Court Opinion

ID: 2996326
Source: CourtListenerOpinion
Date Created: 2015-09-24 19:27:35.10469+00
Date Added: 2024-06-11T11:45:29.402282
License: Public Domain

In the
 United States Court of Appeals
              For the Seventh Circuit
                         ____________

No. 02-3397
KEY OUTDOOR INC. and ROBERT DAHL,
                                          Plaintiffs-Appellants,
                               v.

CITY OF GALESBURG, ILLINOIS,
                                           Defendant-Appellee.
                         ____________
           Appeal from the United States District Court
                for the Central District of Illinois.
            No. 01-1280—Michael M. Mihm, Judge.
                         ____________
      ARGUED APRIL 2, 2003—DECIDED APRIL 24, 2003
                      ____________

 Before BAUER, EASTERBROOK, and WILLIAMS, Circuit
Judges.
   EASTERBROOK, Circuit Judge. After the City of Galesburg
enacted an ordinance banning most of the signage that
they own within its borders, Key Outdoor and Robert Dahl
filed suit in state court seeking compensation for what
they deem a taking of property. The complaint alleged that
both federal and state constitutions require compensation
in cash, rather than in delay. Galesburg has deferred the
effective date of its law until 2009, and it contends that
owners’ ability to profit from their signs in the interim
(which the City calls “amortization”) is all the compensation
that the Constitution requires—though what an owner can
2                                            No. 02-3397

make during the years remaining is not “compensation” but
is only the existing value that the government had re-
frained from extinguishing. (The United States, acquiring
land for a post office, could not say anything like: “You
have ten acres now; we are taking one of them, and the
nine left behind compensate you for the acquisition.” Nor
could Illinois announce tomorrow that on January 1, 2100,
all private property within its borders must be handed
over to the state without compensation, even though the
delay would allow owners to extract 95% of the land’s
value.)
  Galesburg removed the suit to federal court, as was
its right because some of plaintiffs’ claims arise under
federal law. The district court then dismissed the com-
plaint under Fed. R. Civ. P. 12(b)(6) for failure to state
a claim on which relief may be granted. Both state and
federal takings claims are premature, the court held,
because plaintiffs have not exhausted their remedies
under state law and thus have not established that the
government is refusing to pay whatever compensation
may be required by the Constitution. Compare Williamson
County Regional Planning Commission v. Hamilton Bank
of Johnson City, 473 U.S. 172 (1985), with Palazzolo
v. Rhode Island, 533 U.S. 606, 618-26 (2001). Plaintiffs’
contention that the City’s ordinance is incompatible with
§131(g) of the Highway Beautification Act, 23 U.S.C.
§131(g), failed because, the district court held, there is
no private right of action to enforce that statute in fed-
eral court. With respect to plaintiffs’ claims under state
law, the district court concluded that cities’ home-rule
powers permit them to supersede the state legislation
on which plaintiffs had relied. The court then dismissed
the complaint outright, declining to remand any portion of
the litigation to state court.
  This leaves plaintiffs’ takings claims unadjudicated,
because they must pursue state remedies, but also blocks
No. 02-3397                                                3

plaintiffs’ pursuit of those remedies. They filed the case
in state court precisely because they understood the need
to seek whatever relief state courts could provide. When
the City removed the suit to federal court, and frustrated
plaintiffs’ effort to invoke state remedies, it logically ei-
ther surrendered the benefit of Williamson or consented
in advance to the remand of state-law theories, so that
the process required by Williamson could run its course.
Yet Galesburg has steadfastly resisted a remand. The
district court should not have abetted the City’s strategy.
Instead the judge should have considered the criteria
in 28 U.S.C. §§ 1367(c) and 1441(c). The presence of “a
novel or complex issue of State law”, §1367(c)(1), in a suit
where all federal claims have been finally resolved,
§1367(c)(3), implies the wisdom of sending those state-
law theories back to state court.
   Plaintiffs concede that a federal takings claim is prema-
ture and do not ask us to reverse the district court’s
understanding of the federal Highway Beautification Act.
Only state theories remain, and it makes much more
sense to have these resolved by the state judiciary than
to have them resolved by a federal court. Plaintiffs’ argu-
ments would require us to determine the extent of a mu-
nicipality’s home-rule power over a subject that also is
covered by rules of statewide application. No state court
has addressed the question whether, under Illinois law,
a municipality may ban signs and offer only “amortiza-
tion” rather than cash compensation. Nor has any state
court addressed the question whether the sort of stat-
ute that Galesburg has enacted would be deemed a
taking for purposes of state or federal law. If it is not a
“taking,” then no compensation is owed, and the delay
until 2009 gives plaintiffs more than their constitutional
due—though states are free to be generous, and perhaps
Illinois has required municipalities to stop short of the
constitutional limit on the power to regulate without
4                                               No. 02-3397

compensation. Whether Galesburg’s “amortization” ap-
proach is compatible with state law (if, indeed, either
state or federal law requires any compensation) is the
sort of issue that Illinois should be allowed to resolve for
itself.
  We therefore vacate the district court’s decision to the
extent that it resolves any question arising under state
law, and we remand with instructions to remand the
case to state court. See 28 U.S.C. §1441(c). Illinois
courts are free to redetermine all claims under state law,
without any preclusive effect from the district court’s
decision. Moreover, state courts may elect to enforce
23 U.S.C. §131(g) as a matter of state law, whether or
not this provision is implemented by private action in
federal court, for states are not bound by all limitations
on the authority of federal tribunals. (Whether Illinois
does provide a state-based right of action to enforce §131(g)
is a question on which we express no opinion; nor do
we address whether the district court was correct in rul-
ing that §131(g) cannot be enforced by private litigants
in federal court, for that issue is outside the scope of
the appeal.) Once the state-law theories have been re-
solved, any remaining takings claim then will be ripe for
decision.
               VACATED AND REMANDED WITH INSTRUCTIONS

A true Copy:
      Teste:

                        ________________________________
                        Clerk of the United States Court of
                          Appeals for the Seventh Circuit

                   USCA-02-C-0072—4-24-03