U.S. Supreme Court paves way for Takings Clause claim by farmers who were compelled by the federal government to give up 47% of their raisins to the government
(1) Whether the Ninth Circuit erred in holding, contrary to the decisions of five other Circuit Courts of Appeals, that a party may not raise the Takings Clause as a defense to a “direct transfer of funds mandated by the Government,” Eastern Enterprises v. Apfel, but instead must pay the money and then bring a separate, later claim requesting reimbursement of the money under the Tucker Act in the Court of Federal Claims; and (2) whether the Ninth Circuit erred in holding, contrary to a decision of the Federal Circuit, that it lacked jurisdiction over petitioners’ takings defense, even though petitioners, as “handlers” of raisins under the Raisin Marketing Order, are statutorily required under 7 U.S.C. § 608c(15) to exhaust all claims and defenses in administrative proceedings before the United States Department of Agriculture, with exclusive jurisdiction for review in federal district court.
The U.S. Chamber urged the U.S. Supreme Court to overturn a Ninth Circuit decision blocking small California raisin farmers from raising the Takings Clause as a constitutional defense to a USDA enforcement action brought against the farmers for failing to transfer title to up to 47% of their raisins to the federal government - for little to no compensation.
The case arises out of a Depression-era agricultural price stabilization program that today gives a "Raisin Administrative Committee" - backed by the authority of the U.S. Department of Agriculture - the power to require raisin farmers to pass title to their raisins to the committee as a condition for participating in interstate commerce. When the petitioners failed to pass title to their raisins, the USDA sued, demanding the monetary value of the raisins, plus a fine. The Ninth Circuit ruled that the raisin farmers must wait to challenge the "raisin marketing order" as unconstitutional in a different court, and only after the completion of a lengthy and expensive enforcement lawsuit.
According to the Chamber's amicus brief, the Ninth Circuit's theory imposes unconstitutional and impractical roadblocks that effectively prevent property owners from vindicating their property rights when faced with federal enforcement actions demanding the direct transfer of money to the federal government. The Ninth Circuit's decision is particularly problematic for small businesses, who often lack the resources to litigate not one but two separate costly battles against the federal government in order to protect their property rights. The Chamber also warned that the raisin marketing order, as administered, raises serious constitutional concerns. If the government can require raisin farmers to give the federal government nearly half of their raisins as an "in-kind tax" that is a condition on participating in interstate commerce, then the government could just as easily compel an auto manufacturer to turn over 50 percent of the cars it manufacturers under the rubric of a 50 percent "in-kind fee" on automobile sales.
The Supreme Court reversed the decision of the Ninth Circuit and held that the Ninth Circuit has jurisdiction to decide the petitioner's Takings claim.
Cert. granted 11/20/12. NCLC merits amicus brief filed 1/16/13. Decided 6/10/13.