Justice Neil Gorsuch, recently confirmed to the Supreme Court, has authored his first opinion, a unanimous decision in Henson v. Santander Consumer USA, Inc., 582 U.S. ____ (2017), holding that an entity that purchases debt owed to another entity (in this case, defaulted car loans) is not a “debt collector” subject to the 1977 Fair Debt Collection Practices Act. The Court also decided several important state and local government cases on regulatory takings, the Fair Housing Act, § 1983 liability, and the First Amendment. Let’s take a look at a few.
Murr v. Wisconsin, 582 U.S. __ (2017), considered the “critical question in determining whether a regulatory taking has occurred”: What is the proper unit of property when measuring the effect of the challenged regulation? The Murrs had acquired two separate but adjacent lakefront lots, both deemed undersized because of planning regulations that pre-dated the acquisition. Undersized lots nominally could be developed under a grandfathering exemption to the regulations but a “merger” provision disallowed that exemption for adjacent lots under common ownership. The Murrs unsuccessfully sought a variance, and instead could only sell or develop the properties as a combined unit.
The Murrs alleged that these restrictions deprived them of practically all use of that second lot. An appraisal of the second lot as undevelopable land valued that lot at approximately $40,000 compared to $373,000 for their developed adjacent lot. The courts below found no taking had occurred because valuing both lots as a single property resulted in a decreased market value of less than 10%. The question before the Supreme Court was whether this combined “larger parcel” was the proper “denominator” for calculating the diminished property value resulting from the regulations.
In a 5–3 decision authored by Justice Kennedy, the Court agreed there had been no taking under the “single lot” approach. The majority rejected the Murrs’ argument that lot lines alone were dispositive and held that “no single consideration can supply the exclusive test for determining the denominator.” Courts are to consider a number of factors” regarding the “reasonable expectations about property ownership,” including “the treatment of the land under state and local law,” its physical characteristics, and “the prospective value of the regulated land.” Legitimate restrictions on land use were to be given “substantial weight” because these affected the fair, private expectations about potential uses and value. The topography or character of the land itself was relevant for the same reason, as was the overall context (for example, “if the regulated land adds value to the remaining property” through increased privacy or beauty of the surroundings).
In this case, the merger law had long been an accepted means of furthering the state’s legitimate purpose of promoting orderly development by gradually eliminating substandard lots. The total combined buildable area was still less than an acre, limiting potential use regardless of regulations. These factors supported a “single lot” approach, as did the value of the lots when appraised as a whole (which exceeded the total value of the lots when combined).
Town of Chester v. Laroe Estates, 581 U.S. __ (2017), concerned standing to intervene in pending litigation alleging a regulatory taking. A developer (Sherman) had sued the Town of Chester, New York, in 2012, alleging that in the course of a decade or so, the town improperly obstructed his plans for a subdivision. Laroe Estates, Inc. allegedly had a development agreement with Sherman from 2003 whereby Laroe advanced Sherman $2.5 million. In 2013, after TD Bank initiated foreclosure proceedings on mortgage debt owed it by Sherman, Laroe in its status as equitable owner sought to intervene in the foreclosure under Fed. R. Civ. Proc. 24. Laroe’s complaint was substantially similar to Sherman’s regulatory takings claim but was ambiguous as to whether Laroe sought damages for itself or the same damages sought by Sherman. The court of first instance ruled that Laroe lacked standing to assert a takings claim against the town; on appeal, the Second Circuit reversed, concluding that an intervenor of right was not required to meet Article III’s standing requirements.
In a spare, eight-page opinion authored by Justice Alito, a unanimous Court vacated and remanded the case. Whether Laroe sought the same relief as Sherman or something different was unresolved. A litigant seeking to intervene as of right under Rule 24(a)(2) was required to meet Article III standing requirements if the intervenor wished to pursue relief not requested by the plaintiff. Standing was “not dispensed in gross”; thus, when there were multiple claimants for each form of relief sought, “there must be a litigant with standing, whether that litigant joins the lawsuit as a plaintiff, a co-plaintiff, or an intervenor of right,” at least when the intervenor looked for “additional relief beyond that which the plaintiff requests.”
In another case on procedural and standing questions, on May 1, the Court ruled in Bank of America v. City of Miami, 581 U.S. __ (2017), a case of residential housing lending practices by the defendant banks that the city alleged were predatory and discriminatory against minorities. This conduct allegedly led to a concentration of higher foreclosures and vacancies in the affected areas, impairing the city’s ability to racially integrate neighborhoods and diminishing property tax revenue while increasing the cost of reducing blight, stagnation, and crime. The city alleged discriminatory housing practices based on race, violating the FHA. The question presented was whether the city qualified as an “aggrieved person” eligible to file a civil damages action for violations of the FHA. The court below had ruled that the harm alleged fell outside the “zone of interests” protected by the FHA and found an insufficient causal connection between the city’s claimed injuries and the banks’ conduct.
In a 5–3 decision authored by Justice Breyer, the Court held that the city was indeed an “aggrieved person” under the FHA, namely, “any person who” either “claims to have been injured by a discriminatory housing practice” or believes that such an injury “is about to occur.” There was congressional intent “to confer standing broadly” with respect to the Act. On the remaining question of the proximate cause of the injuries, the Court held that the correct standard was not that of foreseeability, as the Eleventh Circuit had found, but a higher and more restrictive standard based on a “direct relation” between the injury and the alleged injurious conduct. The Court declined to delineate this standard further, remanding the case with a direction that the lower courts “define, in the first instance, the contours of proximate cause under the FHA and decide how that standard applies” in this case.
In County of Los Angeles v. Mendez, 581 U.S. __ (May 30, 2017), a unanimous Court rejected a claimed “provocation” element in a 42 U.S.C. § 1983 Fourth Amendment excessive use of force case (Justice Gorsuch did not participate). Police officers seriously injured Mendez and his girlfriend, Garcia, during a warrantless entry into their home without knocking or announcing their presence, on their belief that Mendez held a firearm. The lower courts found the officers acted lawfully in shooting Mendez and Garcia because of a reasonable but mistaken fear, but found them liable, nonetheless, based on a “provocation rule” adopted by the Ninth Circuit. This rule allowed an excessive force claim when the police intentionally or recklessly provoke a violent confrontation and the provocation is an independent Fourth Amendment violation. The otherwise reasonable use of force became unreasonable because the officers’ unconstitutional conduct—the warrantless entry—“created a situation which led to the shooting and required the officers to use force that might have otherwise been reasonable.”
Justice Alito, delivering the opinion of the Court, held that the “provocation rule” amounted to an “unwarranted and illogical” expansion of the established excessive force framework in Graham v. Connor, 490 U. S. 386 (1989). “The basic problem with the provocation rule is that it . . . provides a novel and unsupported path to liability in cases in which the use of force was reasonable,” because it was based on a separate and different Fourth Amendment violation than that (already) addressed in the use of force claim. This conflation “permits excessive force claims that cannot succeed on their own terms.” Although the harm proximately caused by the two or more claims might overlap, the claims themselves “should not be confused.” The judgment of the Ninth Circuit was vacated and the case remanded.
The Court’s docket once again included First Amendment cases.
Packingham v. North Carolina, 582 U. S. __ (2017), examined the extent to which content-neutral restrictions on access or use of the Internet may be imposed on convicted criminals. In North Carolina it is a felony for a registered sex offender “to access a commercial social networking Web site where the sex offender knows that the site permits minor children to become members or to create or maintain personal Web pages.” The aim was to protect minors from use of social media to “harvest” information on potential victims. The ban extended to sites like Facebook, YouTube, and Twitter but exempted e-mail-only providers or sites intended for commercial transactions. Packingham was charged after he gave thanks to God on his Facebook page, using an alias, following the dismissal of a traffic citation. A police officer monitoring social media for possible violations of the law identified the author, and Packingham was convicted. There was no evidence that he had used the Internet to contact minors for sexual purposes nor was he subject to state supervision (parole or probation) at the relevant time. The evidence suggested that the law applied to over 20,000 residents and that more than 1,000 had already been prosecuted.
The North Carolina Supreme Court found the statute “constitutional in all respects.” A unanimous Supreme Court thought otherwise. As a backdrop, the Court noted that today’s Cyber Age represents a “revolution of historic proportions,” in which social media allow users from across the globe to “engage in a wide array of protected First Amendment activity on topics ‘as diverse as human thought.’” Adopting two assumptions—that the law restricted access to commonplace social networking sites, and that the First Amendment allows for preventative but narrowly-tailored laws to restrain conduct that may presage a sexual crime—the Court applied intermediate scrutiny and found the state law too extreme, amounting to “a prohibition unprecedented in the scope of First Amendment speech it burdens.” Offenders who had completed their sentences remained barred for years from communicating in “the modern public square” and using what were arguably “the most powerful mechanisms available” for making a citizen’s voice heard. The state failed to meet its burden of showing that this sweeping law was “necessary or legitimate” to keep vulnerable children away from convicted offenders.
In Trinity Lutheran Church of Columbia v. Comer, 582 U. S. ___ (2017), a divided court reversed the Eighth Circuit’s denial of a state grant to a church-operated day care. The opinion was authored by Chief Justice John Roberts; Justice Sotomayor wrote the dissent, longer than the majority opinion, closing with a curt “I dissent.” A Missouri Department of Natural Resources (DNR) policy denied grant funds for playground resurfacing to any applicant owned or controlled by a religious entity, based on an express provision in the Missouri Constitution. The church’s day-care program ranked fifth out of all applicants for the 12 grants awarded but was disqualified under the policy. The church alleged discrimination prohibited by the Free Exercise Clause of the First Amendment.
The majority held that the Free Exercise Clause did not provide a special dispensation from obeying general laws because of a person’s faith or lack of faith, but likewise did not authorize discrimination in the distribution of public benefits because of religious activity or views. A policy that expressly discriminated against an otherwise eligible recipient of a public benefit solely on the basis of its religious character “imposes a penalty on the free exercise of religion [which] triggers the most exacting scrutiny.” It was irrelevant that the state had not burdened the petitioner by prohibiting religious activity; instead, the state conditioned the right to compete in a grant program on the abandonment of the applicant’s religious character. Locke v. Davey, 540 U. S. 712 (2004), a state scholarship case, was distinguishable because the recipient there was not disqualified because of who he was but what he proposed to do, study theology. The policy here failed strict scrutiny because there was no compelling state interest to justify the infringement—the asserted interest, a preference “for skating as far as possible from religious establishment concerns,” stretched so far that it met itself coming back on the violation side of the Establishment Clause. Footnote 3, for those interested, restricted the opinion to the facts of this case: “We do not address religious uses of funding or other forms of discrimination.”
On June 26, the Court agreed, after some 14 relists, to hear the appeal in Masterpiece Cakeshop, Ltd. v. Colorado Civil Rights Commission, No. 16-111. The case centers on how to reconcile a public accommodations law (prohibiting discrimination based on sexual orientation) with First Amendment free speech and free exercise rights. A self-described “cake artist” declined to design and create wedding cakes for same-sex couples because the messages would not comport with his religious beliefs and would infringe on his freedom of “creative expression.”
The Court also agreed to grant certiorari to the “travel ban” cases, arising from rulings by the Fourth and Ninth Circuits. These blocked the President’s executive orders that would suspend, for 90 days, the entry of foreign nationals from six named countries that sponsor or shelter terrorism and suspend, for 120 days, adjudication of applications and travel under the Refugee Program for aliens from any country. The parties must now address whether the challenges are mooted. The Supreme Court by a 5–3 vote left in place the two circuits’ injunction against restricting travel by those foreign nationals having a “bona fide” professional, educational, or family relationship with U.S. citizens or entities. Some have read that as a predictor of the final decision. More discussion of these and other cases will be in the winter issue of State & Local Law News.