Eminent Domain and the Obamacare Decision


After reading the above title you may think that in juxtaposing these two topics your faithful servant  has gone bonkers. But actually, this is only an illustration of our theory that there appears to be an eminent domain angle to just about everything, as demonstrated by Justice Ruth Bader Ginsburg’s concurring opinion in the Obamacare case (National Federation of Independent Businesses v. Sebelius, No. 11-393). There, at pp. 24-25 of the slip opinion she invokes the law of eminent domain, and explains that “this Court . . . upheld Congress’ authority under the commerce clause to compel an ‘inactive’ landholder to submit to an unwanted sale,” citing the Monongahela case (148 U.S. 312) which involved the condemnation of locks and dams on the Monongahela River in aid of navigation. we have no idea what “inactive” land owners are and how their “inactivity” makes them a proper target of eminent domain, as opposed to other, “active” land owners. And to rise in defense of the English language, Justice Ginsburg’s phrasing is rather strange. Why call a forcible eminent domain taking an “unwanted sale”? That’s like calling forcible rape an act of “unwanted love-making.”

To get back to the Obamacare fiasco, the Chief Justice corrected Justice Ginsburg, noting in footnote 5 of his majority opinion that “The fact that the Fifth Amendment requires the payment of just compensation when the Government exercises its power of eminent domain does not turn the taking into a commercial transaction between the landowner and the Government, let alone a government-compelled transaction between the landowner and a third party.” That sounds right. The use of eminent domain is an exercise of an inherent sovereign government power, not a “commercial transaction,” even if private parties, notably railroads and public utilities, and even individuals may exercise it for public uses when it is legislatively delegated to them. Civil Code § 1001.

Also strange is Justice Ginsburg’s assertion that “Congress has the authority to mandate the sale of real property to the Government, where the sale is essential to the improvement of a navigable waterway.” Emphasis added. “Essential?” Not really. At least since Bragg v. Weaver, 251 U.S. 57, 59 (1919) considerations of necessity have not been a part of the federal law of eminent domain. And in states that do have a statutory necessity requirement, it is largely hortatory — the generally prevailing rule is that necessity for a taking is not subject to judicial review, absent fraud on the part of the condemnor. Judges’ justification for such deference is that they lack institutional competence to pass judgment on the technical decisions establishing the need for a public project, its design, its location, its cost, how much land should be taken for it, and whether (to use statutory language) the project is most compatible with the greatest public good and least private injury — see Cal. Code Civ. Proc. § 1245.230(a)(2). For a good exposition of judicial thinking behind this rule, such as it is, see City of Chicago v. St. John’s United Church, 935 N.E.2d 1158, 1171 (Ill.App. 2010) (judicial review of necessity would lead to “interminable delays.”

Paradoxically, when it comes to reviewing public necessity for takings in the exceptional cases in which it is subject to review, such as, for example, in extraterritorial condemnations, judges display no such inhibitions. See City of Los Angeles v. Keck, 14 Cal.App.3d 920 (1971) (striking down the city’s determination of necessity and chewing it out for wasting public funds). Ditto in environmental law cases, where judges freely review, overturn, and generally pass judgment on the soundness of technical decisions of this kind. See the “interminable” litigation over the Century Freeway in Los Angeles – check out how many reported federal cases captioned Keith v. Volpe there are. But somehow judges are unable to do that in eminent domain. Odd, isn’t it?

In California, necessity for eminent domain takings used to be altogether nonjusticiable, even where the condemnation resolution was procured by fraud, bad faith and abuse of discretion. People v. Chevalier, 52 Cal.2d 299 (1959). Why the generally fair-minded California Supreme Court would embrace such a harsh and immoral rule has always puzzled us, but that’s the way it was until 1976 when an indignant legislature – incensed when it learned from the Law Revision Commission that courts had ascribed to it the intent to shield government fraud from judicial review — repealed the Chevalier rule and established “gross abuse of discretion” or bribery as proper criteria for challenging the validity of a condemnor’s necessity determination. Code Civ. Proc. § 1245.255(b), and § 1245.270.

But we were supposed to be talking about the Obamacare case, weren’t we? Actually, we leave the task of substantive kibbitzing to the intellectual grandees who comprise the credentialed commentariat and have been falling all over themselves in print, on the air and on the internet, instructing the Great Unwashed in the mysteries of Supreme Court politics and jurisprudence — or jurisimprudence, as the case may be — and explaining at length why a creature that looks like a duck, waddles like a duck, and quacks like a duck is (or perhaps is not) an ostrich, or why losing a big landmark case is a great strategic victory. Our concern is primarily with policy: the court bent over backwards to add a dollop of grease to the skids on which this deficit-ridden country is sliding down toward insolvency or runaway inflation. And we remain unimpressed by judicial protestations that the judges are only interpreting the law as written by the legislature. In this case, the law upheld in a 5 to 4 decision, was not the one the legislature thought it was enacting. The fact is that disclaimers notwithstanding, judges frequently do use policy considerations in making their decisions, so the old ”Let justice be done though the heavens fall” shtick is hard to take at face value. The California Supreme Court made no bones over the fact that “[i]f the question is one of first impression [the] answer depends chiefly upon matters of policy, a factor the nature of which, although at times discussed by the courts, is usually left undisclosed.” Bacich v. Board of Control, 23 Cal.2d 343, 350 (1943). Would you believe Bacich was an eminent domain case?

Besides, another problem with this evasion of responsibility for the consequences of judicial handiwork is that at the rate the country is sliding into uncontrollable debt, one of these days the governmental heavens will fall and when they do it won’t be pretty for any of us. And that includes the courts that are experiencing economic pain as the folly of past government (and judicial) policy decisions regarding housing and land-use has been revealed as deeply implicated in precipitating a statewide fiscal storm that threatens imminent government insolvency, and is devastating California’s judicial budgets even as we write.

But policy is not everything, and we do have a doctrinal question stimulated by the Obamacare decision. Why is it that in eminent domain law, when Congress determines what is a ”public use,” that determination is deemed ”well-nigh conclusive,” and as such binding on the judiciary if it is merely “rationally related to the conceivable,” whereas in this case, repeated, explicit legislative and executive declarations that the intention of the law was to impose a penalty, not a tax, on those who fail to buy health insurance, can be disregarded by the court and blithely recharacterized as a tax? Why the dramatic difference in the deference to legislative determination? Could that have been a judicial policy choice rather than adherence to black-letter law? And whatever happened to the primacy of legislative intent in statutory construction?

To conclude where we started – commenting on the eminent domain aspects of this fiasco – Justice Ginsburg’s doctrinal misadventure only illustrates why we have been reluctantly driven to the conclusion that when the Supreme Court touches the subject of takings — whether in the form of direct or inverse condemnation — it tends to exhibit a reverse Midas touch: it messes things up. Similar views are held in surprisingly high places, nor is takings law the only subject thus to suffer at the hands of the Magnificent Nine. A letter to the editor in the New York Times of June 30, 2012, quotes none other than “the renowned tax law professor and practitioner,” Martin D. Ginsburg, who happens to be the husband of Justice Ginsburg, as saying, “Every time the Supreme Court touches the tax law, they crumb [sic] it up.” Welcome to the club, Mr. Ginsburg.


Note: This post, in edited form, was published in the Los Angeles Daily Journal of June 28, 2012.