HORNE v. DEPARTMENT OF AGRICULTURE
The Agricultural Marketing Agreement Act of 1937 (AMAA) was enacted to protect farmers from radical fluctuations in the market. The AMAA allows the Secretary of Agriculture to impose production quotas or supply limitations on products as needed. Refusal to comply with these orders can result in civil and criminal penalties. The orders only applied to “handlers,” those who process and package the products for distribution. The Raisin Marketing Order of 1949 created reserve-tonnage, a percentage of raisins that must be turned over the government each year.
Marvin and Laura Horne were raisin producers living in California who implemented a system to bring their raisins to market without handlers to avoid the AMAA. The Administrator of the Agricultural Marketing Service initiated an enforcement action against the Hornes for failure to comply with the orders. The Administrative Law Judge held that the Hornes should be subject to the Order under the auspices of the AMAA. The Judicial Officer affirmed the decision and held the Hornes liable. The Hornes filed for judicial review in district court, and the court granted summary judgment for the Department of Agriculture.
The United States Court of Appeals for the Ninth Circuit affirmed and held that it did not have jurisdiction to rule on the Hornes’ claim that the Order violated their Fifth Amendment rights under the Takings Clause. The Court held that the Hornes must bring that claim before the Court of Federal Claims, as required by the Tucker Act.
Can the Takings Clause be used as a defense in actions regarding a government-mandated transfer of funds?
If so, does the Unites States Court of Appeals for the Ninth Circuit have jurisdiction over the case?
ORAL ARGUMENT OF MICHAEL W. McCONNELL ON BEHALF OF THE PETITIONERS
Chief Justice John G. Roberts: We'll hear argument first this morning in Case 12-123, Horne v. Department of Agriculture.
Michael W Mcconnell: Mr. Chief Justice, and may it please the Court:
There's a surprising number of difficult merits questions lurking in this case, mostly involving whether there was a taking, and if so, how it should be conceptualized and valued.
Justice Sonia Sotomayor: Could I -- could I just stop you on a factual matter--
Michael W Mcconnell: Certainly.
Justice Sonia Sotomayor: --because it has confused me.
As I look at the captions of the cases, there appear to be two different partnerships: One partnership known as Raisin -- doing business as Raisin Valley Farms -- has Mr. Horne and his wife as the partners.
Lassen Valley, the producer -- not the producer, the handler -- has four other: The Hornes plus two other people.
So who owns the raisins?
Isn't that the first partnership of the husband and wife?
And isn't the handler a second partnership that does the business of handling?
Michael W Mcconnell: The other two partners in Lassen were Laura Horne's parents, now deceased.
Justice Sonia Sotomayor: But the estates have been substituted.
Michael W Mcconnell: That's right.
Justice Sonia Sotomayor: So isn't it two legal entities, one who owns and one who handles?
One partnership produces, one partnership handles?
Michael W Mcconnell: The Department of Agriculture did not distinguish among them.
Justice Sonia Sotomayor: Well, I don't care if they did or they didn't.
I mean, we should know.
Are they two separate legal entities?
One who produces--
Michael W Mcconnell: They are separate -- they are separate legal entities, all effectively controlled by the same family.
Justice Sonia Sotomayor: --Well, that's -- you know, in the cat -- you get some limited liability by creating separate entities, so the creature who owns is one partnership, and the -- and the entity that produces, that handles, is a second one.
Justice Antonin Scalia: I assume this is one of those difficult merits questions you were alluding to, it doesn't go to whether there's jurisdiction, but to whether the claim of a taking can be asserted by the partnership in question, isn't it?
Michael W Mcconnell: That's right, Justice Scalia.
Justice Antonin Scalia: I don't -- I don't see how it goes to jurisdiction, which is the only question before us.
Justice Sonia Sotomayor: Well, it does to my mind, because what is the claim, assuming that the producer owns -- the producer entity owns the raisins.
What exactly is being taken from the handlers?
Is it the percentage -- it can't be the raisins because they don't own them.
Michael W Mcconnell: Well, Justice Sotomayor, I'm -- I'm delighted to preview our -- our argument on the merits on that.
Justice Sonia Sotomayor: What -- what do they own?
Michael W Mcconnell: So the -- so the--
Justice Sonia Sotomayor: What is it that's being taken from the handler entity?
Michael W Mcconnell: --The order in this case was issued against the -- the Hornes in their capacity as a handler only, so the entire fine was paid by them.
None of the fine is attributable to anyone in their capacity as a producer.
Justice Sonia Sotomayor: All right.
So go back.
What is the -- what was taken from them -- you're saying it's just the fine, that the fine is a taking or -- what was the interest that they're claiming was taken by the government?
They didn't own the raisins, so they get paid a fee for handling.
Michael W Mcconnell: So -- so this is -- this is our position, Justice Sotomayor.
I think we have to look at what is it that the Department of Agriculture attempted to take.
So, in the demand letter from the Department of Agriculture addressed to the Hornes, they asked the Hornes to deliver California raisins, or the dollar equivalent.
So that's the fact upon which all of this case is -- is built.
Now, what is the legal significance of that, California raisins or the dollar equivalent?
It is our legal position, or it will be our legal position on the merits that when the government seeks a specific physical property, a res, or its monetary equivalent, that that is a taking of the res itself.
And there's -- and there's support for that in the -- for precedent from this Court.
The closest case is Village of Norwood v. Baker.
In this case, the -- the city condemned a strip of land for the purpose of building a road.
They tried to get out of paying any compensation by claiming that the abutting landowner would gain value.
That was rejected.
They were assessed $2,000 compensation for the taking.
And then the city turned around and issued a special assessment against the landowner for precisely that $2,000.
The landowner came back up to this Court, and this Court held that it was a taking -- a taking of the land.
And in a subsequent case just a couple of years later, the Court described this as a, quote
"actual confiscation of private property to public use. "
Justice Anthony Kennedy: But you -- you began by saying that these are merits defenses, but you wanted to focus first on -- on the jurisdictional question that's before us.
Michael W Mcconnell: That's right.
I hope it helps to inform the jurisdictional question.
But the jurisdictional question is this: The Ninth Circuit held that my clients could not even raise their takings claim on the merits until they had first gone to the Court of Claims.
I think there are three things wrong with that.
Justice Ruth Bader Ginsburg: Am I right in thinking that there is no dispute on that point, that the -- the takings claim could have been asserted by the Hornes as producers in the Court of Federal Claims?
Michael W Mcconnell: I think that the Government no longer disputes, although you should ask them to be clear -- I think that they no longer dispute that this is not a jurisdictional client, even though they prevailed after the petition for rehearing was filed in the Court of Appeals--
Justice Ruth Bader Ginsburg: Well, jurisdictional--
Michael W Mcconnell: --on the ground that it was jurisdictional.
Justice Ruth Bader Ginsburg: --jurisdictional or not, as a practical matter, producers who are not subject to fine as handlers, but the producers of the raisins whose raisins are being segregated, could they go to the Court of Federal Claims and say my raisins have been taken?
Michael W Mcconnell: The -- whether the claim is being brought in the capacity of producer or handler I think is not relevant to one of our arguments, and it is relevant to the other argument.
Justice Ruth Bader Ginsburg: But I'd just like a straight answer to that question.
You -- you are representing producers, and they just produce--
Michael W Mcconnell: No, no.
No, we're representing people who are both producers and handlers.
Justice Ruth Bader Ginsburg: --I'm saying hypothetically -- hypothetically.
Is the Court of Federal Claims the proper forum for a producer?
Michael W Mcconnell: It depends upon whether the taking has been from them or not.
In the ordinary case, the ordinary relationship between a producer and a handler, the producer is not paid for the reserve raisins and therefore any payment that would come, any lawsuit on behalf of those raisins would go to the producer, and that would go I think to the Court of Claims.
In this case, though, the business model is quite different from that and the producers in this case were paid everything.
They received full market value for their raisins.
The only people who are out any money in this case are the Hornes in their capacity as handler.
So that's why they are the only ones--
Justice Sonia Sotomayor: But the problem is that they weren't entitled to that money, meaning they had to pay it over to the producer.
The producer was going to pay them a handling fee, but that money didn't belong to them.
It belonged to the producers who supplied them with the raisins and expected payment for them--
Michael W Mcconnell: --I'm not sure what--
Justice Sonia Sotomayor: --if they were sold in the ordinary course.
Michael W Mcconnell: --I'm not sure which money you're -- they have not asserted any claim on any money.
The producers have been completely paid off.
It is the handlers who have been held responsible.
And the reason they were held responsible was the following logic, and you see this on -- on -- on page 78 of the judicial officer's opinion.
They were held responsible because in their -- in their processing capacity, when they were doing the stemming, the seeding, the fumigating, the packing, that this was regarded by the Department of Agriculture as possession, physical possession of the raisins and acquisition of the raisins, even though they never had title to the raisins.
It's the Department of Agriculture that has attached to them a possessory interest in the raisins and then assessed them the full monetary equivalent of those raisins, full market value, $484,000 for the market value because it's -- because under this very unusual regulatory scheme the Government regards them as having possessed the raisins even though that -- that is not--
Justice Elena Kagan: Mr. McConnell, I'm sorry.
Could I -- along the lines of what Justice Ginsburg was saying, suppose that the Hornes had given over all the raisins, right, but that they thought that this was improper, that this marketing order was -- it was a violation of the takings clause.
Could they have gone to the Court of Claims via the Tucker Act and said, we want our money back?
They gave -- they gave over the raisins, they say we're entitled to compensation.
Could they have gone through the Court of Claims?
Michael W Mcconnell: --If they had -- if they had not been paid for the raisins, they had taken raisins to a handler, received no money for them, I think that they could go to the Court of Claims.
Justice Elena Kagan: In other words, the Hornes did what the marketing order suggested they should do.
They gave over the raisins.
But they said this is just improper.
You're saying they could go to the Court of Claims?
Michael W Mcconnell: Yes.
Justice Elena Kagan: Okay.
So if -- if that's the case, I guess then the question is, why didn't they have to go that route?
Michael W Mcconnell: They didn't -- they didn't go that route, and the question I think is what are the -- what are the legal consequences of that--
Justice Elena Kagan: Right.
Michael W Mcconnell: --because what they -- what they knew was that they were not going to be compensated for the raisins, and therefore they came up with a -- with a plan, a business plan that they believed made -- eliminated any handler and made it unnecessary for any of the independent producers on whose behalf they're operating to turn over raisins to the Government.
The plan was ultimately rejected and we haven't brought a -- a cert petition on it, but the plan actually complies with the -- with the language of the -- of the regulation, because they believe that in their capacity as handler, as processor, that they never acquired the raisins.
“ Acquisition ” is the key term for becoming a handler under the rule.
And they believe that since they were simply providing a service for -- for $12 a ton to their neighbors, that they never acquired the raisins, they never possessed the raisins, and therefore no one had to comply the regulation.
Justice Antonin Scalia: Well, some of the raisins were their own.
Some of the raisins were their own.
Michael W Mcconnell: That's correct.
Justice Antonin Scalia: At least as to that, that wouldn't be true, right?
Michael W Mcconnell: That's -- that's correct.
I think that's correct.
Justice Anthony Kennedy: Well, to get you back to the -- the jurisdiction point, let's -- let's just assume a hypothetical case where a regulated entity has to pay an exaction which it deems to be a penalty.
And let's assume it can go to the Court of Claims, but it doesn't.
It waits until the penalty's assessed and then when the penalty's assessed it says, this is a taking.
That -- is that the case that you want to discuss with us today?
Michael W Mcconnell: That's right.
When the underlying order would be a taking and they have been assessed money because they didn't comply with the taking, we believe they can challenge that as a taking.
And both under the AMAA procedures, which are exclusive, I think that they have to go through the -- through the Department of Agriculture and then to the district court, but I also think under the principles of the -- announced by this Court in of the Apfel decision that they are entitled to a remedy in the district court.
Justice Ruth Bader Ginsburg: Mr. McConnell, would you explain the -- if they were just handlers and weren't producing any raisins, if they were just handlers, do they have a claim and where?
And if they were just producers -- I take it from the question I asked and the question Justice Kagan asked that if they were just producers, the raisins got set aside, they were paid for only the ones that went to market, they could go to the Court of Claims.
But now they're just handlers, as this entity is for most of the raisins that are involved, some 80 percent, right?
It's only about 20 percent is their own.
So, could this work for someone who was just a handler, doesn't produce any raisins?
Michael W Mcconnell: So if they are just a handler--
Justice Ruth Bader Ginsburg: Yes.
Michael W Mcconnell: --as the Department of Agriculture treated them, as far as the Department of Agriculture is concerned they are only a handler.
They are required to raise -- exhaust their claims before the Department of Agriculture and then challenge the order in the district court.
Justice Ruth Bader Ginsburg: What I'm -- I'm trying to understand is this scheme.
Apparently it wasn't enough just to be a handler or just to be a producer.
The claim that you're making turns on the coincidence of being both the producer and a handler.
Michael W Mcconnell: I don't think that that's so.
I think that we -- that the Hornes ought to prevail on either -- in either of their capacities.
Justice Ruth Bader Ginsburg: So any handler, any handler could be making the same claim?
Michael W Mcconnell: Any handler who has a business model that is similar to this.
But most handlers--
Justice Ruth Bader Ginsburg: But what do you mean by -- what's the business model that's similar to this?
Michael W Mcconnell: --So most handlers, if they're in compliance with the order, they take all the raisins from the producers, they only pay for -- for the free pool of raisins.
They don't pay for the reserve raisins and they never have any interest in the reserve raisins.
In this case, the Hornes did not operate that way.
The -- the producers received full value for all of their raisins.
So the producers are -- are not in the case.
They have no standing.
They have no pocketbook injury.
The -- the entire pocketbook injury in this case is borne by the Hornes in their capacity as a handler.
Justice Sonia Sotomayor: I'm sorry.
Michael W Mcconnell: In response to--
Justice Sonia Sotomayor: In the Horne model, the handlers buy, buy the free raisins and then pay the producers, is that what it--
Michael W Mcconnell: --That's correct.
Justice Sonia Sotomayor: --Oh.
So that's the difference in this model; they don't take title to the raisins is what you're saying?
Michael W Mcconnell: Exactly.
And the Hornes believed that this would mean that they were not handlers.
Justice Sonia Sotomayor: All right.
Let me -- let me--
Michael W Mcconnell: And that -- and they were found to be handlers anyway.
Justice Sonia Sotomayor: --What is -- what is the value in permitting a party who doesn't own property to raise a taking claim on behalf of other people?
Meaning, doesn't the system have an interest in ensuring that people comply with their legal obligations, and to the extent that you choose to violate the law the way they have here, that the fine is punitive and not compensatory.
Meaning you don't own the raisins, but you were obligated to put raisins aside for someone else.
You were their agent and you failed to meet a Government obligation that was independently on you.
Michael W Mcconnell: No.
Justice Sonia Sotomayor: So I go back to my question: What was the taking?
Since you didn't own the raisins, the taking is the fine is what you want to call the taking.
Michael W Mcconnell: The taking is what the Government demanded, which was either give me your house or give me your money, give me your raisins or give us the monetary equivalent.
Justice Sonia Sotomayor: But they're not your raisins.
Michael W Mcconnell: By the time -- by the time this order was enforced, the raisins were gone and so as a practical matter, only one of those two alternatives was left as a matter of timing.
Justice Samuel Alito: Well, but in answer to Justice Ginsburg's question that -- you said the producers could go to the -- the Court of Federal Claims to contest the taking of -- producers could go to contest the taking of raisins.
Michael W Mcconnell: If they had not been paid for the raisins.
Justice Samuel Alito: If they had not been paid for it.
Michael W Mcconnell: Right.
Justice Samuel Alito: But are you -- does that mean you do not think that the AMAA withdraws Tucker Act jurisdiction?
Michael W Mcconnell: It withdraws Tucker Act jurisdiction only for handlers.
So if we're talking about pure producers--
Justice Samuel Alito: Only for handlers.
Michael W Mcconnell: --pure producers do not go to the -- don't have to go through the AMAA process.
Justice Antonin Scalia: Why?
Why -- why does it withdraw for the one and not the other?
Michael W Mcconnell: These New Deal-era programs, Justice Scalia, are somewhat -- the purpose is somewhat obscure--
Justice Antonin Scalia: No, I don't mean the policy.
I don't mean the policy reason.
What in the law leads you to that conclusion?
Michael W Mcconnell: --Oh, well, this is straightforwardly set forth in the -- in the -- in Sections 14(a) and 15(a) of the AMAA.
I don't think that's in dispute.
So only producers are -- are regulated by this program.
Only producers have a right to go through their remedies in the Department of Agriculture.
Only producers have to do that.
It's -- it's a -- it's completely a producer--
Justice Ruth Bader Ginsburg: You said--
Michael W Mcconnell: --I'm sorry, I'm sorry.
Each of those was -- please substitute the word “ handler ” for each of those.
It's only the handlers that are regulated under this -- under this program.
So, and -- and my clients were treated as handlers.
They believed that they were not.
But it is the Department of Agriculture that has attached this -- this status to them.
And it's -- it's I think quite a Catch 22 for the Government to come along and say, although we are fining you $700,000 in your capacity as a handler, you're not a handler for purposes of challenging the legality of that order.
Justice Stephen G. Breyer: I'm just trying to get to what you're arguing about.
And I might be off base by now.
I feel like handlers, purchasers, raisins, like an old Abbott and Costello movie.
I just want to see if I'm right.
Just say you're wrong and I don't go into it further.
There -- there are some people, they've been -- they are either -- they have some raisins, all right.
And these particular people, whom the Department has said have acquired the raisins, it said they acquired the raisins.
And so they're there with some raisins, and then the Government says: Do this thing with your raisins.
And they don't want to do it, so they don't.
They don't do it even though the law says do it.
And then they say the law is unconstitutional and, moreover, you fined us a huge amount of money and we don't want to pay it because the law is unconstitutional, and we consider that money to be paid.
Call it a fine, call it what you want.
We consider we shouldn't have paid it and now we want it back and we want compensation and we think it's a taking and where do we go.
Can't we make that argument in the Ninth Circuit?
It's something like that; isn't that what we're arguing about?
Michael W Mcconnell: That's almost exactly right.
Justice Stephen G. Breyer: But not quite.
Michael W Mcconnell: With -- with one detail different--
Justice Stephen G. Breyer: Yes?
Michael W Mcconnell: --which is that this is the proceeding here that decides whether they have to pay.
They have not yet paid the fine.
Justice Stephen G. Breyer: Okay, okay.
So we shouldn't have to pay because this is all unconstitutional.
And -- and now what's your argument?
Michael W Mcconnell: So they're raising a defense.
It isn't that they are -- it isn't that they're getting -- trying to get it back.
Justice Stephen G. Breyer: And then the Ninth Circuit says go to the Court of Claims.
And you say no, we don't have to go to the Court of Claims.
Michael W Mcconnell: But that detail actually is quite important, because, remember, you can't even go to the Court of Claims unless you are seeking damages for an actual violation that has already taken place.
We could not go to the court -- the Hornes could not go to the Court of Claims right now.
What the Government says is that they should pay the $700,000 fine first and then go to the Court of Claims to get it back.
And that is exactly what this Court said in Apfel, is a, quote,
"pointless set of activities that Congress could not possibly have-- "
Justice Elena Kagan: That's true--
Michael W Mcconnell: --“ have contemplated ”.
Justice Elena Kagan: --I think that's true, Mr. McConnell, as to part of the fine, that part of the fine falls under Apfel, but not the other part.
As to the compensation part, it seems to me you have a pretty decent Apfel argument.
But as to the penalty part, I don't really understand how the Apfel argument would go.
It seems to me that as to the penalty part, the key thing is that if they had handed over the raisins, they could have gone to the Court of Federal Claims and had the compensation done there.
And the fact that the Government is penalizing them for not complying with the marketing order does not fall within the rationale of Apfel.
Michael W Mcconnell: Well, the most pertinent case for that part of the fine, for the penalty part, is Missouri Pacific Railroad v. Nebraska.
So this is the case where the railroad was told by the State to do some -- some expensive work, the railroad says no, that would be a taking if we were required to do that.
There is no compensation available and so they don't do it.
They're fined $500.
That gets up to this Court and an opinion by Mr. -- Justice Holmes, the Court holds that that is a taking and that the railroad is entitled to challenge the taking in the form of the fine.
So for -- for the penalty portion, the punishment portion of the fine, Missouri Pacific Railroad is actually the more pertinent decision.
Which comes back -- I don't think I fully answered all the variants of Justice Sotomayor's question.
Justice Stephen G. Breyer: All I was trying to do was to get you on the basic argument, which you started with, which is why is there -- why was the Ninth Circuit wrong when they said they had no jurisdiction to hear this, that rather, they had to go -- you had to go to the--
Michael W Mcconnell: May I tick off the three reasons?
Justice Stephen G. Breyer: --Yes.
Michael W Mcconnell: One is it has nothing to do with jurisdiction.
Second, the Tucker Act does not apply to cases where -- where there is a defense being lodged to a monetary exaction.
That's Apfel as supplemented by Missouri Pacific Railroad.
And third, even if that were not so, the AMAA displaces the Tucker Act and they were required to exhaust their remedies before the Department of Agriculture and take their case to the district court in which they are residing.
Justice Antonin Scalia: What was the first?
I forgot the first already.
What was the first?
Michael W Mcconnell: The first is that it isn't jurisdictional and therefore it should not have been raised--
Justice Antonin Scalia: What -- what isn't jurisdictional?
Michael W Mcconnell: --The -- the requirement to go to the Court of Claims when you -- when you need to is not jurisdictional, that that's a matter of remedy, that is, it's -- it's the equitable principle that you may not pursue your case for an injunctive relief when there's an adequate remedy at law.
Justice Sonia Sotomayor: Mr. McConnell, in -- in -- if the producers had decided to challenge this as a Tucker Act violation, they would have had to hand over the raisins?
Or could they have just held on to the raisins and said, I'm not handing it over until I get just compensation?
Michael W Mcconnell: So had they held on to their own raisins and sold them, I assume, you don't -- not just left them rot, if they had sold them, then the Department of Agriculture would have called them a handler, because anyone who sells raisins is called a handler, and then they would be fined in their capacity as a handler and it would be a somewhat similar case to this one.
Justice Sonia Sotomayor: All right.
Michael W Mcconnell: Maybe an easier one than this one.
Justice Sonia Sotomayor: Well, the point is that under a normal takings claim, you have to hand over your property, you've lost the value, and you want the Government to pay it back to you, correct?
Michael W Mcconnell: Not necessarily correct.
There are a whole string of cases in which property owners raise takings as a defense rather than turning over the property.
Kaiser Aetna is perhaps the most -- best known recent case, but out of an administrative context, there's the Florida Power & Light case.
Penn Central was -- was like this.
Loretto v. Teleprompter is like this.
There's a whole string of cases.
The Government themselves cite six such cases, most of them fairly old, for this proposition.
So there's nothing unusual about bringing a -- a defensive takings claim.
Mr. Chief Justice, unless--
Justice Ruth Bader Ginsburg: --Mr. McConnell, I don't want to encroach on your rebuttal time, but one mysterious thing.
The first time around, the Ninth Circuit decided this case on the merits.
So if you're right, I take it, we remand and then they adjudicate the merits of the takings claim.
But they already did that.
Michael W Mcconnell: --Yes, Justice Ginsburg.
And they did that on a ground that we think is manifestly inconsistent with this Court's precedents.
We were prepared to -- we were trying to get an en banc review and were prepared to come to this Court from the merits determination.
We were blocked from that because the Government, after the petition for rehearing was filed, came up with calling this a jurisdictional argument, raised this objection for the first time; and the Ninth Circuit panel accepted their view, issued a new opinion stripping out the entire merits and substituting this jurisdictional holding that is producing so much enjoyment for us this morning.
May I reserve the remaining time?
Chief Justice John G. Roberts: Thank you, Mr. McConnell.
ORAL ARGUMENT OF JOSEPH R. PALMORE ON BEHALF OF THE RESPONDENT
Joseph R. Palmore: Thank you, Mr. Chief Justice, and may it please the Court:
I'd like to start where Justice Sotomayor started with Petitioner's counsel, because any takings analysis needs to begin with a careful identification of what property was allegedly taken.
Petitioners in this case have actually advanced two different theories about what property of theirs was taken.
What taking is at issue here?
Raisins and money.
We think both takings claims fail for threshold reasons, but they're different threshold reasons that call for different analysis.
Justice Elena Kagan: Mr. Palmore, before you do that then, haven't you conceded the point that this is not jurisdictional?
Joseph R. Palmore: We agree that the failure to go to the Court of Claims is not properly viewed as a jurisdictional defect.
We did invoke Ninth Circuit precedent below stating that it was jurisdictional.
And some of this cases -- this Court's cases put it in ripeness terms, which is an Article III concept.
So there has been confusion--
Chief Justice John G. Roberts: When did you first raise the argument that it was jurisdictional?
Joseph R. Palmore: --In our opposition to the rehearing petition.
Chief Justice John G. Roberts: And now you are -- now you are changing back again and saying it's not?
Joseph R. Palmore: There was Ninth Circuit precedent holding that it was jurisdictional, and we relied on that and there is certainly language from this Court--
Chief Justice John G. Roberts: You relied on that when you got to rehearing.
You didn't rely on that before you went before the Ninth Circuit, right?
Joseph R. Palmore: --That's correct.
We think -- we think this is properly viewed as a substantive defect in the claim, so in a sense the Ninth Circuit in its initial panel decision ruled for the Government on a substantive defect one, there's no taking.
And what it did on rehearing in our view, although it attached the wrong label to it, it substantively was correct in concluding that there was substantive defect number two--
Justice Elena Kagan: But Mr. Palmore, if you are conceding now that this is not jurisdictional, it seems to me that your Tucker Act argument as a substantive argument, I mean, has been waived.
You didn't raise that argument until the rehearing petition.
Joseph R. Palmore: --That would certainly be something that -- that the Ninth Circuit could consider in the event there were a remand here.
But the Ninth Circuit did decide it.
The substance of its bottom line conclusion was correct and all of its analysis was correct.
It simply used the wrong words, so we think it is here.
Justice Antonin Scalia: I'm really confused.
You are saying there ought to be a remand here because the question is not jurisdictional, which is just what your friend says, right?
Joseph R. Palmore: Well, the Ninth Circuit--
Justice Antonin Scalia: So the two of you are in agreement it ought to go back to the Ninth Circuit, they should do it on the merits, and -- and if that's wrong, we can review that.
Joseph R. Palmore: --If that happens, of course, as Justice Ginsburg pointed out, the consequence for us is they reinstate the prior panel opinion, in which--
Justice Antonin Scalia: That may well be, but--
Joseph R. Palmore: --I'm not going to resist too strenuously that kind of remand, but they did decide it.
And moreover, they decided something separate, which is at JA-305 they said something different, which is the kind of threshold defect in the takings claim turning on raisins, which is there is a capacity problem.
So there are two problems with the raisin claims, a capacity problem and a just compensation problem.
The capacity problem is this: In 2002, after having been strictly raisin producers since 1969, entering into a market where there was a reserve requirement from the beginning, they knew what they were getting into, they decided to adopt a new business model, as Petitioner's counsel says.
But, as was found below, they adopted a business model that was an intentional, willful attempt to evade regulatory requirements in order to secure an unfair competitive advantage.
But what they did was they took on the obligations of a handler.
They became raisin handlers in 2002.
And what came with that status were a series of regulatory obligations that apply only to handlers and under the AMAA can apply only to handlers: The requirement to have raisins inspected, the requirement to file truthful reports, the requirement to make records available, and the requirement to separate out raisins into what's called free tonnage and reserve tonnage, any raisins processed, it doesn't matter who owns them.
Those are handler-specific regulatory obligations that were imposed upon them, and they violated every single one of them willfully and intentionally in order to secure an unfair competitive advantage.
And what the USDA did was impose penalties on them for the violation of law that attached to them only as raisin handlers.
And then they invoked the judicial review proceedings in Section 14 that provides a judicial review mechanism only for handlers.
Justice Antonin Scalia: --Yes, but part of that penalty was, you know, your raisins or your life, right?
I mean, it was--
--you don't have to pay the penalty if you give us the raisins.
Joseph R. Palmore: That's not correct, Justice Scalia.
They have to give the raisins.
Mr. McConnell referred to demand letters--
Justice Antonin Scalia: You mean they -- Is that right, they have to give the raisins?
Joseph R. Palmore: --They are under a regulatory obligation to provide the raisins.
If they violate that regulatory obligation, they are subject to sanctions.
Justice Antonin Scalia: Okay.
Joseph R. Palmore: One component--
Justice Antonin Scalia: --that amounts to the same thing, your raisins or the penalty, right?
Joseph R. Palmore: --No, but it's not a choice.
And I think that's very important to point out.
There were actually two different demand letters.
Mr. McConnell referred to a demand letter saying your raisins or your money.
There was an initial demand letter saying: You are a handler; you have to comply; we're going to come get the raisins.
The second demand letter said: We showed up -- literally it says: We showed up with our truck, you didn't provide the raisins, so now you have got to provide the cash equivalent.
And there were also going to be, as there were, separate regulatory proceedings brought against them for violating those -- those obligations.
Not just the failure to reserve, but all these handler-specific obligations.
They filed false reports.
They didn't make raisins available for inspection.
There were a whole host of regulatory violations that were at issue here, and when they invoked the handler review action in the district court they could assert defenses as a handler.
But, for instance, another producer -- producers can't invoke these judicial review schemes.
Another producer couldn't have intervened in that action to assert its producer claim.
Justice Samuel Alito: As this case stands as it comes before us, is there a claim that they -- that money -- the Government is trying to take money from them without just compensation?
Joseph R. Palmore: That was certainly not how we understood the claim to be litigated below.
That's not how the Ninth Circuit thought -- understood the claim.
We have been talking about the claim involving the raisins, which fails for a to capacity reason and a just compensation reason.
Justice Samuel Alito: Is that an issue we should decide or is that an issue that the Ninth Circuit should decide, whether there is a takings claim for money?
Joseph R. Palmore: That was certainly not decided below, so a remand -- to the extent that this was preserved, a remand would be possible outcome there.
We think, though, that that claim suffers from separate -- separate threshold defects.
Justice Samuel Alito: All right.
If we assume for the sake of argument that there is such a claim, why does that not fall within Apfel?
Joseph R. Palmore: Well, we think that -- for several reasons.
First of all, the Apfel opinion that's referred to is just a plurality.
It's not been adopted by the Court.
Second of all, the Apfel analysis relied on this one-for-one, dollar-for-dollar concept.
That was a critical part of the plurality's discussion there, and it thought that it would simply be a pointless exercise for Eastern Enterprises to be required to pay the premium and then to go to the Court of Federal Claims and get the exact same amount of money back.
Justice Samuel Alito: Don't they claim that--
Joseph R. Palmore: We suggested that there are a whole host of reasons--
Justice Samuel Alito: --Before you leave that, don't they claim that the entire amount that is assessed against them is a taking?
Now, maybe they are wrong.
That the entire amount assessed against them is a taking without just compensation?
Maybe they are wrong, but isn't that a merits question?
Joseph R. Palmore: --That's -- that's -- they are clearly wrong about that, and I -- but I think however you characterize that defect, it defeats this dollar-for-dollar pointless exercise point that Apfel--
Justice Elena Kagan: Well, why is that a necessary part of Apfel?
Why didn't Apfel just mean when we are dealing with cash you don't have to go to the Court of Claims?
So even if -- you know, you can have a discussion in the district court about whether it's not dollar-for-dollar and it should be discounted in some way.
But why should the fact that its dollar-for-dollar mean -- why is that a requirement, as opposed to just it's cash and so the question of, like, you know, handing some -- handing it all over and getting some back, that can be done in the district court rather than making somebody file a separate suit?
Joseph R. Palmore: --Well, I think there were two things going on in Apfel and there were really two distinct reasons why the plurality in Apfel thought that there was no requirement to go to the Tucker Act there.
One was that it thought that in a statute like that, that simply allocated benefits and burdens among private entities, Congress would not have intended there to be compensation available in the event that there were a taking.
And that was actually the Government's position in that case and the Apfel plurality cited to that portion of the Government's brief.
And it cited cases in its discussion that weren't dollar-for-dollar or even cash transfer cases in which the Court had gone to the merit of takings claims without consideration of a Tucker Act remedy.
Then there is the second idea, which is the cash transfer idea.
And we think that the dollar-for-dollar aspect of that was important to the plurality's analysis because it viewed that as evidence that Congress would not have intended the Tucker Act to be deployed, because it would have been a pointless exercise.
So it really went to what Congress's intent was.
Here, of course, for myriad reasons, that dollar-for-dollar analysis breaks down.
Justice Stephen G. Breyer: No, no, but there's a similar -- i mean, it seemed to me, again simplifying, that underlying this their clients think this whole raisin program is unconstitutional.
What it does is it takes raisins that we grow, in effect throws them in the river.
And in the thirties, that was done to raise raisin prices.
And they think as a matter of policy that just hurts people by raising prices, and as a matter of constitutional law it takes raisins from some people that belong to them and uses them for this bad purpose.
Okay, that's their view of it, something like that, isn't it?
Joseph R. Palmore: Yes.
Justice Stephen G. Breyer: Fine.
So they're making that kind of constitutional claim.
Now, I would think if all you told me was that and I knew nothing about all these statutes, I would say that's the kind of claim that should be made in a Federal district court, period, not the Court of Claims.
Because their government isn't going to compensate them for anything.
That's against the whole point of the program.
Either this program is valid or it isn't.
And if it isn't, some authoritative set of courts should tell us that.
So I have a feeling this is somehow not a right fit with the Court of Claims.
Now, you explain to me why that purely instinctive feeling at this point is completely wrong.
Joseph R. Palmore: Sure.
Justice Breyer, we've now shifted back to the -- the first theory about the property, which is the raisins.
What they could have done in 2002, would they have been a producer of raisins, solely a producer of raisins for decades, at any point during -- between 1969 and 2002, they could have gone to the Court of Claims and said, this reserve requirement, the taking of my raisins, I want my just compensation.
That is not just a remedy, as Mr. McConnell suggests, it is a constitutional condition on the taking of private property for public use.
As long as there's just compensation, there simply is no violation.
So that's why--
Justice Antonin Scalia: That couldn't be what the statute meant.
I think that's what Justice Breyer says.
Did -- did Congress create a statute in which we're going to take your raisins and then you can go to the Court of Claims and get your money back.
I mean, that -- that surely is not what Congress contemplated.
The -- the whole notion of the program is you can't get your money back in the Court of Claims.
Now, if you're raising a constitutional objection, that's something else.
That should be done in district court.
But to say that Congress contemplated, you know, we'll take your raisins and then you sue in the Court of Claims, they give you your money back.
That's a weird statute.
Joseph R. Palmore: --Justice Scalia, I have two -- two responses to that.
First of all, these claims have been litigated in the Court of Claims; the Evans case, the Cal-Almond case, both of which we cite in our brief.
Raisin producers, or in the Cal-Almond case it was an almond producer, went to the Court of Claims and said this reserve requirement is a taking, I want my money.
And they lost; the Court of Claims -- correctly, in our view -- held that there was no taking.
That said, we do agree that it is actually a close question whether Congress would have intended compensation to be provided in a situation like this one in the event the raisin reserve program were found to be a taking.
We've said -- we've said in our brief, we do view that as a close question, although on balance, we think that the proper answer is that there is a remedy -- or, sorry, there is just compensation available in the Court of Claims.
But there are cases, Justice--
Justice Antonin Scalia: And you -- you think that's a close question?
You think that the way the statute is supposed to operate, once it is held that this is an unconstitutional taking, is that every year, the government takes the raisins and every year, the grower goes to the Court of Claims and gets the money back for the raisins.
Is that the program that Congress anticipated?
Joseph R. Palmore: --Well, we do agree that it's a close question for the--
Justice Antonin Scalia: I don't think it's close at all.
That's a crazy statute.
Every year we're going to take raisins and every year we're going to pay you in the Court of Claims.
What's the purpose of that?
Joseph R. Palmore: --Well, of course, Congress didn't think this was a taking.
And it -- and it built considerable administrative flexibility into the statute, and at the end of the day, that's what convinces us that Congress would not have intended to preclude compensation in the Court of Claims and to -- to opt for an injunction instead, because the Secretary of Agriculture has wide latitude to adjust.
So the compensation wouldn't be paid year after year, as your hypothetical suggested.
The program could be adjusted.
A reserve requirement is only one way of complying with the kind of supply control provisions of the statute.
There are any number of options available.
But I'd also point out that in this Court's precedence in Monsanto and Regional Rail, those were both statutory schemes which had their own compensation mechanism, as does this one, this reserve raisins that producers do get paid sometimes for them in a smaller amount.
Those were cases in which the statutes did have compensation mechanisms, and this Court held that the Tucker Act was available as kind of a supplementary compensation in the event--
Justice Ruth Bader Ginsburg: Mr. Palmore, am I incorrect in thinking that the Government is saying, handlers cannot raise the constitutionality of the Raisin Marketing Order?
You've told us that the producers can go to the Court of Claims.
What about the handlers?
They're at least being fined for violating the Act, and it's their position that the whole thing is unconstitutional.
Can they raise the constitutionality of the whole arrangement defensively, or they simply can't raise the constitutionality of the Act?
Joseph R. Palmore: --Justice Ginsburg, I think this goes back again to the property question.
If the claim is that it's unconstitutional because it takes producers' property, they can't raise that in this proceeding.
If the property is the raisins, they can't raise that in this proceeding.
They need to -- to comply and go to the Court of Claims for compensation, which means there has been no -- in the event there's a taking, it's a constitutional taking because just compensation is provided.
Justice Ruth Bader Ginsburg: But it would be--
Joseph R. Palmore: If the claim -- if the claim is that the money that was taken from me, the fine, that itself is a taking, then we think that claim can and must be brought in the context of the AMAA proceeding.
That was not how the Court of Appeals understood the claim here to be, and there's no precedent for the idea that a fine for violation of law can be articulated as a taking of the lawbreaker's property without just compensation.
I haven't seen any case that -- that stands for that proposition and that would be quite remarkable.
Justice Anthony Kennedy: But then you just -- but then you just lose on the merits.
What the Ninth Circuit says, they can't even argue this.
Joseph R. Palmore: Well, Justice Kennedy--
Justice Anthony Kennedy: I thought that what we were going to decide was whether or not, assuming you can go to the Court of Claims, you must go to the Court of Claims, can you prefer to wait, have a penalty assessed against you and say this is unconstitutional, it's a taking.
Your position is you can't say that.
I don't understand why.
Other than, if you want to talk about Williamson and so forth, we can get into that.
Joseph R. Palmore: --But, Justice Kennedy, the -- the Ninth Circuit didn't understand the taking claim to be that the fine for my violation of law is a taking of my money.
That's not how the Ninth Circuit understood the claim, so they didn't analyze it in that way.
They understood the claim to be that the taking of producers' raisins is a taking, and we lawfully resisted it because it was an unconstitutional taking.
The Ninth Circuit correctly rejected that because there was nothing unconstitutional about it because it was not without just compensation.
The Tucker Act is the just compensation.
This Court has held--
Justice Stephen G. Breyer: The just compensation, I take it, in the program is supposed to come from the fact that raisin prices go up.
Whether the poor children with their noses pressed to the glass, because they can't pay the raisins, their parents are the ones who are paying the compensation.
And certainly not the taxpayer, he's not going to pay it, and maybe the other producers will pay some who get gypped or something, I don't know.
But I can't believe that Congress wanted the taxpayers to pay for a program that's going to mean they have to pay higher prices as consumers.
Joseph R. Palmore: --Justice Breyer, and that goes to the -- to the merits of the case.
Justice Stephen G. Breyer: No, no.
No, it doesn't go to the merits.
It goes to whether or not it makes sense to think that the Court of Claims has something to say about this.
And suppose we did this.
Suppose we said, given the fact that you filed your thing, whatever it was, you know, late, and the -- and the light of this very enlightening discussion which has been helpful, we think that this is the kind of program and challenge to the program where there isn't going to be a remedy really in the Court of Claims and they ought to go ahead in the Ninth Circuit, and in light of all these enlightening things that we'll write, you just decide the merits of -- is that -- now, I'm sure you're going to say that's absolutely terrible, it won't work at all.
So tell me why not.
Joseph R. Palmore: Well, Your Honor, of course, the consequence of that is they reinstate our prior victory in the prior panel opinion--
Justice Stephen G. Breyer: No, no, we'd say -- we'll say given the way that we've talked about the program, perhaps it's best to consider this matter fully.
Joseph R. Palmore: --Well, they did consider the matter fully.
In the initial opinion, they said there's no taking here.
Justice Stephen G. Breyer: Yes.
Joseph R. Palmore: So all of the discussion we're having here is about -- is predicated on the idea that if there were a taking, would compensation be available in the first place.
Justice Sonia Sotomayor: Excuse me.
Joseph R. Palmore: We agree there's no taking.
Justice Sonia Sotomayor: --All right.
It almost seems to me, and I'll ask Mr. McConnell when he gets up at rebuttal, that there is some sort of due process challenge going on here that's been created by the labels they did in this new situation -- in this new business venture.
In the normal situation, the handler, I'm being told, would actually have title to the raisins, and they would pay the producers for the raisins.
So there would be property taking.
In that situation, where the handlers actually own the property, would they be able to raise a taking defense?
Joseph R. Palmore: No, because of the way that the statute and the regulatory program works.
If the handler is actually buying raisins from the producer, the handler never takes title to the reserve raisins.
And he doesn't pay for the reserve raisins.
He takes title to the free-tonnage raisins and the title to the reserve raisins passes as a matter of law from the producer to the Raisin Administrative Committee.
The handler never owns those raisins.
Justice Sonia Sotomayor: So they are missing a business opportunity, because they can't take title to those raisins.
And yet you're asking--
Joseph R. Palmore: They would never pay for those -- they would never pay for those raisins because they can't take title.
They can't lawfully take title to those raisins.
Justice Sonia Sotomayor: --This really does sound to me -- and I think that both Justice Scalia and Breyer now are being more and more convinced -- there has to be a place to challenge this scheme.
Joseph R. Palmore: --And there absolutely is.
Justice Sonia Sotomayor: Whether it's a taking -- whether there's a takings claim f.
Or the handler, because the handler is being asked to do things--
Joseph R. Palmore: But the handler's property is not being taken, and that's critical.
There are separate takings claims that handlers have advanced that -- that could be asserted through this process.
For instance, there was a case called Lion Raisins from the Federal Circuit that we cite in our brief, in which the issue was that the handler provided bins to store the raisins, and he didn't get his bins back.
That was a handler takings claim, and that had to be asserted in the context of this handler review scheme.
But the handler doesn't own the raisins under this scheme.
Justice Antonin Scalia: That's -- that's a merits question again.
I mean, it's not a question of whether you -- you can resist on the basis of a takings claim.
It's a question of whether you are going to win.
Joseph R. Palmore: No, Justice Scalia, I think it goes to the scope, the capacity question that we were talking about before, because the statute is quite clear in section 608c(13)(B) that this scheme does not regulate producers in their capacity as producers.
And if someone wants to take on both roles, they will be regulated only as a handler.
So the regulatory obligations that applied to Petitioners when they adopted this business model were handler-only regulatory obligations, and then this is a handler judicial review proceeding.
That's a very narrow means of decision here that avoids some of these kind of conceptual questions about the nature of the Takings Clause, which is that this claim simply doesn't belong in this proceeding.
But there's no unfairness or no due process issue here at all, because they -- in 2002, when -- when Petitioners decided to engage in this, these regulatory violations in order to secure an unfair advantage over their competitors, as was found by the ALJ at JA41, at that point they could have sought compensation for the past 6 years of raisins that they had provided.
They didn't do it.
I don't understand why they didn't do it.
They left that claim on the table.
And to the extent they wanted to claim going forward, they could have continued to use compliant handlers and sued every month for compensation in the Court of Claims.
Justice Samuel Alito: Did I understand you to say a couple minutes ago that if the case were remanded, you would be entitled to win on the reasoning of the panel opinion?
Joseph R. Palmore: The prior panel opinion, Justice.
If -- if there was a remand on the basis that the Ninth Circuit misunderstood this as a jurisdictional Article III defect, and then the Ninth Circuit were to find waiver, what the Ninth Circuit presumably would do would be to reinstate its first panel decision, which we think was also correct and held that there was no taking here.
There are two--
Justice Elena Kagan: Mr. Palmore, what would be wrong -- would anything be wrong -- with a -- with a disposition of this Court that went something like this: Everybody agrees that this is not a jurisdictional issue, including the Government, so they got that wrong.
Now, as to this whole business about the Tucker Act and whether the Tucker Act provides a remedy, the Government only started talking about that in a petition for rehearing en banc, and the Government can't do that.
You know, it can't introduce an argument like this in a petition for rehearing en banc.
So that's waived.
And now, the Ninth Circuit can go and try to figure out whether this marketing order is a taking or it's just the world's most outdated law.
Joseph R. Palmore: --That would certainly be an available option, or the Ninth Circuit could decide for itself whether there had been a waiver.
But there's a separate issue in that there's this capacity issue, which is a separate point that the Ninth Circuit made at JA305, when it pointed out that this was a producer claim, and that's something that was strictly a producer claim and wasn't -- wasn't a fit for this handler review action, and that's something that could also be considered on remand.
But the consequence of this -- of that would be for the -- the Court to impose its -- if it found a waiver, to rule for us for separate merits reasons.
We do view the Tucker Act -- the failure to seek just compensation -- as a merits defect in the Petitioners' claim here.
So even putting this capacity problem aside, there is simply -- there's no defense.
Mr. McConnell says this can be raised as a defense.
But there is no defense if all you show is that there has been a taking of private property for public use, full stop.
Justice Stephen G. Breyer: What does the word “ acquire ” mean.
There is some opinion here which says these handlers acquired the raisins.
What is -- what's that about?
Joseph R. Palmore: “ Acquire ” is a defined term, and it includes to possess.
So they took to--
Justice Stephen G. Breyer: Like lessees or something, bailees?
Joseph R. Palmore: --There was no question under the regulatory scheme here that Petitioners were handlers.
And in fact, there's a surprising--
Justice Stephen G. Breyer: I -- no, no.
I just wanted to know what the word “ acquire ”--
Joseph R. Palmore: --“ Acquire ” -- “ acquire ” is defined to include a number of things, including to possess.
And a handler is anyone who sells raisins.
There was no mystery about this.
And in fact at pages 8 through 11 of our brief, we cite communication after communication where USDA--
Justice Stephen G. Breyer: --Now, can an acquirer of my car, for example -- I don't know.
Justice Antonin Scalia: A bailee?
Justice Stephen G. Breyer: Can they -- can they assert a takings claim attaches to the car?
It sounds like a standing question.
Justice Antonin Scalia: Yeah, I suppose a bailee could, a bailee of the car.
Joseph R. Palmore: --No, I don't think a bailee could.
I think the owner would have to assert that claim, right.
But “ acquire ” is a defined term, and as this case comes to this Court it's accepted.
The Petitioner has not sought cert on the underlying regulatory findings.
In fact, their arguments -- they were told ahead of time that they were completely wrong over and over and over again, and then they lost that claim at every level, twice within the Department of Agriculture, in the district court, in the court of appeals.
They lost on that regulatory claim.
This wasn't a good faith misunderstanding.
If you look at JA41, the ALJ found that this was a willful and intentional, knowing violation of regulatory requirements, because they were able to undercut their competitors by not playing by the rules.
So this doesn't present any kind of due process--
Justice Stephen G. Breyer: But still, it might if they're acquirers -- but they are acquirers, okay?
They think this program is unconstitutional because it takes some other people's property, all right?
So those other people are in a very special relation to them.
Those other people are really close.
And it may be they have standing to assert those other people's claims.
And if they do have standing to assert those other people's claims, why can't they make the argument that way?
Joseph R. Palmore: --I -- I disagree that they have standing to make those other people's claims.
And also, Petitioners haven't argued, haven't made any third-party standing argument here.
But -- this Court's requirements are quite strict for third-party standing.
You have to have a close -- a close relationship, and I don't think a mere arm's-length commercial relationship would count.
Justice Anthony Kennedy: Suppose they did have standing.
Could they raise the claim?
Joseph R. Palmore: If--
Justice Anthony Kennedy: You say no.
Joseph R. Palmore: --Well, they have -- they certainly have standing as producers to raise the claim.
Justice Anthony Kennedy: Let's assume they have standing.
Could they raise the claim--
Joseph R. Palmore: Yes, that--
JUSTICE KENNEDY -- that this is an unconstitutional taking?
In the Court of Claims, absolutely, as producers.
Justice Anthony Kennedy: --No, no.
In the administrative proceeding where they are charged with -- where a penalty is being assessed against them.
Joseph R. Palmore: I think that they would have standing, but it's still a claim that's beyond the scope of this narrow specific judicial review proceeding.
I think it's a different problem.
Chief Justice John G. Roberts: I have to say -- I think it comes with less than good grace for you to criticize the other side for not having raised a particular argument.
But I do want to clarify that you have no objection at this point for reversing the Ninth Circuit on the ground that they erred in saying that this -- they should have dismissed on jurisdictional grounds.
Joseph R. Palmore: Well, I'm not going to resist that too strenuously, -- but I think if they did decide the question, they decided it correctly.
It was a threshold defect.
Their analysis was all correct.
So I think that's before the Court.
But yes, we -- we frankly acknowledge and we acknowledged in our brief that we did not -- we did suggest below that this was a jurisdictional defect.
Ninth Circuit authority said that it was and we relied on that.
We now believe that it's best understood not as a jurisdictional defect, but as a substantive defect in the claims, not simply a choice of remedies issue, as Petitioners suggests, because choice of remedy suggests that there has been a constitutional wrong and that we need to decide what remedy is going to be available, an injunction or damages.
Justice Sonia Sotomayor: --The short answer is, yes, reach the merits only if I win.
That -- that's really what you want us to do.
Joseph R. Palmore: Well, we -- we think you could reach some of the merits.
We think that the narrow disposition here is the capacity--
Justice Sonia Sotomayor: No, no, no.
I need to ask you this question, because do you want us to reach the merits if we're going to have you lose?
You got to want one or the other.
Do you want us to reach the merits, period, is really the question.
Joseph R. Palmore: --Yes.
Our position is that we're not acquiescing in a -- in a remand.
We think you can affirm, and you should affirm.
However, I do recognize--
Justice Sonia Sotomayor: Do you think we should reach the merits, which is a very different question?
Joseph R. Palmore: --Well, it depends on what you mean by “ merits ”.
Justice Sonia Sotomayor: Only if you win, right?
Joseph R. Palmore: There is the taking -- no.
There is the underlying kind of takings claim, that there was -- was there a taking here at all.
And that's not before the Court.
I don't think anyone suggests that that's before the Court.
But we do -- we do think that there are a series of other threshold defects in the claim that this Court could -- could rely on.
Chief Justice John G. Roberts: Thank you, Mr. Palmore.
Mr. McConnell, you have 3 minutes remaining.
ORAL ARGUMENT OF MICHAEL W. McCONNELL ON BEHALF OF THE PETITIONERS
Michael W Mcconnell: I'd like to make two quick points.
One is that I believe that the Government has essentially conceded here in this argument and in their brief that the Tucker Act does not apply.
They have told us that the Tucker Act does not apply on page 50 and repeated here when Congress could not have contemplated a compensation.
Now, in addition -- and their only answer to that is to say, first, that Congress didn't think it would be a taking, which in Regional Rail, this Court said is not the question.
And secondly, that if -- if there's one -- we should get paid once, compensation once and then the administrator's going to cancel the program, which is no answer at all.
Either the statute contemplates compensation for everybody or it contemplates it for nobody.
I think they have effectively conceded that the Tucker Act does not apply.
Justice Sonia Sotomayor: Well, they've conceded that it doesn't apply to handlers.
Michael W Mcconnell: To handlers.
Justice Sonia Sotomayor: Yes, and so they've conceded there is no--
Michael W Mcconnell: --And the second issue I wanted to talk about so is this capacity issue.
Certainly, we have standing.
When -- it's not third-party standing.
All of the money comes out of our pocket, yes, we have standing.
And secondly, we certainly -- and then that is in our capacity as handler.
Essentially, the Department of Agriculture's view is that during those couple of days when the raisins are going through our packing plant, that we acquired them and possessed them during those couple of days and that we should have given them their -- their share.
That's raisins, that's not money.
But by the time they get around to enforcing that and so forth, the raisins are gone and now the money stands in -- stands in for the raisins.
But that is a taking claim.
We think it's a -- it's a straightforward taking claim under -- under Norwood and Missouri Pacific Railroad, that's a merits question.
But in any event, it is not a problem of capacity.
Whatever might be, that taking, that taking is in the capacity as a handler.
Those are my two points.
Chief Justice John G. Roberts: Thank you, counsel.
The case is submitted.