The Supreme Court Rights a Property-Rights Wrong

June 21, 2019
By Timothy Sandefur

Today’s Supreme Court decision in Knick v. Township of Scott may sound like a lot of legalese at first, but it marks a vital step toward fulfilling the Constitution’s promise to protect the rights of property owners nationwide.

That’s because the Court overruled a bizarre 1985 case called Williamson County v. Hamilton Bank, which had previously blocked property owners from getting just compensation when the government took away their property. The Williamson County decision prohibited landowners from suing in federal court when state or local governments confiscated their land. Instead, they were forced to go to state court—not a hopeful prospect in states like California where state judiciaries routinely disregard the importance of private property rights.

Worse, the Williamson County rule created a bizarre paradox: Although the Court claimed that property owners could ask federal judges to protect their rights in the event that state courts did not, the opposite actually happened. If a property owner went to state court to seek compensation for the deprivation of his or her rights, and lost, federal courts would later use that state court ruling as a reason to also deny the owner compensation. As Chief Justice Roberts observes in today’s decision, the Williamson County rule crated “a Catch-22” whereby a property owner “cannot go to federal court without going to state court first; but if he goes to state court and loses, his claim will be barred in federal court.”

That made no sense, and the Supreme Court today undid the error. The problem with the Williamson County case was that it presumed that a property owner’s right to just compensation isn’t violated until he or she seeks compensation and is denied it. But we don’t treat any other right that way. We don’t say a person’s free-speech rights have not been violated until after the person challenges censorship in court and loses. We say her free-speech rights are violated when she’s censored, and that means she can sue. We don’t say a person’s right to freedom of religion is only violated after he sues the government for prohibiting him from praying and loses that lawsuit—we say that his rights are violated when the government prohibits him from praying, and that’s why he can sue. But under the theory of Williamson County, your property rights aren’t violated when the government takes your land without paying for it; your rights are only violated after you sue and (perhaps years later) lose your lawsuit.

That illogical notion had very serious real-world consequences for property owners in the 35 years that Williamson County was on the books. For example, when the owners of San Francisco’s San Remo hotel wanted to convert their hotel from long-term residential use to night-by-night tourist use, the city forced them to get a permit—and, as is typical of California cities, it forced them to pay hundreds of thousands of dollars for that permit. (As one California judge put it, this is like taking away the landowner’s rights and then charging the landowner to get them back.) The owners filed a lawsuit, but they weren’t allowed to go to federal court; they had to go to state court, where—thanks to California’s hostility to private property—they were denied just compensation. When the owners then filed a federal lawsuit, they were again denied compensation…because the state court had already ruled against them. This scenario played out so often that it came to be known as “the Williamson County trap.”

Not only was this a lawyer-trick to avoid respecting the rights of property owners, but it contradicted the very purpose of our federalist system, which is to private “a double security” to individual rights. Williamson County transformed what should be the protections of federalism into a weapon against people. Today’s decision puts a stop to that by declaring that a property owner may bring a federal lawsuit “as soon as a government takes his property for public use without paying for it.”

Justices Kagan, Ginsburg, Breyer, and Sotomayor dissented, arguing that the property-rights protections in the Fifth Amendment are “unique” because the Amendment “does not prohibit takings,” but “permits them provided the government gives just compensation.” And since the owner isn’t really denied compensation until he loses his lawsuit, the Williamson County rule makes sense. Worse, they contend, today’s decision will hamper government programs that result in depriving people of their property. “Now, when a government undertakes land-use regulation,” writes Justice Kagan, “the responsible employees will almost inescapably become constitutional malefactors.”

But as Justice Kagan herself says, perhaps she should take the hint. Local governments run afoul of the takings clause precisely because they so routinely deprive people of their constitutional rights. To allow this to continue simply because we’ve become accustomed to this abusive circumstance, or because it’s more convenient for lawmakers than compensating property owners would be, is irrational. Justice Thomas, in fact, has a fine answer to that in his short concurring opinion: The taking of private property is unlawful “unless the government ‘pays just compensation before or at the time of its taking.’ If this requirement makes some regulatory programs ‘unworkable in practice,’ so be it—our role is to enforce the Takings Clause as written.” As for the notion that a taking doesn’t happen until a person seeks compensation in court and is denied it, that is precisely the fallacy at work in Williamson County. As Chief Justice Roberts puts it: “A later payment of compensation may remedy the constitutional violation that occurred at the time of the taking, but that does not mean the violation never took place. The violation is the only reason compensation was owed in the first place. A bank robber might give the loot back, but he still robbed the bank.” To confuse the state-court remedy for a taking with the taking itself places an anomalous and often insurmountable burden on the rights of property owners.

Today’s decision is an immense victory for property owners nationwide—which is precisely why defenders of ever-more intrusive government are so sensitive about it.

Timothy Sandefur is the Vice President for Litigation at the Goldwater Institute.

Learn about the Goldwater Institute’s work on property rights here.