Opinion ID: 209137
Heading Depth: 3
Heading Rank: 3

Heading: Character of the Government's Action

Text: In Rose Acre III, the trial court found that the character of the government's regulations favored Rose Acre. The trial court conclude[d] the SE regulations were misguided because they relied on ineffective testing methods. Rose Acre III, 55 Fed.Cl. at 660. The court also concluded that Rose Acre shared a disproportionate amount of the burden of the SE regulations. Id. In our prior decision, we reversed the trial court's conclusion with respect to the character of the government's action. Rose Acre IV, 373 F.3d at 1195. We held this conclusion to be erroneous because, in part, the trial court's misgivings about the regulations are primarily based on its finding that a less-burdensome, alternative regulatory schemeegg testingwas feasible. Id. at 1193. We explained, however, that the issue is not whether a less restrictive alternative to the government action existed or was `possible.' It is whether there is a nexus between the regulation and its underlying public purpose. Id. at 1194 (emphasis in original) ( citing Nollan v. Cal. Coastal Comm'n, 483 U.S. 825, 837, 107 S.Ct. 3141, 97 L.Ed.2d 677 (1987)). We faulted Rose Acre because it neither argued nor showed that the regulatory means were inconsistent with knowledge the government possessed at the time they were adopted or applied against Rose Acre. Id. at 1195. Between the time we remanded the case and the time the trial court rendered its decision, the Supreme Court changed the takings landscape with its decision in Lingle v. Chevron U.S.A. Inc., 544 U.S. 528, 125 S.Ct. 2074, 161 L.Ed.2d 876 (2005). In a unanimous retreat, the Supreme Court discarded the substantially advances test set forth in Agins v. City of Tiburon, 447 U.S. 255, 100 S.Ct. 2138, 65 L.Ed.2d 106 (1980). Lingle, 544 U.S. at 540, 125 S.Ct. 2074. In doing so, the Court marked a clear distinction between substantive due process analysis and Fifth Amendment takings analysis. Id. Although the Court had admittedly discussed and approved the substantially advances language over the intervening twenty-five years, the Court concluded that it had never held a compensable taking based on the Agins test. Id. at 546, 125 S.Ct. 2074. The Court thus reaffirmed the outcome in cases such as Keystone Bituminous Coal Ass'n v. DeBenedictis, 480 U.S. 470, 107 S.Ct. 1232, 94 L.Ed.2d 472 (1987), in which the substantially advances test was arguably applied. The holdings of such cases, read in light of the particular facts of each case, it ruled, remain viable precedent. See Lingle, 544 U.S. at 546, 125 S.Ct. 2074. The government argues that Lingle in no way changes the analysis under Penn Central. We cannot agree. The opinion's language itself signals the change in the law. E.g., Lingle, 544 U.S. at 544, 125 S.Ct. 2074 ([T]he `substantially advances' formula is not only doctrinally untenable as a takings test-its application as such would also present serious practical difficulties. (emphasis in original)). To the extent that other circuits have had the chance to visit the issue, those courts recognize that Lingle alters the calculus. See Spoklie v. Montana, 411 F.3d 1051, 1058 (9th Cir.2005) ([T]he Supreme Court has just disavowed the use of the `substantially advances' test in takings claims ....); see also Adams v. Village of Wesley Chapel, 259 Fed.Appx. 545, 549-50 (4th Cir.2007) (unpublished). In addition to its effect on the takings analysis itself, the Ninth Circuit has noted that  Lingle pulls the rug out from under our rationale for totally precluding substantive due process claims based on arbitrary or unreasonable conduct. Crown Point Dev., Inc. v. City of Sun Valley, 506 F.3d 851, 855 (9th Cir. 2007); see also A Helping Hand, LLC v. Baltimore County, 515 F.3d 356, 369 n. 6 (4th Cir.2008) (observing that Lingle explicitly distinguished between takings and substantive due process claims and thus substantive due process claims based on property restrictions are not supplanted by takings law). State courts which have addressed Lingle have come to a similar conclusion. See Vanek v. State Bd. of Fisheries, 193 P.3d 283, 293 (Alaska 2008) (noting Lingle 's demarcation between takings and due process analyses); Kafka v. Dept. of Fish, Wildlife & Parks, 2008 MT 460, 348 Mont. 80, 201 P.3d 8 9-10 (Mont.2008) (noting the Supreme Court's rejection of the `substantially advances' formula); Scofield v. Dep't of Natural Res., 276 Neb. 215, 753 N.W.2d 345, 358-59 (Neb.2008) (appreciating Lingle 's clarification of takings law); El Paso Prod. Co. v. Blanchard, 269 S.W.3d 362, 370 (Ark.2007) (setting aside any consideration of the substantially advances test); Biddle v. BAA Indianapolis, LLC, 860 N.E.2d 570, 577 n. 17 (Ind. 2007) (To the extent our prior decisions have relied on the Agins formulation, they are overruled.); Mansoldo v. State, 187 N.J. 50, 898 A.2d 1018, 1024 (2006) (declaring that, in view of Lingle, considerations of `legitimate state interest[s]' have no bearing on whether the [state] regulation effected a taking); Gove v. Zoning Bd. of Appeals, 444 Mass. 754, 831 N.E.2d 865, 870 (2005); Wild Rice River Estates, Inc. v. City of Fargo, 705 N.W.2d 850, 854 (N.D.2005) (noting the disavowal of the Agins test by Lingle); Coast Range Conifers, LLC v. State Bd. of Forestry, 339 Or. 136, 117 P.3d 990, 998-99 (2005); Byrd v. City of Hartsville, 365 S.C. 650, 620 S.E.2d 76, 80 (2005) (To the extent that some of our previous cases have applied Agins alone or both Agins and Penn Central, we overrule them.). Commentators have likewise expressed their opinion that Lingle alters the takings landscape. See, e.g., Robert G. Dreher, Lingle's Legacy: Untangling Substantive Due Process From Takings Doctrine, 30 Harv. Envtl. L.Rev. 371, 402 (2006) ([ Lingle ] rejects any normative component to takings law based on considerations of the efficacy or wisdom of the government's actions.); D. Benjamin Barros, At Last, Some Clarity: The Potential Long-Term Impact of Lingle v. Chevron and the Separation of Takings and Substantive Due Process, 69 Alb. L.Rev. 343, 349 (2005) ([I]t is undeniable that by eliminating the substantially advance standard the Court took at least a modest step in clarifying its regulatory takings doctrine.); John D. Echeverria, Making Sense of Penn Central, 23 UCLA J. Envtl. L. & Pol'y 171, 200 (2005) ( Lingle, of course, jettisons the substantially advances test as a free-standing test.). Thus, we can confidently say that, under Lingle, the regulatory takings paradigm has changed. We can no longer ask whether the means chosen by government advance the ends or whether the regulation chosen is effective in curing the alleged ill. All those concerns, albeit relevant concerns in many cases dealing with governmental regulations, are now confined to a substantive due process inquiry. See Equity Lifestyle Props., Inc. v. County of San Luis Obispo, 548 F.3d 1184, 1194 n. 17 (9th Cir.2008) (Due process violations cannot be remedied under the Takings Clause .... ( citing Lingle, 544 U.S. at 543, 125 S.Ct. 2074)). And, as we have noted previously, the Seventh Circuit has long ago adjudicated those due process claims of this case. See Rose Acre I, 956 F.2d at 672-74. Because Lingle indeed altered the analytical framework, the trial court should have reassessed the character prong of Penn Central. See Wopsock v. Natchees, 454 F.3d 1327, 1333 (Fed.Cir.2006) (It is well established ... that law-of-the-case principles do not bar a court from departing from earlier rulings when there is `an intervening change of controlling legal authority'.... ( quoting Toro Co. v. White Consol. Indus., 383 F.3d 1326, 1336 (Fed. Cir.2004))). In our prior opinion, we clearly applied the Agins test when we were dealing with the distinct issue of consideration of `whether the regulation[s] appropriately advance[d] a substantial government interest.' Rose Acre IV, 373 F.3d at 1195 n. 15 ( quoting Tahoe-Sierra, 535 U.S. at 323, 122 S.Ct. 1465). That inquiry is now obsolete. Although the trial court was, in part, correct that  Lingle does not necessarily invalidate the character determination from Rose Acre IV, the trial court also thought its character-prong analysis from Rose Acre III was likely the correct approach under Lingle.  Rose Acre V, 2007 WL 5177409, at . Given the significant change in the law effected by Lingle and because we still disagree with aspects of the approach set forth in Rose Acre III, we feel it necessary to explain our reasoning in further detail. Turning to what Lingle requires us to do rather than what we cannot do, the Supreme Court instructed that, instead of looking at the rationality of the regulation, we must consider the actual burden imposed on property rights, or how that burden is allocated. 544 U.S. at 543, 125 S.Ct. 2074. The Court likewise directed that the magnitude or character of the burden a particular regulation imposes upon private property rights is an important consideration, as the now-discarded substantially advances test reveals nothing about that burden. Id. at 542, 125 S.Ct. 2074 (emphasis in original). The Court also criticized a means-end analysis because it does not provide any information about how any regulatory burden is distributed among property owners. Id. (emphasis in original). Applying these insights to our present case, the undisputed facts indicate that the SE regulations did not single out Rose Acre. Instead, the enacted rules broadly applied to almost any egg producer in the United States. Specifically, the rules affected primary and multiplier breeding flocks used for the purpose of producing progeny for commercial egg production, and to egg production flocks used for the purpose of producing table eggs for sale or other distribution in interstate commerce. 55 Fed.Reg. at 5578. The regulations admittedly did not apply to all poultry flocks because USDA focused its efforts on controlling the spread of SE in the segments of the poultry industry where the spread of SE is most prevalent, i.e., egg-type flocks. Id. Additionally, the rules affected only those farms, whether Rose Acre's or another company's, which tested positive for SE. Id. The SE regulations as enacted targeted no single egg producer unless SE-infected eggs were traced back to a particular farm and that farm tested positive. Only then did an egg producer experience the negative consequences of the SE regulations. In Rose Acre's view, however, the SE regulations could, and perhaps should, have been drafted more broadly. Specifically, because the regulations did not cover food handlers and the egg-consuming public, according to Rose Acre, the regulations' burdens were distributed narrowly, and devastatingly, upon a few egg producers like Rose Acre. Additionally, the company argues, Rose Acre, more so than any other egg producer, disproportionately suffered the consequences of the regulation because Rose Acre's eggs could be traced back to its farms more easily than the eggs of most other egg producers. These contentions seem to approach or possibly step over the line drawn in the sand by Lingle because, in some respect, they challenge the effectiveness of the regulations, which Lingle says we cannot do in a takings analysis. Moreover, even if Rose Acre's contentions are proper considerations under Lingle, we do not think they are sufficiently persuasive. Based on this assessment then, even under Lingle 's new approach, the character of the SE regulations in this case do not favor Rose Acre. But, before deciding this factor, we need to consider the related issue of the public health and safety aspect of the SE regulations. In our view, although Lingle alters one aspect of analyzing regulatory takings, it leaves unchanged a substantial body of case law concerning the character prong. The asserted taking in Lingle had nothing to do with the safety or health of the public. Rather, Lingle addressed a law intended to modify the distribution of wealth by imposing certain restrictions on the ownership and leasing of service stations by oil companies. 544 U.S. at 533, 125 S.Ct. 2074. The state of Hawaii enacted the law in response to concerns about the effects of market concentration on retail gasoline prices. Id. We think it is clear that Lingle neither addressed nor disturbed Penn Central 's consideration of the health and safety aspect of the regulations. See Penn Cent., 438 U.S. at 125, 98 S.Ct. 2646. To put Penn Central, Lingle, and the present case in the proper context, it will be helpful to summarize briefly the history and underlying bases of food regulation by governments in a takings analysis. For almost as long as food has been in commerce, some regulation of food has existed. Cato, Pliny the Elder, and Galen all described recommendations or warnings about the quality of prepared foods. See George M. Burditt, The History of Food Law, 50 Food & Drug L.J. 197, 197 (1995). See generally Peter Barton Hutt & Peter Barton Hutt II, A History of Government Regulation of Adulteration and Misbranding of Food, 39 Food Drug Cosmetic L.J. 2 (1984). After the Dark Ages, England's Parliament in 1266 codified food laws which prohibited the sale of any `corrupted wine' or any meat, fish, bread, or water that was `not wholesome for Man's body' or that was kept so long `that it loseth its natural wholesomeness.' Peter Barton Hutt, Government Regulation of the Integrity of the Food Supply, 4 Annual Rev. of Nutrition 1 (1984), reprinted in Peter Barton Hutt, Richard A. Merrill, & Lewis A. Grossman, Food and Drug Law 1-2 (3d ed.2007). In the United States, common law generally governed early limitations on the right to sell certain foods. Violations of those limitations incurred both civil and criminal liability. To be sure, it was a crime at common law knowingly to sell bad food.... Lawrence M. Friedman, A History of American Law 461 (2d ed.1985). Early courts in the United States imposing civil liability on a person for selling tainted food did not necessarily base their rulings on legal theories common today. In Van Bracklin v. Fonda, 12 Johns. Cas. 468, 468 (N.Y.Sup.Ct.1815), the court affirmed a jury verdict for the plaintiff who, along with others, had eaten beef that was bad and unwholesome. The ruling in Van Bracklin sounded in contract more than tort or nuisance law, but nonetheless confirms that the right to sell food has long been subject to certain strictures. As the law developed, courts accepted findings of liability based on then-novel doctrines. In the late 1800s, courts in many states began imposing negligence and strict warranty liability on commercial sellers of defective goods. Restatement (Third) of Torts: Products Liability § 1 cmt. a (1998). In some cases, food manufacturers were held liable for unwholesome food under a theory of negligence. E.g., Jackson Coca-Cola Bottling Co. v. Chapman, 106 Miss. 864, 64 So. 791, 791 (1914) (affirming a finding of liability when the plaintiff became ill after drinking from a cola bottle in which a `wee, sleekit, cow'rin,' tim'rous beastie' [had] drowned ( quoting Robert Burns, To A Mouse )). In other instances, manufacturers of food were liable to a consumer under a theory of implied warranty of merchantability, for example, even though the manufacturer and consumer were not in privity of contract because the consumer had purchased the food from a retailer. E.g., Ward v. Morehead City Sea Food Co., 171 N.C. 33, 87 S.E. 958, 958 (N.C.1916) (The authorities are numerous that there is an implied warranty, that runs with the sale of food for human consumption, that it is fit for food and is not dangerous and deleterious.). Later courts perceived little difference between the two theories. See Davis v. Van Camp Packing Co., 189 Iowa 775, 176 N.W. 382, 392 (Iowa 1920) (allowing plaintiff to rely on either negligence or implied warranty of wholesomeness against manufacturer of beans). As commerce developed, states turned to statutory law to define the rights of property owners with respect to food products. Although the courts effectively resolved individual disputes between private parties involving unfit food, systemic deficiencies in the nation's food supply persisted. In the latter half of the nineteenth century, some states tackled the problem by increasingly enacting legislation which broadly regulated aspects of the growing food trade. During the same period, Congress considered numerous pieces of legislation that would authorize federal regulation of the food industry. Eventually, in 1906, Congress enacted the Meat Inspection Act [8] and the Pure Food and Drugs Act, the latter of which paved the way for the creation of the FDA and the more comprehensive Federal Food, Drug, and Cosmetic Act of 1938. Since that time, the public has come to expect that federal agencies will police the safety of the food products in interstate commerce. There is little doubt that it is appropriate to consider the harm-preventing purpose of a regulation in the context of the character prong of a Penn Central analysis. See Appolo Fuels, 381 F.3d at 1351 (considering government action designed to protect health and safety within the character prong of Penn Central ). Even long prior to Penn Central, the Supreme Court considered health and safety in takings cases. See, e.g., Miller v. Schoene, 276 U.S. 272, 280, 48 S.Ct. 246, 72 L.Ed. 568 (1928) (upholding a law requiring the destruction of cedar trees to prevent the spreading of cedar rust that imperiled nearby apple orchards); Mugler v. Kansas, 123 U.S. 623, 668, 8 S.Ct. 273, 31 L.Ed. 205 (1887) (rejecting a takings challenge to laws prohibiting the production or sale of intoxicating beverages). In the present case, we of course need not, and thus do not, conclude that the federal government has an absolute right to condemn or seize food, without any possible liability, merely because, as here, the government declares the food to be potentially dangerous or unhealthy. Turning to the government's current position, at times the government appears to argue for a per se exception to a regulatory taking based on the regulation's public health purpose. In its opening brief, the government writes that Rose Acre has no private property right dictating that the Government pay it to stop using its property in a manner that threatens public health. Yet, it never goes so far as to assert a blanket exception to the Penn Central analysis here. And, during oral argument, government's counsel was less than resolute in arguing that the law requires a per se exception to the Penn Central. But the government did argue that the character of the government's act, protecting the public health by identifying diseased eggs and forcing their owner to remove them from the table market, weighs strongly against finding a taking here. We agree. Rose Acre, on the other hand, reads Lingle 's characterization of Penn Central as a demotion of the character prong to a secondary and optional factor. Citing the Supreme Court's description of Penn Central, Rose Acre contends that we can only consider the public health aspect of the SE regulations in a diminished and optional role. See Rose Acre Br. 57 (arguing that the Supreme Court deemphasized Penn Central's character prong, holding it `may' also be considered if relevant to the regulatory-takings analysis). Putting aside the question of whether Lingle properly characterizes Penn Central, and disregarding that the quoted sentence is in no way a holding of Lingle, we do not believe Lingle caused any diminution in the importance of the Penn Central character prong, at least with respect to public health and safety regulations. When we view what the law sets forth with respect to the selling of food for human consumption, we must recognize thatwhether through criminal law, nuisance law, or tort lawthe law has long imposed significant restrictions on the food-property owner. In the present case, the severity of the burden that government impose[d] upon private property rights, Lingle, 544 U.S. at 539, 125 S.Ct. 2074, was not impermissible because the SE regulations restricted uses of personal property in which the restrictions were directed at the protection of public health and safety. That is the type of regulation in which the private interest has traditionally been most confined and governments are given the greatest leeway to act without the need to compensate those affected by their actions. See Jacob Ruppert, Inc. v. Caffey, 251 U.S. 264, 303, 40 S.Ct. 141, 64 L.Ed. 260 (1920) (prohibition on sale of near beer in order to make prohibition of alcoholic beverages more effective was a regulation for the preservation of the public health and not a taking); Purity Extract & Tonic Co. v. Lynch, 226 U.S. 192, 201, 33 S.Ct. 44, 57 L.Ed. 184 (1912) (noting the right of states to prohibit the sale of intoxicating liquors); N. Am. Cold Storage Co. v. City of Chicago, 211 U.S. 306, 315, 29 S.Ct. 101, 53 L.Ed. 195 (1908) (recognizing a state's authority to seize unwholesome food based upon the right and duty of the state to protect and guard, as far as possible, the lives and health of its inhabitants). This assessment leads us to conclude that a regulation ending the production and sale of such eggs in the table market, although allowing their sale in the breaker market, cannot be described as imposing an undue burden on the egg producer. Furthermore, we need not determine that the proscribed activity constitutes a public nuisance in order to conclude that the character prong favors the government. See Bass Enters. Prod. Co. v. United States, 381 F.3d 1360, 1369 (Fed. Cir.2004) (rejecting appellants' position that, because oil and gas exploration is not a public nuisance, the Court of Federal Claims improperly considered the concerns for public welfare in its Penn Central analysis). Finally, for similar reasons, we cannot conclude that the SE regulations are functionally equivalent to the classic taking in which government directly appropriates private property or ousts the owner from his domain. Lingle, 544 U.S. at 539, 125 S.Ct. 2074. In the end, the effect of Lingle in this case is for the character of the government's regulations to more strongly favor the government than when we examined the issue in Rose Acre IV.