In a recent case decided by the United States Supreme Court (Horne v. Department of Agriculture), The Court agreed to hear the matter of plaintiffs and raisin farmers Marvin and Laura Horne who refused to meet the crop reserve requirement established by The Agricultural Marketing Act of 1937 (the “Marketing Act”). The California couple refused to relinquish their raisins to the government “pool” of crop reserves because they claimed to be losing money under the strictures of the Marketing Act.. For instance, for the years 2003-2004 the Act required farmers to “save” (or relinquish to the Department of Agriculture) 30% of their raisin crop yield for crop reserves established by the Marketing Act. The Hornes claimed that the money they could theoretically make from the reserves (30% of the crop yield) was greater than the compensation provided by the government. Their argument was that the government was not providing “just” compensation to cover the costs they incurred growing and handling their raisins. As a result of their refusal to participate in the Marketing Program, the Hornes were fined $680,000 by the Department of Agriculture.
After a failed attempt in the Ninth Circuit Federal Court, the Hornes brought their argument to the Supreme Court, where they argued “that the reserve requirement (of the Marketing Act) was an unconstitutional taking of their property under the Fifth Amendment.” The Takings Clause in the Fifth Amendment to the United States Constitution states in pertinent part “nor shall private property be taken for public use without just compensation”. In Horne, the Court was left to decide whether or not the takings clause of the Fifth Amendment barred the government from imposing such a demand (reserve requirements) on the growers without just compensation.
Chief Justice John Roberts wrote the opinion of the Court, in favor of the Hornes, Justice Sotomayor was the sole dissenting opinion. The majority opinion ultimately came to three (3) conclusions. First, the government’s “categorical duty” under the Fifth Amendment to pay just compensation when the government ,”physically takes possession of an interest in property”, applies to both real property and to personal property. Therefore upholding the enumerated principles outlined in the Fifth Amendment. Second, the government may not avoid the categorical duty to pay just compensation for a physical taking of the property by reserving to the property owner a contingent interest in a portion of the value of the property, set at the government’s discretion. Chief Justice Roberts noted “[t]he reserve requirement imposed by the Raisin Committee is a clear physical taking.” Third the Court decided whether” a “governmental mandate to relinquish specific, identifiably property as a “condition” on permission to engage in commerce effects a per se taking. In this particular case, the Court concluded that the answer was yes.
The opinion made an important distinction as it pertains to property rights. Chief Justice Roberts summed up the argument of the Respondents (the Department of Agriculture) as “the reserve requirement is not a taking because raisin growers voluntarily choose to participate in the raisin market,” and were free to grow other crops, thereby not participating in the Marketing Act Chief Justice Roberts was unimpressed with such logic, noting that “property rights cannot be so easily manipulated.”
While Horne isn’t necessarily the most glamorous case, the 8-1 decision most certainly reinforced existing Takings Clause jurisprudence and made a bright line rule that the Takings Clause applies to both real and personal property, a distinction that has not always been readily realized by the courts.
Written by Austin Lew, Summer Intern; Edited by J. Ryan Gustafson, Esq.