Federal Appellate Court Rules in Favor of Takings Lawsuit Against the CDC’s Covid-Era Eviction Moratorium
On Wednesday, in Darby Development Co. v. United States, the US Court of Appeals for the Federal Circuit (which reviews takings claims against the federal government ruled that a takings lawsuit against the 2020-21 federal eviction moratorium can proceed. In so doing, it overruled a trial court decision by the Court of Claims, which I criticized here. The decision could well end up setting an important takings precedent.
In September 2020, during the Covid pandemic, the Trump Administration Centers for Disease Control (CDC) imposed a nationwide eviction moratorium, claiming that it would reduce the spread of the disease. The Biden Administration extended the moratorium multiple times. In August 2021, the eviction moratorium was invalidated by the Supreme Court because the CDC lacked proper statutory authority to institute it. But, in the meantime, numerous landlords suffered financial losses, because they could not evict tenants who weren’t paying rent.
Some of the property owners filed a lawsuit arguing that the eviction moratorium violated the Takings Clause of the Fifth Amendment, which requires the government to pay “just compensation” whenever it takes private property. As I explained at the time, their position was backed by the Supreme Court’s 2021 ruling in Cedar Point Nursery v. Hassid, which held that even temporary physical occupations of property qualify as “per se” (automatic) takings requiring compensation.
In May 2022, the US Court of Claims dismissed the takings lawsuit against the CDC moratorium on the perverse ground that there was no taking because the CDC’s eviction moratorium was never properly “authorized.” In other words, the government could escape takings liability because its actions were illegal! The recent Federal Circuit decision reversed that ruling.
As Judge Sharon Prost writes in her majority opinion for the court, an illegal seizure of property can nonetheless qualify as an “authorized” taking if it is “chargeable” to the government:
An action will normally be deemed authorized if it was done by government agents “within the general scope of their duties”—i.e., if it was “a natural consequence of congressionally approved measures” or “pursuant to the good faith implementation of a congressional act.” Del-Rio, 146 F.3d at 1362 (cleaned up); see also Ramirez, 724 F.2d at 152 (“[O]n numerous occasions when the government agent was acting within the ordinary scope of responsibilities conferred on him by Congress, and took private property without express statutory authority or prohibition, the Tucker Act remedy was held to lie.”)…..
To summarize: even if an action by a government agent is unlawful, it will likely be deemed authorized for takings claim purposes if it was done within the normal scope of the agent’s duties—for example, if it was done “pursuant to the good faith implementation of a congressional act.” Del- Rio, 146 F.3d at 1362 (cleaned up). If instead the action was outside the normal scope of the government agent’s duties— or, despite being within that scope, it contravened an explicit prohibition or other positively expressed congressional intent—it will likely be deemed unauthorized. See id. at 1363; Ramirez, 724 F.2d at 151. The ultimate inquiry is whether the government agent’s action is “chargeable to the government.” Del-Rio, 146 F.3d at 1362.
The majority opinion engages in a long and detailed debate with Judge Dyk’s dissent over the issue of whether the above approach is the best interpretation of relevant Supreme Court and Federal Circuit precedent. I won’t try to assess that debate here.
To me, the decisive factor should be that the Takings Clause nowhere says that compensation is only required for legal government actions or for those specifically authorized by statute. Rather, the Clause imposes a general rule that compensation must be paid whenever the government takes private property for “public use.” That, of course, can happen even without proper legislative authorization. I can understand if takings liability is nonetheless denied when rogue low-level officials seize property without any plausible justification. But that isn’t what happened here. As the majority explains:
Finer legal points aside,
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