Local Government Legal Center

Facts:

The Gun Control Act of 1968, 18 U.S.C. 921 et seq., imposes licensing, background-check, recordkeeping, and serialization requirements on persons engaged in the business of importing, manufacturing, or dealing in firearms.  In the Act, Congress delegated to the Atorney General the authority to promulgate “such rules and regulations as are necessary to carry out” the Act. 18 U.S.C. 926(a). The Attorney General has in turn delegated that authority to the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF).

The Act defines a “firearm” to include “any weapon … which will or is designed to or may readily be converted to expel a projectile by the action of an explosive,” as well as “the frame or receiver of any such weapon.” 18 U.S.C. 921(a)(3)(A) and (B).

The GCA requires all manufacturers and dealers of firearms to comply with certain requirements, including conducting background checks, record the transfer or sale, and serialize the firearm.

Technology has allowed companies to manufacture and sell “firearm parts kits” that allow anyone with access to the internet and basic tools to assemble a functional firearm “quickly and easily,” often in just minutes.  Known colloquially as ghost guns, some manufacturers sold these kits without complying with the Act’s requirements by claiming that they were not “firearms” regulated by the Act.  These kits are then sold without the required background checks or records of sale and the assembled firearms lack serial numbers.

In 2022, the ATF issued a regulation to clarify that the definition of firearm under the GCA includes products and kits that can “readily be converted” into an operational firearm or a functional frame or receiver. See 87 Fed. Reg. 24,652 (Apr. 26, 2022) (codified in relevant part at 27 C.F.R. 478.11, 478.12(c)).  The Rule also explained that the statutory term “frame or receiver” under the definition of firearm includes “a partially complete, disassembled, or nonfunctional frame or receiver, including a frame or receiver parts kit, that is designed to or may readily be completed, assembled, restored, or otherwise converted to function as a frame or receiver.”

The Solicitor General explained the scope of the rule and its impact in its brief as follows:

The Rule’s interpretation of the Act does not prohibit the manufacture of any firearm or the sale of a firearm to any individual lawfully entitled to possess one. Nor does it prohibit such a person from making a firearm at home. Instead, the Rule simply clarifies that the Act requires commercial manufacturers and sellers of covered weapon parts kits and partially complete frames or receivers to obtain licenses, mark their products with serial numbers, conduct background checks, and keep transfer records. Those are the same “conditions and qualifications on the commercial sale of arms,” that around 80,000 manufacturers and distributors of firearms comply with in millions of transactions each year.

Lower Court Holding:

The Fifth Circuit held the ATF’s Rule was inconsistent with the statutory text and exceeded the agency’s authority and therefore violated the Administrative Procedure Act.

Issues:

The Supreme Court granted certiorari on the following issues:

1. Whether “a weapon parts kit that is designed to or may readily be completed, assembled, restored, or otherwise converted to expel a projectile by the action of an explosive,” 27 C.F.R. 478.11, is a “firearm” regulated by the Act.
2. Whether “a partially complete, disassembled, or nonfunctional frame or receiver” that is “designed to or may readily be completed, assembled, restored, or otherwise converted to function as a frame or receiver,” 27 C.F.R. 478.12(c), is a “frame or receiver” regulated by the Act.

Facts:

Five named plaintiffs brought a class action lawsuit against the Virginia Department of Motor Vehicles to challenge the constitutionality of a (now repealed) law, Section 46.2-395 of the Virginia Code.  This law required courts to automatically suspend a convicted criminal’s driver’s license if they failed to pay certain court fines and fees.  The plaintiffs alleged the law was unconstitutional by violating their procedural and substantive due process rights as well as other claims.  They sought preliminary and permanent relief to prevent enforcement of the statute and sought reinstatement of the licenses for the Virginians’ whose licenses had been suspended.

The district court granted a preliminary injunction, finding the plaintiffs were likely to succeed on the merits as to their procedural due process claims (one of the five claims brought).  The court set the case for a bench trial, but before the trial, the Virginia General Assembly passed a Budget Amendment that suspended the enforcement of the law for one year.  The court then stayed the case pending the next legislative session, which the Commissioner represented to the court was likely to result in a full repeal of the law.  That subsequent repeal took place, and the court then dismissed the action as moot.  The court therefore never issued a permanent injunction or declared the law unconstitutional (it was only ever found to be “likely” unconstitutional).

After the case was dismissed, the plaintiffs then sought attorney’s fees under Section 1988.  The appellate fees alone were over $767,000.

Legal Background:

Under 42 U.S.C. § 1988(b), in certain civil rights cases, “the court, in its discretion, may allow the prevailing party . . . a reasonable attorney’s fee.”

In Buckhannon Bd. & Care Home, Inc. v. W. Virginia Dep’t of Health & Hum. Res., 532 U.S. 598 (2001), the Supreme Court held for a party to “prevail” under Section 1988 for the purposes of attorney’s fee awards, the relief must be “judicially sanctioned.”  In other words, “[a] defendant’s voluntary change in conduct, although perhaps accomplishing what the plaintiff sought to achieve by the lawsuit, lacks the necessary judicial imprimatur on the change” to have prevailed under the statute.  Id. at 605. Then, in Sole v. Wyner, the Court held that a party has not “prevailed” under Section 1988 through the award of a preliminary injunction if that injunction is later reversed by a final decision in the case.  Sole v. Wyner, 551 U.S. 74, 83, (2007).

Issue:

The issues in this case were left open by the prior Supreme Court decisions and they are: (1) whether a party must obtain a ruling that conclusively decides the merits in its favor, as opposed to merely predicting a likelihood of later success, to prevail on the merits under 42 U.S.C. § 1988; and (2) whether a party must obtain an enduring change in the parties’ legal relationship from a judicial act, as opposed to a non-judicial event that moots the case, to prevail under Section 1988.

Lower Court Decision:

The district court denied the attorney’s fees, following the Fourth Circuit’s case law at the time which had a bright line rule indicating that preliminary injunction awardees are not entitled to attorney’s fees as they are not prevailing parties under the statute.  The Fourth Circuit, bound by its case law, initially affirmed.

The Fourth Circuit then reheard the case en banc and reversed, creating a new rule for when a party may obtain attorney’s fees after the award of a preliminary injunction.  That rule states:

When a preliminary injunction provides the plaintiff concrete, irreversible relief on the merits of her claim and becomes moot before final judgment because no further court-ordered assistance proves necessary, the subsequent mootness of the case does not preclude an award of attorney’s fees.

Stinnie v. Holcomb, 77 F.4th 200, 210 (4th Cir. 2023).  The court then explained that “all preliminary injunctions” are “solidly merits-based” and will satisfy the “judicial imprimatur” necessary under Buckhannon.  (Though the court did leave open the possibility that not all preliminary injunction awardees will be entitled to attorney’s fees, but the result is that most will be).  The court found in this case there was “little question that [the] preliminary injunction’s ‘alternation of the legal relationship of the parties’” satisfied the necessary standard as it provided precisely the relief the plaintiffs sought – the reinstatement of their licenses.

Holding: In Chiaverini v. City of Napoleon, the Supreme Court rejected the theory that a defendant in a Section 1983 case may defeat a malicious prosecution claim so long as one of the charges brought against the plaintiff (former criminal defendant) was supported by probable cause if other charges that were brought were not supported by probable cause.  In other words, valid charges cannot insulate a local government from a Fourth Amendment malicious prosecution claim related to invalid charges.

In this case, Chiaverini managed a jewelry store in Napoleon, Ohio.  He purchased a ring from a jewelry thief for $45.  The owners, the Hills, called Chiaverini to seek the return of the ring, but he would not return it.  The police got involved and at one of the visits to the store, the police instructed Chiaverini to return the ring, but he refused, claiming that he had received conflicting directives from the police about what to do with the ring (including a letter telling him to hold the ring as evidence).

Chiaverini then confronted the police chief about the contradictory information in the letter.  In talking to the Chief, Chiaverini alluded to the fact that he did not have a precious metal license.  After this conversation, the Chief confirmed on the Ohio Department of Commerce’s website that Chiaverini’s precious-metals-dealers license was inactive. The officers sent the police reports to the City’s law director who reviewed them and concluded Chiaverini’s potential criminal offenses of receiving stolen property, operating without a valid license, and money laundering.

One of the officers then applied for a search warrant and a municipal judge signed search and arrest warrants.  The officers searched Chiaverini’s store and seized the Hills’ stolen jewelry as well as items related to sales, purchases, and licenses.  Chiaverini spent 3 days in jail.  Ten days later, the same municipal judge held a preliminary hearing and concluded that probable cause existed for all charges and bound them over for trial.  Later, however, a court dismissed the charges without prejudice for failure to be timely presented to a grand jury.

Chiaverini then sued the officers and the City under Section 1983 for malicious prosecution.  To succeed on a malicious prosecution claim, a plaintiff must prove, among other things, that the criminal charges lacked probable cause. The Sixth Circuit upheld the district court’s grant of summary judgment based on the existence of probable cause to arrest Chiaverini.  The Sixth Circuit found that if probable cause supports one or more of the three charges, then dismissal of the claim for all charges is appropriate.  Because the Sixth Circuit found probable cause supported at least two of the charges (the misdemeanors), it did not reach the third felony charge under its rule that probable cause as to one charge suffices to defeat a malicious prosecution claim.

In a 6-3 decision the Supreme Court reversed on narrow grounds, concluding only that valid charges supported by probable cause do not insulate defendants from malicious prosecution claims based on other charges that were not supported by probable cause. By the time the parties were litigating at the Supreme Court, they agreed on this point, thus the decision did not break significant ground.  The Court rejected the Sixth Circuit’s categorical bar to malicious prosecution claims if any charge is supported by probable cause.  Instead, lower courts must evaluate Fourth Amendment malicious prosecution claims charge by charge.  The Court provided a hypothetical to underscore the rationale for its holding:

A person is detained on two charges—a drug offense supported by probable cause and a gun offense built on lies.  The prosecutor, for whatever reason, drops the (valid) drug charge, leaving the person in jail on the (invalid) gun charge alone. The inclusion of the baseless charge—though brought along with a good charge—has thus caused a constitutional violation, by unreasonably extending the pretrial detention.

As noted, the parties agreed with the Court’s ruling, but their dispute at the Court centered on the issue of causation.  The Court refused to go further and decide whether a malicious prosecution claim may be brought under the Fourth Amendment if the charge that is not supported by probable cause did not prolong the detention.  Under Chiaverini’s proposed rule, which was the most plaintiff-friendly, when both a valid and invalid charge are brought against someone, the warrant the judge issues is “irretrievably tainted; so any detention depending on that warrant is the result of the invalid charge.”   The United States as amicus urged a “but for” causation test.  And the officers argued that the test should be “whether the judge, absent the invalid charge, could have legally authorized the detention – regardless of what he really would have done.”

For example, in this case, Chiaverini was detained for three days.  The Sixth Circuit found the receipt of stolen property charge and doing business without a license charge were both supported by probable cause but did not reach the felony money laundering charge.  If Chiaverini could still have been detained for three days even without the money laundering charge, the defendants argued that there can be no malicious prosecution claim because he was not unlawfully seized.  The Court declined to answer this question and instead remanded to the Sixth Circuit to grapple with that issue in the first instance.

IMLA filed an amicus brief in this case, arguing that the charge lacking probable cause must have caused a prolonged seizure in order to bring a malicious prosecution claim as that claim is grounded in the Fourth Amendment.  The brief further argued against the imposition of attorney’s fees in cases that did not cause any harm to the then-defendant – i.e., if the lack of probable cause for one charge did not prolong the seizure.

To read the decision, click here.

To read the amicus brief, click here.

Holding: The Supreme Court held that the Eighth Amendment’s Cruel and Unusual Punishment Clause does not prohibit the enforcement of generally applicable laws regulating camping on public property.  The Court explained the “Constitution’s Eighth Amendment serves many important functions, but it does not authorize federal judges to wrest … [the] rights and responsibilities from the American people” to decide “how best to handle a pressing social question like homelessness” and “in their place dictate this Nation’s homelessness policy.”  The decision highlighted the complexities of the homeless crisis and noted that five years ago, the Ninth Circuit “took one of [the] tools [needed to address homelessness] off the table” in Martin v. Boise, 920 F. 3d 584 (2019).

This case centers on ordinances passed in Grants Pass, a city in Oregon with a population of 38,000 people, of whom approximately 600 are individuals experiencing homelessness.  To understand the case, we need to travel back to 2019 when the Ninth Circuit decided Martin v. Boise.  Martin involved an ordinance in Boise that made it a misdemeanor to use “streets, sidewalks, parks, or public places” for “camping.”  The Ninth Circuit held that “the Eighth Amendment prohibits the imposition of criminal penalties for sitting, sleeping, or lying outside on public property for homeless individuals who cannot obtain shelter.”  Boise (and all other local governments in the Ninth Circuit), therefore could not enforce public-camping ordinances against homeless individuals who lacked “access to alternative shelter.”

Back to Grants Pass.  The city passed several ordinances after the Martin decision related to the regulation of sleeping outside, which taken together made it nearly impossible to sleep outside with any form of bedding or shelter on public land in the city.  See GPMC 5.61.020; GPMC 5.61.030; GPMC 6.46.090.  A violation of these ordinances resulted in fines, which would escalate if left unpaid.  The “park exclusion” ordinance allowed police officers to bar someone from a city park for 30 days if they received 2 more citations for violating park ordinances within one year. GPMC 6.46.350(A).  If someone had received a park exclusion ordinance and was later found in a park, that could result in criminal trespass.  The city amended its camping ordinance after Martin to make it clear that the involuntary act of sleeping in a park was not prohibited, rather what was prohibited was “camping” – i.e., sleeping with any bedding / shelter.

Two homeless individuals in Grants Pass filed a class action lawsuit on behalf of those that are “involuntarily homeless” against the city, arguing its ordinances are unconstitutional under the Eighth Amendment’s Cruel and Unusual Punishment Clause.  The Ninth Circuit upheld the district court’s class certification of all “involuntarily homeless” in Grants Pass.  The Ninth Circuit also affirmed the district court’s holding that “the anti-camping ordinances violated the Cruel and Unusual Punishment Clause to the extent they prohibited homeless individuals from ‘taking necessary minimal measures to keep themselves warm and dry while sleeping when there are no alternative forms of shelter available.’”  Although the city had four temporary shelters, none were “adequate” for the city’s homeless population.

In a 6-3 opinion authored by Justice Gorsuch, the Supreme Court reversed the Ninth Circuit’s “Martin experiment.”  In doing so, the Court explained that the Eighth Amendment’s Cruel and Unusual Punishment Clause addresses “the method or kind of punishment a government may impose for the violation of criminal statutes.”  (internal quotations omitted).  Noting that the Court has previously discussed the history of the clause, the majority simply explained that the clause was adopted to ensure the new Nation would not resort to certain types of “barbaric punishments” which had been tolerated in English law.  The question of what type of behavior may be criminalized is not addressed by the Eighth Amendment.  The Court noted instead that other provisions of the Constitution may speak to those matters. And in terms of the “method and kind[s]” of punishments at issue in this case, which included fines and up to 30 days in jail, do not qualify as cruel or unusual.

The plaintiffs argued that Robinson v. California, 370 U. S. 660 (1962) should apply because the city, in their view, is criminalizing the status of being homeless.  In Robinson, the Court held that a California law that criminalized the status of narcotics addiction constituted cruel and unusual punishment under the Eighth Amendment.  The Court in Robinson noted that if the government punishes “status,” “[e]ven one day in prison would be . . . cruel and unusual.”

Here, the Court declined to extend Robinson beyond true “status” crimes.  Public camping laws like the one in Grants Pass do not criminalize status, but instead make certain actions a crime, and the crime applies to any defendant, as the Court puts it, whether the person is homeless or a backpacker on vacation.  The majority rejected the plaintiffs’ argument that Robinson should apply to laws banning public camping as applied to the homeless because they apply to an “involuntary” action and the homeless person “cannot help but do what the law forbids.”  The Court explained that its decision in Powell v. Texas already rejected this argument and the Court refused to “extend Robinson beyond its narrow holding.” The Court reiterated that other constitutional provisions may apply and individuals may have certain defenses (like necessity).

The Court not only rejected the plaintiffs’ legal arguments, but also underscored the important federalism and separation of powers issues inherent in these decisions noting “federal courts [are] removed from realities on the ground, [and the] rules have produced confusion.”  The Court further noted that the Ninth Circuit’s decisions have interfered with “‘essential considerations of federalism,’ taking from the people and their elected leaders difficult questions traditionally ‘thought to be the[ir] province.’”

The majority also highlighted the unworkability of the Martin decision explaining:

…Martin exemplifies much of what can go wrong when courts try to resolve matters like those unmoored from any secure guidance in the Constitution. Start with this problem. Under Martin, cities must allow public camping by those who are “involuntarily” homeless. But how are city officials and law enforcement officers to know what it means to be “involuntarily” homeless, or whether any particular person meets that standard? Posing the questions may be easy; answering them is not. Is it enough that a homeless person has turned down an offer of shelter? Or does it matter why? Cities routinely confront individuals who decline offers of shelter for any number of reasons, ranging from safety concerns to individual preferences.  How are cities and their law enforcement officers on the ground to know which of these reasons are sufficiently weighty to qualify a person as “involuntarily” homeless? If there are answers to those questions, they cannot be found in the Cruel and Unusual Punishments Clause. Nor do federal judges enjoy any special competence to provide them.

Additionally, the Court called the Ninth Circuit’s shelter availability test “all but impossible to administer in practice.”  Citing several amicus briefs as evidence of the complexities of the problem, including the fact that it can take thousands of volunteers multiple days to count the homeless population in large cities.  The Court also emphasized the line drawing problems the decisions present in terms of a lack of a definition for “adequate” and “available” shelter as well as the uncertainty as to what other biological necessities might be covered under Martin. 

Justice Sotomayor authored the dissent, joined by Justices Kagan and Jackson.  The dissent argued that because sleep is a biological necessity, for people who sleeping outside is their only option, it cannot be a crime.  The dissent viewed the ordinances at issue as criminalizing status under Robinson and would find they violate the Eighth Amendment.

The majority noted that “an exceptionally large number of cities and States have filed [amicus briefs] in the case,” and cited to many of those briefs, including citing and quoting the one filed by the Local Government Legal Center (IMLA, NACo, & NLC), which was drafted by Brandon Rain with the City of Seattle, multiple times.  The Court used the amicus briefs to highlight everything from the scope of the homelessness problem, to how Martin is being interpreted in lower courts to hamstring local governments, to some of the solutions that local governments are seeking to address homelessness.  One of the points the LGLC made in its amicus brief which was cited by the Court is that “these public-camping regulations are not usually deployed as a front-line response to criminalize homelessness. Instead, they are used to provide [local government] employees with the legal authority to address encampments that pose significant health and safety risks and to encourage their inhabitants to accept other alternatives like shelters, drug treatment programs, and mental-health facilities.”

The Court and many amici agree that the problem of homelessness is complex.  This case returns the hard task of solving the homeless crisis to state and local policymakers, where it belongs.  Rather than spending significant time, money, and resources litigating Martin claims, local governments can focus on expending resources to help the homeless community while ensuring their public spaces are safe and clean in a manner consistent with local needs.

To read the decision, click here.

To read the LGLC amicus brief, click here.

Holding: In a short per curiam (unauthored) opinion the Supreme Court decided Gonzalez v. Trevino, offering guidance as to how a plaintiff may prove a retaliatory arrest claim even where probable cause existed for the arrest.  The decision follows the Court’s 2019 decision in Nieves v. Bartlett where the Court held that although a plaintiff must generally plead and prove the absence or probable cause to bring a First Amendment retaliation claim, that rule was subject to a “narrow qualification” for the situation where an officer has probable cause to arrest but where officers “typically exercise their discretion not to do so.”  The Court in Nieves indicated that if a plaintiff can demonstrate “objective evidence that he was arrested when otherwise similarly situated individuals not engaged in the same sort of protected speech had not been” then the plaintiff can proceed with a retaliatory arrest claim even if the officer had probable cause to arrest. Gonzalez answered one of the questions left open by Nieves – i.e., what type of evidence a plaintiff may utilize to meet the “narrow” exception.

In this case, Sylvia Gonzalez was elected to a seat on the city council for Castle Hills, Texas, a town with fewer than 5,000 residents. As her first act in office, she called for the removal of the city manager by organizing a nonbinding petition.  During her first city council meeting, a resident submitted the petition to remove the city manager to council.  The council meeting grew contentious and included allegations by at least two residents that Gonzalez had gotten them to sign the petition under false pretenses.  The proceeding continued until the next day.

During that next meeting, Mayor Trevino, who was supposed to have the petitions in his possession, was unable to locate them.  At first, he assumed that the city clerk had taken the petitions, but when she later asked for them, he realized they were missing.  At this point, Mayor Trevino suspected Gonzalez had taken the petitions as he had seen a similar stack of documents in her belongings that were fastened with a large black binder clip.  He then asked an officer to have her check her possessions for the petitions. She at first denied having them and slowly flipped through her belongings, claiming all the while that she did not have them.  When both the Mayor and the officer pointed to the stack of documents with the black binder clip, she took them out and claimed to be surprised that they were in her possession. Video showed that Gonzalez took the petitions from Mayor Trevino’s possessions on the dais.

The Mayor informed the police two days later that he wished to file a criminal complaint against Gonzalez for taking the petition without consent.  The police officer investigating the allegation determined that Gonzalez violated Texas Penal Code §§37.10(a)(3) and (c)(1), which provide that “[a] person commits an offense if he … intentionally destroys, conceals, removes, or otherwise impairs the verity, legibility, or availability of a governmental record.” The investigation took over a month, which included reviewing the videos, interviewing witnesses who had indicated Gonzalez got them to sign the petition under false pretenses, and seeking to interview Gonzalez herself (who refused to be interviewed).

The officer secured a warrant and instead of issuing a summons for a nonviolent crime, booked her into the jail, where she spent the day. (This process was legal but unusual for a nonviolent offense).  The prosecutor later dropped the charges.

Gonzalez sued under Section 1983, claiming that she was arrested in retaliation for her protected speech in organizing the petition to oust the city manager.  Gonzalez conceded that there was probable cause to arrest her, but argued her arrest fits into the Nieves exception.  In seeking to prove the “narrow qualification”, Gonazlez claimed that this criminal statute has not been used in the county to criminally charge someone trying to steal a nonbinding or expressive document in the last decade.  She conducted a survey of the types of offenses that were charged under this statute and argued that while there were 215 felony grand jury indictments under the statute, none remotely resembled the facts of this case.  And all the misdemeanor cases, according to Gonzalez, involved “fake social security numbers, driver’s licenses, [or] green cards” and were thus not similar to what she had been charged with.

The Fifth Circuit held that this case does not fall within the Nieves exception because Gonzalez did not present “objective evidence that she was arrested when otherwise similarly situated individuals not engaged in the same sort of protected speech had not been.”  The court reasoned that Nieves required comparator evidence.

The Supreme Court granted certiorari on two issues: (1) Whether the probable-cause exception in Nieves v. Barlett can be satisfied by objective evidence other than specific examples of arrests that never happened; and (2) whether Nieves is limited to individual claims against arresting officers for split-second arrests.

In a short per curiam opinion the Supreme Court answered only the first question presented and reversed the Fifth Circuit’s decision, concluding a plaintiff may show other types of objective evidence beyond the Fifth Circuit’s “overly cramped” requirement of comparator evidence.   The Court reasoned that “[a]lthough the Nieves exception is slim, the demand for virtually identical and identifiable comparators goes too far.”  The only express limit on the type of evidence a plaintiff can present is that it must be objective and the survey that Gonzalez made of the types of crimes charged under the statute satisfied the requirement.

The Court declined to reach the second question presented – whether the general requirement that a plaintiff show an absence of probable cause from Nieves only applies to split-second arrests.  So that question is left open.

Justice Alito concurred in the decision and wrote separately to provide additional factual context and guidance regarding the decision.  In Justice Alito’s opinion, the exception is most easily satisfied by the type of comparator evidence that the Fifth Circuit would have required, but the type of evidence Gonzalez sought to introduce also satisfies the exception, though the case may not be as strong. Justice Alito emphasized that the exception is narrow and that the Mt Healthy burden shifting analysis does not come into play unless and until the plaintiff can satisfy the narrow Nieves exception and that courts should not conflate the two analyses.  Additionally, Justice Alito would have answered the second question presented and in his opinion, believes that Nieves applies to all arrests and does not hinge on the split-second nature of the arrest.

To read the decision, click here.

To read the amicus brief, click here.

Holding: In a unanimous opinion, the Supreme Court issued a narrow holding in Sheetz v. El Dorado County, a Takings case involving impact fees.  The Court held that legislatively enacted impact fees are not exempt from Nollan and Dolan but remanded to the lower court on all other arguments.

This case involves the County of El Dorado’s traffic impact mitigation fee, which it adopted via General Plan, to require new development to help finance the construction of new roads and widen existing roads.  The amount of the fee is set by formula after the County conducted a nexus study and generally, the fee was based on the location of the project (i.e., the specific geographic zone within the County) and the type of project (e.g., single-family residential, multi-family residential, general commercial).  In assessing the fee, the County does not make any “individualized determinations” as to the nature and extent of the traffic impacts caused by a particular project on state and local roads.

Mr. Sheetz, a resident of the County, applied for a building permit to construct a single-family home on his property. The County agreed to issue the permit on the condition that he pay the impact fee.  He paid and the permit was issued, but he then challenged the fee as invalid under the Takings Clause of the Fifth Amendment.  He argued that the fee was an unconstitutional condition under Nollan and Dolan as the County did not make an individualized determination that an “essential nexus” and “rough proportionality” existed between the traffic impacts caused by his project and the need for improvements to state/local roads.   

The California Court of Appeals held that the Nollan and Dolan “essential nexus” and “rough proportionality” tests do not apply to legislative exactions that are generally applicable to a broad class of property owners like the one at issue in this case.

In a 9-0 decision authored by Justice Barrett, the Supreme Court reversed, concluding that “[t]he Takings Clause does not distinguish between legislative and administrative permit conditions.”  The Court reasoned that the text, history, and precedent support its conclusion that legislatures are not exempt from the Takings Clause. And because the Takings Clause applies equally to legislators and administrators, it “prohibits legislatures and agencies alike from imposing unconstitutional conditions on land-use permits.”

The Court acknowledged that the area of permit conditions is “complicated.”  But, the Court explained, where a building permit is conditioned on something unrelated to the land-use interest Nollan and Dolan will apply.  Nollan requires an “essential nexus” between the condition and the government’s land-use interest.  While Dolan requires the conditions to have “‘rough proportionality’ to the development’s impact on the land-use interest.”

The Court’s narrow ruling was not entirely surprising after oral argument as it noted that the parties agreed on this bottom line holding as the County conceded at oral argument that “building permits are not exempt from scrutiny under Nollan and Dolan just because a legislature imposed them.”   The silver lining was that in reaching this narrow holding, the Court declined to address any other arguments “including whether a permit condition imposed on a class of properties must be tailored with the same degree of specificity as a permit condition that targets a particular development.”  In other words, the Court did not rule on Mr. Sheetz’s arguments that Nollan and Dolan require local governments to make individualized determinations regarding the impact fees.

Importantly, the decision does not prevent local governments from enacting reasonable permitting conditions, including impact fees, via legislation.  Though local governments will want to ensure that all such legislatively imposed impact fees comply with Nollan and Dolan’s requirements.  And local governments may expect challenges by litigants in this area to ensure compliance with the heightened scrutiny required under these precedents.

Although the decision was unanimous, it resulted in three separate concurrences. The main disagreement appeared to be between Justice Gorsuch, who wrote only for himself, and Justice Kavanaugh, who wrote for himself, as well as Justices Kagan and Jackson.  Justice Kavanaugh explains that the majority decision does not “address or prohibit the common government practice of imposing permit conditions, such as impact fees, on new developments through reasonable formulas or schedules that assess the impact of classes of development rather than the impact of specific parcels of property.”  Justice Gorsuch’s concurrence notes that Nollan and Dolan do not “distinguish[] between government actions against the many and the few.”  This issue will warrant further development in the lower courts and local governments will want to ensure they advocate for positions that do not require individualized inquiries into these legislatively enacted fees.

The Local Government Legal Center filed an amicus brief joined by IMLA, NACo, NLC, and GFOA authored by Austin Yang, Kristen Jensen, & Giulia Gualco-Nelson with the City and County of San Francisco. In the brief, the LGLC argued that legislatively enacted, generally applicable impact fees should not be subject to Nollan and Dolan.  But more fundamentally, the brief emphasized the importance and ubiquity of legislatively enacted impact fees and stressed that the Court should not require individualized determinations for these fees as doing so would wreak havoc on development.  The brief also educated the Court on nexus studies and the importance of impact fees more broadly.

To read the decision, click here.

To read the amicus brief, click here.

Holding: In a 6-3 opinion in Muldrow v. City of St. Louis, the Supreme Court created a new standard under Title VII for employee transfers, rejecting any heightened harm requirement – such as materiality or significant disadvantage – that lower courts have applied.  However, the Court did not go so far as to adopt the Petitioner’s proposed rule in the case which would have found any transfer, regardless of harm would be actionable under Title VII if based on a protected characteristic.  Instead, the Court compromised, and concluded that Title VII’s text requires “some harm” in a forced transfer suit.  Where exactly is the line between “some harm” and “material” harm is not entirely clear, though the Court does provide several examples from case law in lower courts of what would qualify in its opinion.

In this case, a newly appointed police commissioner for the City of St. Louis transferred twenty-three police officers.  Sgt. Muldrow was one of these officers. She was transferred out of the Intelligence Division, where she investigated human trafficking and public corruption and oversaw the Gang Unit to the Fifth Division.  Her pay and rank remained the same with the transfer, but the new job was less prestigious, and she could no longer wear plain clothes.  In addition, her schedule changed from weekdays only to a rotating schedule involving some weekends and she also lost access to a FBI unmarked vehicle she had with the Intelligence Division.

She sued, claiming her transfer was based on her sex in violation of Title VII.  Title VII makes it unlawful for an employer “to fail or refuse to hire or to discharge any individual, or otherwise to discriminate against any individual with respect to his compensation, terms, conditions, or privileges of employment, because of such individual’s race, color, religion, sex, or national origin.” §2000e–2(a)(1).  The Eighth Circuit held that Sgt. Muldrow could not demonstrate the transfer resulted in a “materially significant disadvantage” because her pay, benefits, and rank remained the same.

In an opinion authored by Justice Kagan, the Supreme Court vacated the judgment, concluding that the text of Title VII does not require a heightened harm showing.  The Court noted that whether the lower courts were requiring a “material disadvantage” or a “significant disadvantage” those approaches were all incorrect.  Instead, under the new test, an employee “must show some harm from a forced transfer” that harm just need not rise to the level of “serious” or “significant.”  The Court explained that the term “discriminate against” in the language of the statute refers to “differences in treatment that injure” or “practices that treat a person worse” because of a protected trait.  To add the word “significant” would be imposing a requirement that Congress did not write into the statute.  Additionally, the Court explained that the words “terms or conditions” in the statute are used, not in the “narrow contractual sense” but instead are meant to encompass “more than the economic or tangible.”

In response to a concurrence in the judgment, the Court’s majority explained the sweeping nature of its ruling, noting this new standard “changes the legal standard used in any circuit that has previously required ‘significant,’ ‘material,’ or ‘serious’ injury.”  The Court noted its holding “lowers the bar Title VII plaintiffs must meet” and “because it does so, many cases will come out differently.” The Court also provided several examples of cases from lower courts which had applied a heightened harm threshold which would come out differently under the Court’s new test.

The Court rejected the City’s arguments about text, precedent in the context of an anti-retaliation case, and policy. In terms of policy, the City argued that courts would be flooded with lawsuits if a lower standard is applied.  The Court explained that is a problem for Congress, not the Court.

Finally, in terms of Sgt. Muldrow herself, the Court concluded that if her allegations are true, she meets the Court’s new test “with room to spare.”  However, the Court noted that she may have forfeited arguments about her schedule and the unmarked car and there may be other proof issues in the case, and thus remanded to the lower court to reexamine the case in light of the new standard.

Justice Alito concurred in the judgment only, calling the majority opinion “unhelpful” and noting he has “no idea” what the test requiring some harm or injury but not “significant” or “substantial” harm means.  In Justice Alito’s view, there is little difference between the lower court’s “substantial harm” test and the majority’s “harm” test and lower court judges “will continue to do pretty much just what they have done for years.”

Justice Kavanaugh meanwhile also concurred in the judgment only as he would not have required any showing of harm.  Although Justice Alito believes the majority’s test is virtually the same as the test employed by lower courts applying a materiality standard, Justice Kavanaugh believes the majority’s “some harm” threshold is “a relatively low bar.”  And he therefore believes his no harm test would be the same as the majority test in 99 out of 100 cases, if not all 100.

The Local Government Legal Center filed an amicus brief in this case authored by IMLA legal staff: Amanda Karras, Erich Eiselt, Deanna Shahnami, and Ravinder Arneja.  In that brief, the LGLC argued that adopting the rule advocated by the petitioner that any transfer is actionable under Title VII if based on a protected characteristic would have profound policy implications for local governments in the context of public safety and budgets.  The brief advocated for maintaining the materiality requirements required in most circuits.  While that position was rejected by the Court, the fact that the Court did not adopt the Petitioner’s argument either means local governments will retain some ability to weed out unmeritorious claims in this area.  But local governments should examine policies surrounding employee transfers and ensure that proper training is conducted to avoid liability in this area.  Only time and litigation in this area will tell us whether Justice Kavanaugh or Justice Alito was correct in terms of how this new test will be applied.

To read the Court’s decision, click here.

To read the LGLC’s amicus brief, click here.

Facts: In this case, two school district officials created public Facebook and Twitter pages to promote their campaigns for office.  They maintained separate private accounts for family/friends.  After they won their elections, they used their public social media pages generally to promote school board business, solicit input on board decisions, invite the public to school board meetings, etc. The “about” section on the pages lists their positions as school trustees, and links to official trustee emails.  Only the trustees themselves could post on their public pages, but members of the public could comment on a post or react to it (like, dislike, etc.).

Christopher and Kimberly Garnier (Garniers) were members of the community with children in the school district.  They would frequently write repetitive and critical comments on the school board officials’ pages.  For example, within ten minutes of the officials’ posting a message on their pages, the Garniers would post over 200 identical replies.  The school board officials deleted and hid the posts and then eventually blocked them from their social media accounts.

The Garniers sued under Section 1983, claiming the school board officials had violated their First Amendment rights by blocking them from their social media pages.

Proceedings Below: The Ninth Circuit concluded that the school board officials were acting under the color of state law for the purposes of Section 1983 and that therefore blocking the Garniers from their account because of the message the Garniers were promoting violated the First Amendment. The Ninth Circuit analogized the situation to off-duty governmental employees, explaining that the question is whether the public official’s conduct even if “seemingly private,” is sufficiently related to the performance of his or her official duties to create “a close nexus between the State and the challenged action,” or whether the public official is instead “pursu[ing] private goals via private actions.”  The Ninth Circuit concluded that the social media pages were “overwhelmingly” geared toward providing official information and soliciting feedback on the same.  The court also rejected the argument that these were personal campaign pages even though that is how they started out.

Issue:  Whether a public official engages in state action subject to the First Amendment by blocking an individual from the official’s personal social-media account, when the official uses the account to feature their job and communicate about job-related matters with the public, but does not do so pursuant to any governmental authority or duty.

Click here to see the brief.

Holding: In Lindke v. Freed, the Supreme Court set forth the test for when local government officials are considered “state actors” for the purposes of the First Amendment when they post on social media.  The case is a win for local governments as the test provided by the Supreme Court safeguards the free speech rights of elected officials while balancing the rights of their citizens.  More importantly, it is objective and focuses on authority as the test to determine if the official is acting “under the color of state law.”  As Justice Barrett put it in writing for the unanimous Court: “To misuse power…one must possess it in the first place.”

In this case, Mr. Freed operated a Facebook page, which he started in college in 2008.  At some point, he attracted more than 5,000 friends and under Facebooks rules, he was required to convert it the account to a public a “page” which allows for unlimited followers.  He was required to pick a category for the page, and he picked “public figure.”  In 2014, he was appointed the city manager of Port Huron, Michigan and he added that information to his Facebook page.  He listed his contact information as Port Huron’s, including linking to the city website, city email, etc.  He posted primarily about personal matters including posting pictures of his family, his dog, and food he likes to eat.  He would also post information about his job, including the town’s COVID-19 policies and articles on public-health measures as the pandemic continued.

Mr. Lindke was a citizen of Port Huron and unhappy with the City’s COVID policies.  Mr. Lindke would post negative comments on Mr. Freed’s Facebook page and Mr. Freed initially deleted those comments, but then eventually blocked Mr. Lindke from the page.

Mr. Lindke sued, claiming blocking him from the Facebook page was “state action” for the purposes of a Section 1983 claim and that Mr. Freed had violated his First Amendment rights in doing so. Mr. Freed argued his account was strictly personal and not subject to the constraints of the First Amendment.  The Sixth Circuit found in favor of Mr. Freed, concluding the proper test to determine if the government official is engaging in state action is to ask whether he was “performing an actual or apparent duty of his office or if he could not have behaved as he did without the authority of his office.”  The lower courts were split on the proper test and the Ninth Circuit in a separate case involving the same question had held that state action applies to public officials’ social media accounts based on the “appearance and content” of the pages.

The Supreme Court took the case to resolve the split and provide the test to determine when the First Amendment applies to a government official’s social media account.  In a unanimous decision authored by Justice Barrett, the Supreme Court rejected the Ninth Circuit’s subjective “appearance and content” test and concluded that a government official’s social media posts are “attributable to the State only if the official (1) possessed actual authority to speak on the State’s behalf, and (2) purported to exercise that authority when he spoke on social media.”  The Court noted that the “appearance and function of the social-media activity are relevant at the second step, but they cannot make up for a lack of state authority at the first.”  The authority must be “real, not a mirage.” The analysis will hinge on substance and not the mere label of public official and the Court explains, it will require a fact-intensive inquiry.

The Court notes that the line between private and state action can be “difficult to draw.”  The difficulty is magnified, the Court explains, because of the nature of some public officials’ work, which can make it seem like “they are always on the clock.”  But the Court emphasized that public officials have their own First Amendment rights, including rights to speak about their employment, that they do not relinquish simply by becoming public officials. The burden is on the plaintiff to show the official is “purporting to exercise state authority in specific posts.”  Additional factors, such as the use of governmental staff and resources may help demonstrate the use of that authority.

The Court explains that its test is derived from the text of Section 1983, which provides a cause of action where “[e]very person who, under color of any statute, ordinance, regulation, custom, or usage, of any State deprives someone of a federal constitutional or statutory right.” (internal quotations omitted).  Thus, a public official has the authority to speak on behalf of the government if based on a written law, regulation, or ordinance which authorizes that person to make official announcements or if there was a well-established custom such that the “power to do so has become permanent and well settled.”  (internal quotations omitted). The Court notes in situations where an account belongs to the government or is passed down to the occupier of the particular office, those would be government accounts subject to the First Amendment.

The Court admonished lower courts not to rely on “excessively broad job descriptions” to conclude that authority to speak on behalf of the government exists.  The question should be “whether making official announcements is actually part of the job that the State entrusted the official to do.”

The Court provided guidance and hypotheticals, which may prove instructive.  It explained that in cases where someone has the authority to communicate with their residents, for state action to exist and First Amendment liability to attach, “there must be a tie between the official’s authority and the gravamen of the plaintiff’s complaint.”  For example, if Mr. Freed had no authority over public health and he was posting about local restaurants with health-code violations and deleted unwanted comments on those posts, he would not be acting with any state authority and would not violate the First Amendment.

More obviously, if a mayor posts something expressly invoking the authority of the City or State, the action takes immediate legal effect, and is not otherwise available elsewhere, that post would likely be state action according to the Court. On the other hand, if the official is merely sharing information that is otherwise publicly available, it is far less likely to be state action.

Public officials may use labels and disclaimers on their social media pages such as “this is the personal page” of the individual or “the views expressed are strictly my own” which, according to the Court would entitle the official to “a heavy (though not irrebuttable) presumption that all of the posts on his page were personal.”  However, the Court noted such a disclaimer cannot provide cover to conduct government business on a personal page such as by live streaming a council meeting only on that “personal” page.

Because Mr. Freed’s page did not have a disclaimer and his page was used for a variety of things including both private and those related to his job, a fact-intensive inquiry is necessary to determine if when he deleted comments or blocked Mr. Lindke, he was engaged in state action.  The Court also notes that lower courts will need examine both activities that he engaged in on the social media account: deleting and blocking.  The Court cautions that because blocking is a blunt instrument, when an official is using social media in a mixed way, as Mr. Freed did, there is a greater potential to expose themselves to liability as the court must analyze the entire social media page.  Deleting on the other hand, is more precise and the only relevant inquiry for First Amendment purposes pertains to those posts for which the comments were deleted.

Because the test the Court issued was new, the Court vacated the judgment of the Sixth Circuit and remanded the case for consideration in light of its opinion.  The Court granted certiorari in two cases involving this issue, but its decision in Lindke is the controlling decision. The other decision, O’Connor-Ratcliff v. Garnier resulted in a per curiam short decision vacating the Ninth Circuit’s judgment and remanding the case to consider in light of the new test adopted by the Court.

The Local Government Legal Center filed an amicus brief (joined by IMLA, NACo, and NLC) advocating for a clear and easy to apply state action test focused on authority.  The brief, which was authored by Caroline Mackie & Robert Hagemann of Poyner Spruill also highlighted the unworkable nature of the subjectively driven appearance test and urged the Court to reject that test.  And the brief argued that public officials have their own First Amendment rights, which could be squelched if the Court adopts too broad of a test.

As the Court notes, there are millions of state and local government employees in this country with a wide variety of jobs and many of them use social media and will therefore be impacted by this decision.  This decision will hopefully bring them some clarity in this area.

Click here to see the brief.

Groff was hired by USPS as a Rural Carrier Associate, which is a non-career employee who provides coverage for absent employees.  The work for a RCA is as needed and the job requires flexibility.  RCAs do not accrue leave and any absences are unpaid.  During Groff’s employment, there was a shortage of RCAs in his region. Also, during this time, USPS contracted with Amazon to deliver packages, including on Sundays.  USPS indicated that the success of the Amazon Sunday delivery was critical to USPS.

Plaintiff’s sincere religious beliefs dictate that Sunday is meant for a day of worship and rest.  He therefore informed USPS that he was unable to work on Sundays.  USPS told him that during peak season (November – January) he would have to work Sundays or find another job.  But they offered other accommodations, including that he could start later on Sunday after attending services and work after.  USPS also offered to find employees to swap shifts with him.  USPS was able to find other employees to cover his Sunday shifts for some of the time, but there were at least 20 Sundays where no co-workers could swap, and Groff did not work (there were only 2 other individuals who could cover his shifts for some of time time).  Groff was disciplined for failing to work on those days and ultimately left USPS.

Groff sued alleging violations of Title VII for failing to accommodate his religion.

Title VII makes it unlawful “to discriminate against an individual with respect to his compensation, terms, conditions, or privileges of employment, because of such individual’s…religion.”  To establish a prima facie case of religious discrimination, Groff must show he has 1) a sincere religious belief that would prohibit work on Sunday; 2) informed his employer of the conflict; and 3) was disciplined for failing to comply with the conflicting job requirement.  The burden then shifts to the employer to demonstrate either that “it made a good-faith effort to reasonably accommodate the religious belief, or such accommodation would work an undue hardship upon the employer and its business.”

The first issue is whether the employer offered a reasonable accommodation.  If the employer did, the statutory inquiry ends.  In the Third Circuit, to demonstrate a legally sufficient accommodation, it must eliminate the conflict between the job duty and the sincerely held religious belief.  The Third Circuit concluded that “even though shift swapping can be a reasonable means of accommodating a conflicting religious practice, here it did not constitute an “accommodation” as contemplated by Title VII because it did not successfully eliminate the conflict.”

If the good faith attempts to accommodate the religious practice are unsuccessful, the next step in the analysis under Title VII asks whether providing the accommodation would work an undue hardship on the employer.  “An undue hardship is one that results in more than a de minimis cost to the employer.”  USPS provided evidence that Groff’s absences created more work for the postmaster and Groff’s superiors, created burdens for his co-workers who had to do extra work, and created a tense atmosphere amongst other employees and hostility toward management. The Third Circuit concluded that Groff’s requested accommodation to be exempt from working Sundays caused “more than a de minimis cost on USPS because it actually imposed on his coworkers, disrupted the workplace and workflow, and diminished employee morale…”

The Supreme Court granted certiorari on the following issues: (1) Whether the court should disapprove the more-than-de-minimis-cost test for refusing religious accommodations under Title VII of the Civil Rights Act of 1964 stated in Trans World Airlines, Inc. v. Hardison; and (2) whether an employer may demonstrate “undue hardship on the conduct of the employer’s business” under Title VII merely by showing that the requested accommodation burdens the employee’s coworkers rather than the business itself.

Click here to see the brief.

Holding: In a unanimous opinion, the Supreme Court concluded that Hennepin County violated the Takings Clause by keeping the surplus equity in a condominium that it sold after the homeowner failed to pay her property taxes (and failed to regain title to that property pursuant to state law).  The Taking occurred not with the sale of the property for failure to pay property taxes or when the County kept the tax debt (including interest and penalties), but rather, the County violated the Takings Clause by keeping the surplus equity.  As Chief Justice Roberts put it, “[t]he taxpayer must render unto Caesar what is Caesar’s, but no more.”

Under Minnesota law, property taxes become a lien against the property once they are assessed.  Minn. Stat. § 272.31.  If property taxes are not paid during the year in which they are due, they become delinquent the following year, at which point, a county may obtain a judgment against the property.  Minn. Stat. § 279.03 subd. 1.  As a matter of notice and procedure, each year, the county auditor creates a delinquent tax list, which identifies the properties on which taxes are owed, the taxpayer(s), and the amount of taxes/penalties owed.  The delinquent tax list is published twice and mailed to all delinquent taxpayers.  A lawsuit is commenced against delinquent taxpayers and if there is no answer, the court enters a judgment against the property.

At this point, delinquent taxpayers have several avenues to avoid forfeiture. First, while title in the property vests in the state after judgment is entered, that title is subject to the right of redemption, which is a 3-year period during which the taxpayer may redeem the property for the amount of delinquent taxes, penalties, costs, and interest.  Minn. Stat. §§ 281.01–281.02, 281.17.  Second, a property owner seeking to avoid forfeiture who cannot afford to redeem the property, can make a “confession of judgment,” which then allows the property owner to consolidate the debt /tax delinquency and pay in installments over five to ten years. If a property owner fails to pursue either of these avenues, absolute title vests in the state and all outstanding taxes, penalties, interest, etc. are canceled.  Under Minnesota’s tax foreclosure scheme, former property owners have no way to claim any proceeds from the sale of the property in excess of the tax debt.

Geraldine Tyler owned a condominium in Minneapolis and stopped paying taxes in 2010.  At the time the County sought judgment under the statutory scheme, she owed $15,000 in unpaid state property taxes, penalties, costs, and interest. She received the statutorily prescribed notice of foreclosure, failed to answer, and then never tried to redeem the property during the 3-year period.  She also did not seek to repurchase the property.  Thereafter, Hennepin County sold the property for $40,000, and kept the surplus (and distributed it) pursuant to state law.

Ms. Tyler sued the County, claiming that keeping the surplus equity violated both the Takings and Excessive Fines Clauses of the Constitution. In addition to arguing that keeping the surplus equity did not violate the Constitution, the County argued that Ms. Tyler did not have standing as she had additional encumbrances and liens on the property for an outstanding mortgage and HOA lien that amounted to more than the so-called equity in her property.

In a 9-0 decision, the Supreme Court rejected the County’s standing arguments and held that the County violated the Takings Clause.  The Takings Clause provides that “private property [shall not] be taken for public use, without just compensation.” U. S. Const., Amdt. 5. The Court noted at the outset that the imposition of taxes does not constitute a Taking and that a state or local government may also impose interest and late fees when a taxpayer fails to pay taxes.  Furthermore, the Court indicated that a state or local government may also seize property to recover a tax debt without running afoul of the Takings Clause.

The question in this case is whether a homeowner whose property is sold pursuant to a valid state procedure for failure to pay a tax debt has any property interest in the excess value (after satisfying the tax debt, interest, and fees) of that home.  Does that equity or excess value constitute a property interest such that keeping it runs afoul of the Takings Clause?

The Court tells us to answer that question, it looks to state law as an “important source” to understand property rights, but that state law cannot be “the only source.”  Because “[o]therwise, a State could ‘sidestep the Takings Clause by disavowing traditional property interests’ in assets it wishes to appropriate.”  The Court therefore looks to not just state law to determine if there is a property interest, but also historical practices and the Court’s precedent.

The Court explains that history dating back to Magna Carta supports the notion that a “government may not take more from a taxpayer than she owes…”  And this principle continued in the early adoption of state laws at the time of the founding and at the time of the passage of the Fourteenth Amendment.

In addition to history, the Court relied on its precedents to support its holding.  The County pointed to Nelson v. City of New York, 352 U.S. 103 (1956) to support its position.  In Nelson, New York City foreclosed on properties for unpaid water bills and kept the excess.  The Court distinguished Nelson given that the property owner had the ability after foreclosure to request the surplus from the sale.  In Nelson, the homeowners failed to make such a request, so the Court concluded that they forfeited their right to the surplus. In this case, Minnesota law provides no such opportunity for the homeowner to recover the equity surplus once absolute title transfers / after the property is sold.  As a result, the Court concludes Nelson is readily distinguishable.

The Court also notes that although Minnesota law would indicate that the surplus equity is not a property right in this case, in other contexts, Minnesota law does recognize that a property owner is entitled to the surplus equity after satisfying a debt (for example, when a bank forecloses on a property for failure to pay a mortgage).  The Court reasons that the state cannot manipulate property rights in this manner and make an exception only for itself.

Because the Court concluded that the County violated the Takings Clause, it did not reach the Excessive Fines question.  However, Justices Gorsuch and Jackson concurred in the decision and wrote separately to indicate that they would have likely found an Excessive Fines violation.

The Local Government Legal Center, joined by IMLA, the National League of Cities, the National Association of Counties, and the Government Finance Officers filed an amicus brief in this case in support of the County which was drafted by John Baker and Katherine Swenson of Greene Espel.  In the brief, we argued that principles of federalism dictate that the Court should not interfere with the administration of state taxes in cases like this where adequate procedural safeguards exist for the owner to safeguard her property interest.  The brief also pointed out the practical implications of a ruling in favor of the property owner, including the significant costs local governments incur in selling tax forfeited properties as well as the fact that such a ruling would provide a perverse incentive for property owners to abandon their properties rather than sell them as they would not need to bear those costs.

As the Court points out in its decision, while Minnesota is in the minority, it is not alone in excluding surplus equity from the definition of property rights after title vests in the state or local government.  According to the Court, thirty-six states require the return of the surplus equity to the taxpayer.  As a practical matter then, those state laws that allow for the retention of the excess will need to be updated and local governments will need to ensure that they are not keeping any surplus equity after the sale of a forfeited property.  That said, the Court specifically noted that interest and fees on a tax debt would not be considered a Taking (though of course, the Court did not get into an excessive fines analysis so local governments would be wise to tread carefully and not simply seek to redefine all surplus equity as a “late fee” or fine as that would almost surely be struck down).  Justice Kagan did have an exchange during oral argument with the advocate for Ms. Tyler about whether the local government could keep some of the surplus due to the burden of selling the property.  The Court did not answer that question so it is an open question as to whether doing so would be constitutional.  And of course, such a procedure would likely be challenged (even if it is not ultimately considered a Taking).

States and local governments may also look to Nelson as guidance and provide a mechanism for the return of the surplus equity after the sale of the property.  That said, while Nelson remains good law, the question of overruling Nelson was not on the table, and it may be that such a scheme (which would allow a local government to keep surplus equity after the sale of the property if there is a mechanism for the return of the equity to the homeowner) may not be viewed favorably by the current Court and may also conflict with subsequent precedents from the Court.

To read the decision, click here.

To read the Local Government Legal Center amicus brief, click here.