Monterey v. Del Monte Dunes At Monterey, Ltd. - Oral Argument

Argument of George A. Yuhas

Chief Justice Rehnquist: We'll hear argument first this morning in Number 97-1235, the City of Monterey v. Del Monte Dunes, et cetera.

Mr. Yuhas.

Is that the correct pronunciation of your name?

Mr. Yuhas: Yes.

Mr. Chief Justice, and may it please the Court:

We are asking this Court to decide three issues in this inverse condemnation case.

First and most important the constitutional standard for review of a city's land use decision does not allow the imposition of takings liability based upon a de novo second guessing of the city's policy and factual determinations.

Second, courts, not juries, are the appropriate decisionmakers for all inverse condemnation liability issues and, finally, the concept of rough proportionality does not apply to this case, where the city denied the proposed development.

What ties these issues together are the concepts of deference and the concepts of the limited role of the Constitution and the Federal courts in the local land use planning process.

This case is not atypical in some respects.

The city was faced with a complex decision it had to reconcile competing interests, sift through facts, and exercise its discretion and judgment, and it did so.

Justice Scalia: Five times.

Mr. Yuhas: It did so, Your Honor.

It was a complicated project.

In this particular case it only exercised discretion once, that is directly relevant, and that is, its consideration of the restoration plan presented by the respondents.

Justice Scalia: This was the fifth plan presented, right?

Each one was successively rejected for a different reason each time?

Mr. Yuhas: The initial rejections were for density, and the fifth one was rejected down for two reasons only.

There was access, and there was the restoration plan, and that was the first time that... in fact, the city council had faced the question as to whether there was an adequate recommended plan.

Justice Scalia: And this is typical, you say?

Mr. Yuhas: It is typical in this kind of complex.

It was a complicated project.

Justice Stevens: Well, in asking whether the decision in question was reasonable, the history of the zoning and the previous attempts are relevant, are they not, in determining the reasonableness of the city's action?

Mr. Yuhas: I submit that the issue is not the reasonableness of the city's action, but rather the issue is whether, in fact, the city's action in the first instance bears a reasonable relationship to a legitimate goal.

Justice Kennedy: Well, could you... suppose you told the jury, the issue for you to decide is, was the decision based on reason?

Did it substantially advance a legitimate public goal?

Could the jury answer that question?

Mr. Yuhas: I believe that that is two different questions.

Justice Kennedy: Well, that was your argument to the jury.

I've read the record.

Mr. Yuhas: I submit that the question presented to the jury in the instructions was, does the city's action bear a reasonable relationship to a legitimate goal.

Here...

Justice Kennedy: You said, did it substantially advance a legitimate goal?

You said that's the issue for the jury, and you said the issue for you to decide was the decision based on reason.

Those are two questions, and you said those are presented here, and it seems to me that the past history of what the developer was required to do is relevant to that.

Mr. Yuhas: And we didn't argue that the jury could not consider that past history, but on the specific issue that the jury was asked to address, over our objection, because we continue to believe that that is an issue for the court, on the first prong, the substantially advance a legitimate public interest, that prong, which derives essentially from substantive due proc language, that is a deferential test.

Chief Justice Rehnquist: Well, are you saying that the jury was not entitled to consider the length of time that these proceedings were underway at all?

Mr. Yuhas: I'm not suggesting that, Your Honor.

Chief Justice Rehnquist: How long were they underway, from beginning to end?

Mr. Yuhas: The first time that the city was presented with this development application was 1983.

The final consideration was 1986.

There was some additional planning for 1983, because the local coastal plan was being implemented or developed at that time.

Chief Justice Rehnquist: What happened between 1986 and now?

Mr. Yuhas: After 1986, the testimony is that the developer made no further effort to develop the property or contact the city.

The property was sold in 1991 for $4.5 million, approximately $800,000 more than the developer paid, and something less than...

Chief Justice Rehnquist: We have a lawsuit here.

Surely the lawsuit must have begun sometime after 1986, one hopes.

Mr. Yuhas: Well, one hopes.

Believe it not, the lawsuit began in 1986.

In 1986 the lawsuit was filed, there was a ripeness challenge, that went up to the Ninth Circuit, it was reversed, it came back, and that resulted in the trial that brings it to today.

Justice Ginsburg: May I ask about that ripeness challenge, and it relates to how significant this jury trial issue is because, as I understand it, the Ninth Circuit said it was ripe because at the time California had no proceeding which the developer could bring, but now California does and, as I understand our case law, a developer in the situation that this one is in would be obliged to go to the State court, not Federal court, is that correct?

Mr. Yuhas: That is correct, Your Honor.

Justice Ginsburg: And under the California procedure the liability issue would not go to a jury.

Mr. Yuhas: That is also correct, Your Honor.

Justice Ginsburg: So is there, now that the States have been told that they must have these proceedings, is this question of jury trial or not just a question for these cases hanging over from the eighties?

Mr. Yuhas: Your Honor, I certainly submit that the issue of the jury trial is very significant to my client in this case.

It is not... it does not have, I think, great significance directly in cases litigated in the State courts.

Justice Ginsburg: Does it have any continuing significance at all?

That's my question, because if there's no ripe challenge until we've gone to the State, the State would decide those questions.

The State would decide the liability questions, and then you might have some constitutional question about it.

Mr. Yuhas: There are two issues that were raised, one which was raised by the amicus filed on behalf of some of the States is there might be, under some circumstances, a question as to whether, in fact, the State determination would be fully collaterally estoppeled in a subsequent case, or whether it would give rise to collateral litigation.

But I think of more importance is that, depending upon the nature and the reason why it's determined that there is a right to jury trial, the character of the issue is important.

If, in fact, the issue is one that requires a deferential standard, because one that is akin to substantive due process, that is an issue that cuts across simply the procedural issue as to who decides, and goes to what standard should be used.

The Ninth Circuit standard, the reasonableness standard, is one that says, when a Government agency makes a decision... it could be establishing seismic standards.

It could be anything, and all a developer, a property owner needs to do, is to say, you know, we have an expert, and our expert says that we can build safely, we can essentially dispute the fact that you need these standards, or we can say that those standards are excessive.

Justice O'Connor: Well, let's talk about... we're dealing with inverse condemnation here, and it's a two-part inquiry if we follow Agins.

I don't know what the inquiry is.

What do you think it is?

Mr. Yuhas: I believe...

Justice O'Connor: Agins says two things, that the city's action has to substantially advance a legitimate purpose, and deny the subject property all economically viable use.

Mr. Yuhas: Yes, that is what Agins says.

That's what the jury was instructed here.

Justice O'Connor: And they found on both those points in favor of the respondents.

Mr. Yuhas: We don't know that, Your Honor.

Justice O'Connor: Well, they gave a general verdict.

Mr. Yuhas: They gave a general verdict.

They found on one or the other, or both.

Justice O'Connor: Well, was it an and or an or instruction?

Were they told to find that...

Mr. Yuhas: Or.

Justice O'Connor: it takes both, or were they told either one?

Mr. Yuhas: Either one.

Either one, and that...

Justice O'Connor: It was a general verdict.

Mr. Yuhas: It was a general verdict on that claim.

Justice Kennedy: And you didn't object to those instructions?

Justice O'Connor: Even if we were to conclude that there were one or more issues in here that were legal issues for the court, it wouldn't require a new trial because the court could look at the evidence and resolve it anyway.

It's not like we're having to send it back for a new trial, regardless of the answer.

Mr. Yuhas: That's correct, and I believe the Ninth Circuit in fact indicated that in its opinion.

Justice O'Connor: And there are certainly some factual issues here, like economically viable use, that traditionally would go to a jury, it seems to me.

Mr. Yuhas: Those are certainly ad hoc factual inquiries.

Justice O'Connor: Absolutely.

Mr. Yuhas: However, they are not inquiries that I believe are properly decided by the jury, because the decision of economically viable use is not simply a question of valuation.

That is certainly a component, but going with that is the question of what is the reasonable investment-back expectations of the property?

Chief Justice Rehnquist: But surely a jury could be charged on that.

Juries decide all sorts of questions where they get legal instructions from the judge and they decide the factual component of the question.

Mr. Yuhas: Juries are very adept at resolving historical issues of fact.

Juries are not adept at employing balancing tests or multifactor analysis.

Chief Justice Rehnquist: Well, but juries decide questions of land value all the time in the State courts in condemnation actions.

California, Arizona...

Mr. Yuhas: Mr. Chief Justice that is absolutely correct, and if the only issue on a denial of all economically viable use was a valuation question, I would say the jury had the competence, but it goes far beyond that.

For example, even where it does deprive the property of all economically viable use, there is also the issue of simply, is the intended use akin to a nuisance, the Lucas issue.

That is an issue which is akin to a public nuisance determination, which is historically made by courts.

Justice Kennedy: Well, you cast the case as if the jury is going to be assessing the reasonableness of the zoning ordinance, but that's not what the jury was instructed.

That's not what you argued to the jury.

That's not what Mr. Jacobson argued.

They said, was this decision a reasonable implementation of that ordinance, and that's different, and juries talk about reasonableness all the time.

That's the whole law of torts.

Mr. Yuhas: Juries do decide reasonable questions.

They decide reasonable conduct because that is underlying the legal standard of liability.

Where the standard of liability, I submit, is, in fact, one, does an action substantially advance the public purpose, and where that standard derives from substantive due process principles which carries with it a level of deference, carries with it the idea that we don't want juries coming in in every case and saying, I don't think that the State's action reasonably implemented zoning, that will depend upon invariably complicated facts and subsidiary policy decisions as well.

Justice Kennedy: Well, you instruct the jury that the city is entitled to the greatest of deference and leeway, but that if they have been unreasonable or, say in bad... suppose the jury's... the planning commissioner is in bad faith in implementing the ordinance, could that question go to the jury?

Mr. Yuhas: That question did not go to the jury.

In fact...

Justice Kennedy: Could that question...

Mr. Yuhas: Oh...

Justice Kennedy: in a proper case go to the jury?

Mr. Yuhas: in a proper case, that question could go to the jury.

In this case, the jury was instructed that they were to disregard motive, because there was no evidence of bad faith and, in fact, the trial court, considering this same record, concluded that the city acted reasonably.

They were not attempting to forestall all reasonable development.

Justice Breyer: Could the jury do this.

This is... am I right... help me with this.

Am I right in thinking that we're reviewing a judgment that awarded your opponent $1.45 million for a temporary taking, which I take it was for the period of time from, like maybe when they bought the land or something, until California paid the $4.5 million, or 4.8.

That was the judgment we're reviewing.

I may not have it precisely right, but roughly.

Mr. Yuhas: The taking damages went all the way to trial.

They went 4 years beyond when they actually sold the property, but...

Justice Breyer: But it's a temporary taking.

Mr. Yuhas: It is, Your Honor.

Justice Breyer: All right.

Now, if that's so, and if I believe the jury could assess this question, had it during that time been deprived of all value, I suppose that's a jury question in my mind, supposedly.

They can decide that question, whether or not all value disappears from the property, therefore it warrants... and, moreover, the jury could assess the amount.

All right.

If I believe those two things, is there any reason for me to go further in this case?

Mr. Yuhas: I believe there is, Your Honor.

Justice Breyer: Why?

Mr. Yuhas: First, in this case the evidence was undisputed and, in fact, the jury was instructed that if they found an insubstantial value...

Justice Breyer: Could anyone have found... could anyone, any reasonable person have doubted that the property lost all its value during that temporary time?

Is there some evidence here?

Is there some dispute?

I mean, I know there is a dispute as to whether or not, when they got paid the money later... I mean, you had 4.8 million.

I understand that dispute.

But during the temporary time, is there any dispute that it had no value?

Mr. Yuhas: Oh, very much so.

Justice Breyer: There was.

Mr. Yuhas: In fact, the plaintiff's expert opined that immediately after the city's action the property retained $2.9 million in value, and he opined that that value from that point in time went up, so that when the property was sold to the State in its regulated State it was worth $4.5 million.

Now, that was, to be fair, according to that expert, a diminution value.

In fact, the diminution I believe was in the ball park of about 50... about 55 percent, but, in fact, there was substantial value the entire time and that's why, when the jury was instructed, if this property has substantial value, you should conclude that there has been no denial of economically viable use.

Justice Breyer: Is there any value, other than the value that would come about by selling it to the State for the use as a seashore?

Mr. Yuhas: Oh, I believe so.

I mean, this project was turned down for two reasons, and two reasons only.

Justice Breyer: Okay.

Mr. Yuhas: And all that had to be done was to resubmit the site plan that had a better restoration plan, or, in fact, buy the property needed for the access.

Justice Scalia: But I thought they did that five times to try to get a better restoration plan.

Mr. Yuhas: The very first time that the restoration plan was ever even put together in draft form was in 1984, shortly before the city council overruled the planning commission and approved conditionally the 190-unit development, and the conditions were, you need to show that you can do this development consistent with habitat protection and, in fact, they went through a year's process.

The city council expressly said, we can't assess the adequacy of this habitat plan because we don't know enough.

You need to talk to Fish & Wildlife and Fish & Game.

Finally, in 1986, they for the first time said, we have the information, you have not shown us this is good enough.

Justice Scalia: The landowner here essentially thinks that it was getting jerked around, that basically the city didn't want this land used for anything and wanted to retain it empty so it could be used as a seashore.

That's what this thing is about.

Now, let's talk about deference to the city's judgment.

I can under... our normal rule is that we do defer and, if there's a rational basis, that's all we look to.

But where you have a consistent process, as is alleged here, of turning down one plan, the next plan, the next plan, okay, I'll do this to satisfy you, isn't there some point at which, although there's a rational basis for the fifth decision, a rational basis for the fourth and the third and the second and the first, you begin to smell a rat, and at that point can't we say, despite our normal rational basis review, there's some other factor that begins to come in here, and that is, at some point you can say, this is simply unreasonable.

Mr. Yuhas: I submit, Justice Scalia, that that inquiry does not occur in the first prong of Agins as to whether the decision substantially advances illegitimate use.

That comes into the second prong as to whether, in fact, there are economically viable uses available.

If, in fact, the evidence demonstrates the city intended never to approve any development, the trier of fact could conclude, well, I guess this thing doesn't have any economically viable use, and presumably it would have no value.

But on the first prong, the first prong simply says, is there, in fact, the city's action denying this development, leaving the property as it is, does that have a substantial relationship to a legitimate goal, whether that goal be open space, whether that goal be habitat protection.

Chief Justice Rehnquist: What if the commission, instead of saying no, you can't... we'll reject your plan five times, says, we're going to reject it for 100 units but we'll approve it for 10 units?

Now, there the owner can't say it was denied all economic value, but isn't it possible that an element of bad faith would come in somewhere along the lines of Justice Scalia... I'm not saying it happened here, but if a jury or a finder of fact was convinced that the city council was simply going through motions here, that it was determined not to really appraise the situation in the light of the ordinance, couldn't a finder of fact, either a jury or a judge, say that an element of bad faith plays a part in the decision?

Mr. Yuhas: Again, I submit that the element of bad faith goes into whether in fact the property has been deprived of all economically viable use.

Justice Stevens: But what the Chief Justice is asking, and I think it was prompted by Justice Scalia's question in my mind as well, let's assume that the city is unreasonable in the implementation of its planning ordinances, and that it's in bad faith in the implementation of its planning ordinance.

The property still has an economically... an economic viability.

Is there... the city still liable in damages for that unreasonable treatment of the landowner?

Mr. Yuhas: Not under the Fifth Amendment.

There may be a remedy under State law and if, in fact, the city participates in an effort to deliberately deflate the value of the property for purposes of condemnation there's a remedy for oppressive and unreasonable precondemnation conduct, certainly under State law.

Justice Souter: Well, may I try...

Justice Scalia: Why doesn't it come under the other... the other of the two criteria?

Why do you insist that we force this under the economically viable use criteria rather than under whether it substantially furthers any valid purpose?

Mr. Yuhas: Because, looking at the... what the jury was instructed in this case as to a valid purpose, which was habitat protection, health and safety, the denial of this development, you know, did unquestionably have a relationship...

Justice Scalia: Not if there was bad faith.

If there was bad faith it rationally could further that purpose but it wasn't being used for that purpose.

Mr. Yuhas: No.

In this case there was no finding of that.

The Court was... directed the jury to disregard questions of motive and certainly I understand that the respondent felt that in fact they were being jerked around.

The respondent acquired this property and only pursued two applications.

The one that got approved... I correct myself, one application.

The only application that this respondent pursued was the one in 1986.

Justice Breyer: Okay...

Mr. Yuhas: They bought the property...

Argument of Edwin S. Kneedler

Chief Justice Rehnquist: Thank you, Mr. Yuhas.

Mr. Kneedler, we'll hear from you.

Mr. Kneedler: Mr. Chief Justice, and may it please the Court:

Before discussing the substantially advanced legitimate Government purpose aspect of this case I would like to briefly address another point which the Ninth Circuit addressed and that is that the Ninth Circuit, without any prompting by the parties, brought this Court's decisions in Nollan and Dolan into this case and said that the overall denial of the plan in this case had to be assessed under the rough proportionality formulation that this Court announced in the Dolan case.

Justice Kennedy: Well, of course, the jury wasn't instructed on that theory.

The oral arguments weren't on that theory.

I'm not sure why that issue is in the case if the verdict can be sustained on another basis.

Mr. Kneedler: Well, I... but... that seemed to be an important aspect to the court of appeals affirmance of the judgment.

On page 16 and page 20 of the appendix to the petition the Court relies upon the rough proportionality standard as the basis for finding that the jury could have found that there was no sufficient evidence to support the city council's verdict, and it may be sufficient for this Court simply to vacate the judgment and eliminate that discussion from the Ninth Circuit's decision.

But we do want to make clear our position on that question, that this Court's decisions in Nollan and Dolan imposed that special rule for a special situation, where the concern was that the city might actually be extorting a right of physical access, essentially an interest in property on the land, and using the occasion of a permit approval in order to extort that.

It was a special rule for that situation.

In fact, in the Dolan case the Court specifically distinguished that situation from one in which the... you simply had regulations that controlled the landowner's use of her own property as opposed to having someone come onto the property.

Justice O'Connor: Well, suppose we agree with you that the court of appeals got it wrong on the Dolan point, what is... how would reversing that, or vacating it, affect the balance of the decision, if at all?

Mr. Kneedler: Well, the question then would be whether the court of appeals was correct in affirming the judgment on the ground that there was sufficient evidence from which the jury could have concluded that there was not a reasonable basis for the action in this case, and that really goes to the substantial relationship prong, and we have... we have two basic problems with that.

One is, we believe that the Court's formulation of that aspect of finding a compensable taking in Agins was erroneous, and that the question of whether a land use regulation substantially advances a legitimate governmental purpose should not be...

Chief Justice Rehnquist: Was that challenged by the petitioner, the Agins rule?

Mr. Kneedler: It was not, Mr. Chief Justice.

Chief Justice Rehnquist: Ordinarily we don't accept any new questions or positions from an amicus.

Mr. Kneedler: I understand that.

The reason that I do think it's relevant to the Court's consideration, however, is the Court is being asked to lay down a rule for the lower courts in terms of how a jury or... if it's a jury issue, or how a trial court should address that question.

Specifically, the petitioner is arguing, and we think quite correctly, that if this is a proper standard in a takings analysis.

Chief Justice Rehnquist: Well, but that's not any particular justification for taking a new point from an amicus.

You're simply saying you think it's wrong.

Mr. Kneedler: No...

Chief Justice Rehnquist: Presumably all new points from amicus are based on that.

Mr. Kneedler: My point was that in order to decide the question of whether deference to the agency is appropriate and whether the question should be whether there was sufficient evidence before the city council from which it could conclude that there was a rational basis for this action, there is the antecedent question as to whether that is a proper inquiry at all, and we think that where you have an antecedent question upon which the standard of review depends...

Justice O'Connor: Well, do you...

Mr. Kneedler: it would be proper for the Court...

Justice O'Connor: Do you take the position that the legitimacy of the Government purpose is irrelevant to the inverse condemnation question?

Mr. Kneedler: We believe that it is irrelevant to the question of whether a compensable taking has occurred.

That's quite... that is a...

Justice O'Connor: That's hard to derive from Agins, certainly.

Mr. Kneedler: No, but if... if you look at Agins, what the court recited for that proposition was this Court's decision in Nectow, which was a due process case, and what the Court said there was that the action did not substantially advance a legitimate governmental purpose because it was arbitrary and irrational.

It was language that spoke in due process terms.

And I think this goes to Justice Kennedy's point, too, in focusing on the reasonableness of the past history of the consideration of this project proposal.

That is essentially an objection I think that sounds in procedural due process terms.

Unreasonable delay, and that sort of thing, are procedural due process or, in the first instance governed by State APA standards, or...

Justice Souter: Would this be a... Mr. Kneedler, would this be a possible different way of looking at it in nonprocedural terms?

We... the discussion up to this point has been largely in terms of the language that was used in Agins, but if you look at the Penn Central multifactor formulation, one of the sort of broad subjects to be addressed is the nature of the governmental action, and if we take that into consideration properly, isn't the issue of bad faith something that may be considered right up front under that particular heading?

Mr. Kneedler: I think not.

The purpose of the just compensation clause is to address the situation where the Government has taken lawful action, but lawful action that benefits the entire community in a way that it's unfair to visit that cost of a lawful action on a particular individual.

Bad faith, arbitrary action, those are not aspects of lawful governmental action.

Those are aspects of unlawful governmental action, and as this Court said way back in the Pennsylvania Coal Company case the basis for the award of compensation under the Fifth Amendment presupposes that the action is being taken for a public purpose.

It presupposes lawful, proper governmental action.

It is a question of who must pay for it.

And we think this is reinforced by the structure of the Fifth Amendment, which separately addresses the question of the propriety of the governmental purpose.

Justice Breyer: When you get... is it relevant here?

It keeps coming into my mind that the damages here were awarded for a temporary taking, and the conditions of obtaining damages for a temporary taking are?

Mr. Kneedler: Well, it would... the way the jury was instructed here, either that the property...

Justice Breyer: What is the fact?

What do the Court's cases say?

You get money for a temporary taking, you get... does the total value have to be destroyed?

Mr. Kneedler: The Court has said if there was all economic... that is the test.

Justice Breyer: All right.

For a temporary taking... for a temporary taking, total value destroyed, plus... anything?

Mr. Kneedler: The Court has not really spelled out what the standards are, but it has typically come up in terms of saying that the property has been deprived of all economic... all economically beneficial...

Justice Breyer: And if it has?

Mr. Kneedler: Pardon?

Justice Breyer: See, that's what keeps bothering me.

This is a temporary takings case, I take it, and everybody's arguing as if it's not, so I must be wrong, but why?

Mr. Kneedler: Well, first of all we think if you focus on the deprivation of all economic value in this case that would simply be impossible to find, because the... as petitioner's counsel pointed out, the respondent's own expert said this land was worth $3 million after the permit was denied.

That's $80,000 an acre.

So it would be I think impossible to say that this land was deprived of all economic value, and therefore we think it would be inconsistent with the purposes of the Just Compensation Clause, where you don't have anything approaching the sort of physical appropriation...

Justice Scalia: What about a case...

Mr. Kneedler, if this is... granting, for the sake of argument, the correctness of your proposition that this good faith factor is a due process concern ordinarily, does it not become a proper concern in a temporary takings case, even though it may not be in a permanent takings case?

Mr. Kneedler: I... I...

Justice Scalia: Because the argument here is you've effectively taken it during this interim period by jerking me around, by using an essentially unfair procedure for me to get my rights under the existing ordinance.

Mr. Kneedler: As you've said, an essentially unfair procedure.

That objection sounds in due process objections precisely...

Justice Scalia: Maybe, but that's what... that's why there has been a taking, because you have not used a fair procedure, and so at least in the temporary takings cases, if you believe in temporary takings... maybe you don't believe in temporary takings at all, but once you acknowledge there's such a thing as a temporary taking, what else produces it except... except an unfair procedure?

Mr. Kneedler: A temporary taking occurs, as I understand this Court's decision in First English, not from unlawful governmental conduct, unlawful procedure, but where there's a substantive limitation on development that is imposed for a temporary period of time.

Again, the purpose of the Just compensation Clause was not to protect the people against arbitrary or unlawful action.

It presupposes lawful action.

And in the land use area there are both questions of procedure and questions of substance.

Justice Souter: So you're saying this is not a temporary taking case.

That isn't what...

Mr. Kneedler: I believe it was not properly a temporary... I mean, it was tried on alternative theories, and one theory being that the property was deprived of all economic value, but that simply can't be, given respondent's own expert saying it was worth $3 million.

Justice Souter: Did the jury instructions advert to the issue that the action was brought by the buyer, whereas I guess chronologically most of the temporary taking, if that's what there was, occurred during the ownership of the previous owner, the prior buyer shows inaction.

Mr. Kneedler: The premise of the temporary taking award, it began after the period in which the buyer purchased...

Justice Souter: I see.

Mr. Kneedler: purchased the property.

Argument of Michael M. Berger

Chief Justice Rehnquist: Thank you, Mr. Kneedler.

Mr. Berger, we'll hear from you.

Mr. Berger: Mr. Chief Justice, and may it please the Court:

I suppose I ought to start out by referring to Justice Breyer's question and answer it.

This is a temporary takings case.

This property was taken for a finite period of time which the jury found under instructions that were, by the way, drafted by the city.

The city got the jury instructed with everything that it wanted and presumably could have offered more if it didn't like the instructions it had.

Justice Ginsburg: Mr. Berger, I'd like to... this jury trial issue, which has been posed as a discrete issue, I have it in my mind, and I may be wrong about this, that as a result of our two decisions, Williamson the last one, there won't be any ripe claim to be brought in the Federal court as a court of first view any more, because the inverse condemnation proceeding will take place... must take place in the California State courts, is that right?

Mr. Berger: That's my reading of this Court's cases as well, Justice Ginsburg.

Justice Ginsburg: And do I also understand that these two questions, the economic justification or deprivation, that under the California law the liability question, that is, whether there has been a taking, is done by the judge?

Mr. Berger: I would have to say that's not as clear as counsel for the city represented.

Chief Justice Rehnquist: Well, what cases are you referring to, Mr. Berger?

You said the last two cases from our Court in response to Justice Ginsburg.

Mr. Berger: Oh, actually I thought that that was Justice Ginsburg's reference.

I think she was referring...

Justice Ginsburg: Williamson was the second one.

Mr. Berger: Williamson and probably First English...

Justice Ginsburg: Yes, and First English... yes.

Mr. Berger: that mandated compensation as a remedy for a regulatory taking.

Justice Ginsburg: And Judge Wallace, as I recall, said the reason this case is ripe, he said at the time all this happened California did not have those procedures...

Mr. Berger: That is correct.

The...

Justice Ginsburg: in place.

Now it does.

Mr. Berger: This case arose in 1986, 1 year before First English, at a time when California recognized no compensatory remedy.

Justice Ginsburg: So that's why this whole 1983 jury trial or not seems to me largely academic, not having any continuing importance.

Mr. Berger: It could have little continuing importance, I would...

Chief Justice Rehnquist: It's certainly not academic in your case, though, is it?

Mr. Berger: In this case it was the heart of the case.

Justice Kennedy: Well, and in California juries do, in precondemnation delay cases, for instance, decide whether the State was unreasonable in delaying condemnation activity under Coppin, I take it.

That's a jury question, isn't it?

Mr. Berger: Your Honor, there are many of those kinds of cases in California, and I would have to say I cannot put my finger on a citation to an appellate decision that deals with the issue.

I can assure the Court we've tried cases like that in California that have gone to juries...

Chief Justice Rehnquist: Well, in...

Mr. Berger: and without objection.

That's why it doesn't go up.

Chief Justice Rehnquist: In California, State condemnation is a jury trial, is it not, because Arizona it is, and we patterned ours after California, unlike the Federal system where it is not.

Mr. Berger: Yes, Your Honor, but of course the only issue in a direct condemnation case would be the valuation of the property, a major distinction between the kind of case we have here and a condemnation case, but in California those issues, the only issues that are left, the valuation issues, are decided by juries.

Justice Ginsburg: And in the inverse condemnation case, which is new in California, how is that division?

Mr. Berger: I'm hesitating, Justice Ginsburg, only because there have been so few of them that have reached...

Justice Ginsburg: Well, I don't want to detract you on that, but at least it's my understanding that these cases are not going to come up under 1983 now the way they did.

Mr. Berger: They're very unlikely to make an appearance in the way that this case did, because this Court has ordered California to recognize compensation as a remedy.

To the extent that California complies with that, and some of us think that it pays only lip service, these cases will not be filed at least in the first instance in Federal district court.

But getting back to the reasonableness issue that counsel spent so much time on, this is not something that I think was invented for this case.

It was not something that was even invented in Agins.

This Court's jurisprudence on regulatory takings is based on a determination by a court, whether it be a judge or a jury, of the reasonableness of the conduct of the governmental...

Justice O'Connor: Does that derive, do you agree, from due process concerns?

I mean, it's basically whether it's sufficiently arbitrary to violate due process.

Mr. Berger: Well, Your Honor, there are certainly some due process aspects that could be raised in such a case.

They can't, by the way, be raised in the Ninth Circuit any longer.

We briefed this in our brief pointing out to the Court that in an en banc decision in a case called Armendariz v. Penman the Ninth Circuit has decided that all property owner claims related to constitutional infirmities have to be brought as takings claims and cannot be brought as due process claims.

There's an Eleventh Circuit opinion in a case called Villas of Lake Jackson v. Leon County that reaches that same conclusion.

So there are some due process-sounding concerns in these cases, but at least in the part of the country where we live we can't raise those on behalf of property owners.

Justice Kennedy: It seems a little odd to me, perhaps to you, too, given your representation in the case in your client's position, that the judge would find as a matter of law that the planning action was substantively reasonable under due process but then submit the takings issue to a jury.

That does seem to me somewhat inconsistent.

Mr. Berger: Well, let me say at least I was disappointed in that result, Your Honor, but I don't think that... I don't think it's terribly inconsistent.

It depends on the standard of review that one uses in these two different questions, and when you look at the standard of review for a due process violation it's a very low threshold that the city has to climb.

It's a determination that the city did not act arbitrarily, and once the Court makes that determination, as I think it could make legitimately in this case, which is why we did not appeal that finding, the city did not act arbitrarily.

That doesn't mean that the impact of what it did to this property owner in applying its general planning and zoning laws did not result in a taking.

Justice Kennedy: It was not arbitrary, but it was unreasonable?

Mr. Berger: It was not a reasonable way for the city to effectuate...

Justice Kennedy: Well, if it's not a reasonable way, then it was unreasonable, wasn't it?

Mr. Berger: I think in that sense, yes, but I think that it could also pass an arbitrary standard under a due process examination, and I think that's what happened here.

Justice Breyer: If this is basically a temporary takings case, and if... and here I'm not certain... the point of the temporary takings doctrine is to stop, say, cities from giving people what one might call the extreme run-around, all right, suppose that's the point of it, and if that's so, we could answer the first question, I guess.

We could answer the first question and say, some issues anyway... maybe we'd answer it in your favor, I don't know.

Assume that for the sake of argument.

But the second and third questions, how would we even get to them?

I mean, that's what I'm having trouble with.

This question of proportionality has nothing to do with the temporary takings case, I would think, as... at least if it's the extreme run-around.

I don't see the relationship.

Nor do I see the relationship of the reweighing.

I mean, I don't... in other words, I don't know what to do with this case if I see it as a temporary takings case.

I got question 1.

I guess we could answer that.

But how do you see the 2 and 3 relating to this case?

Mr. Berger: I... Justice Breyer, I have to confess that I have trouble understanding some of this case as well.

I believe that what the city is trying to do is to get this Court to review the standards by which takings, either permanent or temporary, are evaluated, but I... it feels to me as though a temporary taking, where the jury looks at what's going on and looks at the period of time, as it was instructed to do.

Whether the action was reasonable or unreasonable, whether it was proportional or not proportional, if they determine that there was a period of time during which there was a complete taking of this property, which it appears that they did, then I would agree that those other questions on the substantive merits of the case become irrelevant.

Justice Scalia: Well, we don't know that they did.

The thing was put to them in the alternative.

Mr. Berger: Yes.

Justice Scalia: Either there was a total taking, or.

Mr. Berger: That's correct, Justice Scalia.

They were told, in the words of this Court's decision in Agins, that they could find a taking either if it... the city's actions failed to substantially advance a legitimate State interest, or if it denied the property owner economically viable use.

Justice Ginsburg: Mr. Berger, if the... what was submerged in this general word is not clear to me, because even before we get to the split on the takings there was also an equal protection claim.

As I understand it, the jury was told you could find a violation of equal protection or unconstitutional taking, one or the other, and how can we just uphold this verdict without saying that the award would be independently sustainable on either basis, equal protection and takings, because unless there was a special verdict, we could be talking about takings when in fact the jury went off on equal protection.

Mr. Berger: Justice Ginsburg, the... as I read the record in this case the equal protection issue is not before the Court.

The Ninth Circuit...

Justice Ginsburg: But we don't know what the jury told you could find on either basis?

Mr. Berger: I believe that it was, Your Honor.

Justice Ginsburg: Do we know which one the jury did find on?

Mr. Berger: We got a general verdict from the jury.

Justice Ginsburg: So that's... even before you get to the which part of the takings analysis was it, we don't even know whether the jury ever got to a taking question.

Mr. Berger: I believe that they examined each of those things independently.

They were instructed...

Justice Ginsburg: But we can't tell.

If it's a general verdict they could have gone on equal protection or taking.

If they went on taking, then these two parts they could have gone on, either-or there.

But if... I don't understand... unless we agree that this verdict was independently sustainable as an equal protection claim or a takings claim, then I don't understand how we can do anything with it.

Justice Scalia: There's been no claim of inadequacy of the equal protection ground, has there been?

Mr. Berger: The...

Justice Scalia: I didn't realize that question was here.

Mr. Berger: It was... it has not been briefed in this Court.

It was the Ninth Circuit expressly did not deal with the equal protection issue.

Justice Scalia: Then it's not one of the questions presented in the petition, certainly.

Mr. Berger: That's certainly true, as the... I believe in the... either in the petition or in the petitioner's...

Justice Scalia: I mean, it may be true, but I didn't know we were going to have to grapple with it.

Justice Ginsburg: Well, my only point is, we don't... we are making an assumption that the jury went on the takings claim when there's no basis for that.

I mean, how much can we make up?

Chief Justice Rehnquist: Well, the petitioner framed the question he chose to put it in terms of regulatory takings and not to challenge the equal protection.

Mr. Berger: Your Honor, I believe that the verdict form did distinguish between the equal protection and the takings, and that the jury found that there was a violation...

Justice Ginsburg: Then I could understand this case, but if it was just a general verdict, so we don't know...

Mr. Berger: It was general within the takings realm, so that we have these unanswered questions of which prong of the Agins formulation the jury may or may not have ruled on, and how they determined what the amount of compensation was.

Justice Ginsburg: As long as they found both, the jury found both, then I have no problem with it.

Mr. Berger: The jury found both, Your Honor.

Justice Stevens: Well, it found both equal protection and takings.

Yes.

But within the takings...

Mr. Berger: That's right.

Justice Stevens: This is the concern I have.

I hope you'll address it a little.

The first prong within the taking is not substantially advance legitimate State interest and I gather, given the judge's finding that there was no substantive due process violation, it was nonarbitrary, we're saying that something can be nonarbitrary that does not substantially advance legitimate State interests.

Mr. Berger: Yes, Your Honor, that's the way it looks here.

Justice Stevens: And I frankly had not... I was here during... I had thought that that former prong meant totally irrational, but I guess it's... I guess there's some intermediate area between being nonarbitrary and not substantially advancing.

Mr. Berger: Well, it seems to me, Justice Stevens, that this case may be an excellent example of that kind of a determination, as I think that the court of appeals properly analyzed.

What we had here was a jury examining whether it was a reasonable way to achieve the city's environmental goals to completely frustrate the development of this property, and the jury decided that that was such an extreme misconnection between ends and means that it failed to substantially advance legitimate State interests.

Justice Stevens: Even though it was not arbitrary.

Mr. Berger: Even though you could say that there was a reason...

Justice Stevens: Yes.

Mr. Berger: why they did it.

Justice Kennedy: Of course, I suppose we could sustain your verdict by saying the judge was wrong and the jury was right.

Mr. Berger: If the Court wanted to do that we'd certainly...

Justice Breyer: But you...

Justice Scalia: Even if the two standards are the same.

Justice Breyer: Is it in that...

Justice Stevens: But I don't think we could say that, because you did not appeal from the judge's holding.

I think we have to accept... assume that for purposes of this case the judge was right.

Mr. Berger: That's correct.

Justice Stevens: Maybe he wasn't, but it seems to me that's the way it comes to us.

Mr. Berger: Justice Stevens, you're correct that we did not appeal from the due process holding.

As it turns out in hindsight, if we had appealed the Ninth Circuit's intervening decision in Armendariz would have resulted in a conclusion that we had no due process claim in any event, but that's...

Justice Kennedy: On the jury trial issue there's been some mention in the brief that the judge would have discretion to submit this to the jury anyway, and so maybe that issue isn't before us, either.

But assuming the question is before us whether or not there is a right to jury trial, what is the best case you have for the proposition that there is, that there is a right to jury trial on this issue under 1983?

Mr. Berger: The... well, there are no cases from this Court, I believe, that has directly dealt with a... the right to a jury trial in a 1983 case.

Chief Justice Rehnquist: Ah... excuse me.

Go ahead.

Mr. Berger: There are two cases that this Court has decided.

Justice Kennedy: Chauffeurs and Terry and Tull, are those the two you have?

Mr. Berger: Chauffeurs is a good discussion of the jury trial analysis.

The cases that I was thinking of were Jett v. Dallas Independent School District and Hetzel v. Prince William County, both of them 1983 cases.

In Jett this Court determined that after the district court decided a question of law as to who the appropriate decisionmaker was in a municipality then the remainder of the determination of liability, whether that decisionmaker's actions resulted in section 1983 liability would be decided by the jury.

In the Hetzel case, decided I think this last term, this Court reversed a determination by the Seventh Circuit when the Seventh Circuit attempted to reduce a jury verdict and this Court said you can't do that.

They had a right to have a jury determine this issue, and the court of appeals cannot arbitrarily...

Justice O'Connor: Well, I would have thought we'd look to the Seventh Amendment in a Federal court case to decide whether a jury should decide a particular issue or case, and not to section 1983.

I mean, there's no indication, is there, that the drafters of section 1983 were trying to tinker with what the Seventh Amendment required and say every case could go to a jury at plaintiff's option?

Mr. Berger: Well, they certainly wouldn't have had any inclination to tinker with the Seventh Amendment, Justice O'Connor, if that's your...

Justice O'Connor: No.

I mean, it just... I don't know, I thought your argument on that was very strange, and that we should look to the Seventh Amendment for what goes to a jury.

Mr. Berger: Your Honor, I'm sorry that it struck the Court as strange, but I was doing that because of this Court's earlier decisions, which said that the first thing to examine in determining whether there's a jury trial right is the statute, and only after having exhausted the statute do we turn to the Seventh Amendment itself.

That's why in our brief we analyzed it both ways as did, I believe, the court of appeals here, and concluded that the drafters of section 1983, when they said that a plaintiff at his or her option could file an action at law or a suit in equity or some other appropriate proceeding, was giving the plaintiff the right to choose...

Justice O'Connor: Oh, but I would think you'd...

Mr. Berger: the kind of action he wanted.

Justice O'Connor: Yes, but you'd have to look at this temporary takings claim and try to analogize it to something to figure out whether there's a right to a jury trial or not.

I don't think you'd derive that from the face of 1983.

Mr. Berger: Not from the face of 1983.

Justice O'Connor: No.

Chief Justice Rehnquist: In the Jett case that you referred to and the other... did the court look at it, the jury trial right, as a statutory thing, or did they analyze it in terms of the Seventh Amendment?

Mr. Berger: The Hetzel case was clearly a Seventh Amendment analysis.

The Jett case I believe was a 1983 analysis.

Chief Justice Rehnquist: The... 1983 required a jury trial.

Mr. Berger: I can't push it that far, Your Honor.

The court didn't directly deal with the question of whether the statute required a jury trial.

What the Court dealt with was how to divide the issues in the case to determine whether a judge decided the issues or a jury decided the issues, and what the Court decided was that the jury would decide liability once the judge had determined as a matter of law which municipal official was the actual decision-making body.

Justice Breyer: Is it the case at the trial that when the second half, that the city's decision to reject the plaintiff's unit did not substantially advance a legitimate public purpose... that was the second half of the basic instruction.

Did your opponents say, judge, we don't want to submit that to the jury?

Mr. Berger: Your Honor, all of the jury instructions were drafted by the city.

Justice Breyer: Well then...

Mr. Berger: Everything the city wanted they got.

Justice Breyer: How are they saying now that the error is that it was submitted to the jury, if they didn't object?

Justice Ginsburg: Didn't they object to a jury trial in the beginning?

Mr. Berger: They did object to the trial, yes.

Justice Breyer: To the whole thing?

Mr. Berger: Yes.

Justice Breyer: To the whole thing, okay.

Mr. Berger: That's correct.

Justice Breyer: Now, was there an element in this case, when you get back to the details of the case, which had to do not with whether or not as a matter of law the city's decision was reasonable or not, but as to what factually happened?

That is, was there bad faith?

Was an official saying, I don't... I want to protect the butterfly, or was saying I don't want to protect the butterfly, but reality, that was his motive, or... was there a factual element to this, or was it simply a matter of the lawfulness of a city's, or the reasonableness of a set of facts that were not in dispute?

Mr. Berger: Justice Breyer, let me try answering it this way, because bad faith per se was not an issue that was raised directly in the trial.

What the jury got was the entire history of this case from the time that the first application was filed in 1981, the entire 5-year history of administrative proceedings from 1981 through 1986, all of the trips that were made to the planning commission, all of the revisions that were requested, all of the revisions that were made, and they heard the biologist who was processing the reclamation plan on behalf of the developer testify about what he did, how he worked with the city staff, with the coastal commission staff, how they accepted and incorporated all of the suggestions that were made by any of the expert agencies, unless they, for example, conflicted with one of the other city's requirements.

I remember one place in the...

Justice Ginsburg: Mr. Yuhas... may I just interrupt to clarify what Mr. Yuhas said, and if this is wrong please tell me, that the motive, bad faith and motive were not made issues in this case?

Mr. Berger: That is correct, Justice Ginsburg.

Motive was not an issue that was submitted to the jury.

Justice Ginsburg: And what was submitted to the jury was either-or, and can you explain to me now why it doesn't make any difference that we don't know whether it was the substantially justified or the no economic value that the jury in fact determined?

Mr. Berger: Well, I believe, Justice Ginsburg, it doesn't make any difference, because, as the court of appeals explained, the evidence amply supports both prongs of that Agins test, and therefore whichever way the jury went, and they may well have gone both ways, it's supported by the evidence in the record.

Justice O'Connor: Mr. Berger...

Well, how is it amply supported if the Ninth Circuit says that there's no arbitrariness within the meaning of the Due Process Clause?

That's where we get tangled up.

Mr. Berger: I think, Justice O'Connor, it has to do with the level of examination that goes on in a due process case as opposed to a takings case.

Justice Souter: What if we assumed...

Justice O'Connor: How is it different in your view, the inquiry of the substantial relationship to a legitimate city purpose?

How does that really differ from the essential due process inquiry?

Mr. Berger: I believe that the essential due process inquiry simply looks on its face at what the city said it was doing, and if the city said we are basing this determination on our conclusion that we need to protect this habitat for a butterfly that nobody's ever seen there, then that is sufficient to get the city past the extremely low threshold of review that happens in a due process case.

I think when the matter gets submitted to a determination of whether there's a substantial advancement of legitimate State interest, the jury in this case or a judge if it didn't go to a jury would be entitled to look at what the city is trying to accomplish... that is, to set up a butterfly preserve... and look at the means that it adopted to get there, essentially total frustration of the use of this 36-1/2 acre parcel of property, and say, is this an appropriate way to achieve that end as a matter of fact, and I think that that's a different level of examination than you'd get when you just look at, what is the city's rationalization for what it was doing.

Justice Souter: But if we read Agins the way Justice Stevens said he remembered, or he thought was intended, then we really would have a conflict, wouldn't we, because Justice Stevens... I hope I don't misstate him, but he said that he thought of the Agins test, or had at one point thought of the Agins test as being essentially an absolute irrationality kind of test, and if that's the case, then we really would have a conflict between what the court found and what the jury was... would have apparently found here.

Mr. Berger: It would appear that way, Justice Souter, although I have to say that the trial judge at the time that he made that ruling expressly said that he didn't find it to be in conflict.

Justice Stevens: No, certainly one can draw... I mean, the language is different, and maybe I just... you know, I didn't understand what was going on at the time.

Unidentified Justice: [Laughter]

Justice Stevens: But the other question, I'd like to have you comment just to be sure I don't... you have a full opportunity.

Your opponent has said it's perfectly clear that they could not have relied on the denying economically viable use of the land because he sold it for several million dollars.

What is your response to that?

Mr. Berger: My response is that this is a temporary taking case, and that there was a period of time that the jury found that this property had no use and no particular value to a private property owner.

The fact that they actually sold the property at some later date...

Justice Stevens: But wouldn't that always be true in any case in which time is required to make a zoning decision?

There's always going to be a period where you can't start construction while they make up their mind and there's a total denial... is that the same?

Is there a difference between that and what happened here?

Mr. Berger: Sure.

The difference, and I agree with you, Justice Stevens, because that's what the Court said in First English, that there is this period of delay during normal planning, although I think that the developer here in 5 years went sort of overboard in the normal planning process trying to find something that would satisfy the city.

But what we have here, as the trial court instructed the jury, that they should focus their attention in awarding damages for a temporary taking from the time in 1986 when the permit was finally denied, the fifth permit application was denied, until sometime between then and the date of trial, so that it wasn't that normal period of planning and waiting and trying to get permits that was compensated in this case.

The developer was essentially told, that's your problem.

You're going to... you went through all that process.

You'll have to take the heat for that one.

But from the time the city denied the permit in 1986, from there forward the jury was instructed to determine what the period of delay was in allowing these people to make some productive use of either their property or its monetary equivalent, and to find a monetary equivalent and award it.

Justice Souter: Mr. Berger...

Mr. Berger: That's what they did.

Justice Scalia: Could I ask about the... coming back to the jury question, the objection to the jury request, did that go to use of the jury for any of the issues in the case?

Mr. Berger: I believe it did, Your Honor.

Justice Scalia: Including the equal protection?

Mr. Berger: I believe so, although, like Your Honor, I...

Justice Scalia: Well, if that were the case the objection wouldn't be sufficient if a jury would be appropriate for the equal protection claim, even though it was not appropriate for the taking claim, I suppose.

Mr. Berger: If it was not appropriate across the board...

Justice Scalia: Yes.

Mr. Berger: it certainly would not have been.

Justice Scalia: Yes.

Justice Ginsburg: But you don't remember... as I remember, the position was, this action is not triable to a jury.

This action, equal protection, due process taking, goes to a judge.

I think that was...

Mr. Berger: I believe it was across the board that the objection was raised.

Justice Ginsburg: That was my recollection.

Mr. Berger: The Fifth Amendment is a critically important part of the Constitution.

It was applied in this case.

It was enforced in this case.

As this Court said very recently in the Dolan case the Fifth Amendment is not to be considered as some sort of poor relation in the Bill of Rights.

It is just as important as the First Amendment or the Fourth Amendment.

The reason that it's important is that people like this developer need to know that when they are dealing with their regulating local government agencies that their rights are protected, that they can't be simply strung along and abused at the city's whim.

I think, looking at the record in this case as the court of appeals laid it out, what you have here is a pattern of abuse, if you will, and I think the jury was entitled to look at that pattern that existed from 1981 when the first application for use of this land was made.

The judiciary in general and this Court in particular remains the only hope of these kind of people.

Chief Justice Rehnquist: Thank you.

Thank you, Mr. Berger.

The case is submitted.