Supreme Court Update: Horne v. Dep't of Agriculture (14-275), Kimble v. Marvel Entertainment (13-720), Patel v. City of Los Angeles (13-1175) and Kingsley v. Hendrickson (14-6368)

June 25, 2015 Supreme Court Update

Greetings, Court Fans!

Raisins, radioactive wrists, Red Roof registries, and reformatory roughhousing were all on the Court's radar Monday (it's a very broad radar horizon), as it issued decisions in Horne v. Dep't of Agriculture (14-275), holding that the seizure of personal property requires just compensation under the Fifth Amendment; Kimble v. Marvel Entertainment (13-720), holding that stare decisis precludes the inventor of a Spider-Man toy from collecting royalties after expiration of his patent; Patel v. City of Los Angeles (13-1175), holding that a city ordinance requiring motels to produce information about their guests to police on demand is facially invalid under the Fourth Amendment; and Kingsley v. Hendrickson (14-6368), holding that excessive force claims brought by pretrial detainees must be adjudicated under an objective standard. We've got a lot to cover, so may as well clock out for the day. To the summaries!

In Horne v. Dep't of Agriculture (14-275), the Court addressed an issue not often raised in constitutional litigation: the Government's interest in an orderly raisin market. Under the Agriculture Marketing Agreement Act of 1937, the Government has the power to promulgate orders to maintain the stability of various agricultural markets, including the raisin market. Pursuant to this power, the Raisin Administrative Committee (you read that right) is authorized to demand that raisin growers turn over a certain percentage of their crop, which the Committee then sells. The money from the sales is mainly used to subsidize raisin exporters. After deducting the Committee's administrative expenses, any net proceeds are returned to the raisin growers. The petitioners in this case—a family of California grape wrinklers—were ordered by the Raisin Committee to turn over 47% of their crop in 2002–2003, and 30% in 2003–2004. The petitioners refused to do so, even after the Government sent trucks to collect the bounty. The Government then leveled a $680,000 fine: the market value of the raisins plus a penalty of $200,000. If the Hornes had turned over the raisins, they would have received no compensation in one year and an amount less than the cost of growing the raisins in the other. The Hornes brought suit, alleging an unconstitutional taking under the Fifth Amendment.

On the case's second trip to the Court (in the first, the Court held the Hornes could bring a takings claim), eight of the Justices agreed that the Raisin Committee's actions were a per se taking under the Fifth Amendment. The Chief Justice wrote the majority opinion, joined by Justices Scalia, Kennedy, Thomas, and Alito, and joined in part by Justices Ginsburg, Breyer, and Kagan. Roberts began by holding that the Government has a categorical duty to pay just compensation when it seizes property. Although this categorical duty is applied most often to the seizure of real property, it applies with equal force to the seizure of personal property. Roberts observed that the Fifth Amendment's Takings Clause is rooted in almost 800 years of law prohibiting the taking of personal property without compensation. The Magna Carta expressly forbade taking corn without payment; Massachusetts had the same rule for cows in the seventeenth century; and Virginia required compensation for military takings of beef, pork, and bacon in 1777. Further, the actions of the Raisin Committee were unquestionably a seizure of personal property—the Committee often literally took the raisins, and even if it didn't, title to the raisins was transferred to the Committee. The Chief rejected the argument that there was no per se taking in this case because the Government returned any net proceeds to raisin growers. After all, sometimes growers didn't receive any money in compensation. He also found unpersuasive the Government's argument that grape growers waived their right to just compensation by choosing to participate in the regulated interstate raisin market. This argument—which he described as "let them sell wine"—would mean that the Government could condition any sale of goods in interstate commerce on waiving constitutional rights. Because raisins are the "fruit of the growers' labor," "any physical taking of them for public use must be accompanied by just compensation." The Chief concluded by finding that just compensation in this case was easy to calculate: it was the market value of the raisins. With that, the majority ended more than a decade of litigation. The petitioners owed nothing to the Government, and were entitled to keep their raisins.

Justice Breyer, joined by Ginsburg and Kagan, concurred in part and dissented in part. He agreed that the Government's actions were a per se taking. However, he would have remanded for a determination of whether any compensation was actually due. Breyer wrote that it was possible petitioners were not entitled to any compensation because they received an offsetting benefit from the Government's actions. Specifically, the Government's seizure may have had the effect of raisin' raisin prices in the free market. In other words, petitioners may have made more money than they would have if their raisins weren't seized. If the petitioners had already received just compensation, even though there was a per se taking, it was not unconstitutional. In response, Justice Thomas wrote a one-paragraph concurrence. In his opinion, the Government may not take property for non-public use, even if it pays compensation. The raisin seizure was for the benefit of raisin exporters—a non-public use. Therefore, he concluded, any calculation of just compensation was "fruitless."

Justice Sotomayor, the lone dissenter, fundamentally disagreed with the Court's interpretation of the Takings Clause. She would have held that under existing Supreme Court precedent, the Government only has a categorical duty to pay just compensation when it destroys all property rights. Here, the petitioners had a property right remaining to them—their interest in any net proceeds left over. Justice Sotomayor made it clear that she was not concerned with whether the Raisin Committee's actions were "a good idea now, whether it was ever a good idea, or whether it intrudes upon some property rights." Instead, she focused on a line of precedent holding that as long as a property owner retained some interest in the property, there was no per se taking. She also would have found that under existing precedent, the Government can condition entrance into the interstate raisin market on the forfeiture of certain property rights (or raisins). Justice Sotomayor concluded by discussing the practical effects of the Court's ruling. In her opinion, it had blurred a bright-line test for determining whether there was a per se taking. More strangely yet, by focusing on the fact that the raisins had been taken physically, the majority "instructs the Government that it can permissibly achieve its market control goals by imposing a quota without offering raisin producers a way of reaping any return whatsoever on the raisins they cannot sell. I have trouble understanding why anyone would prefer that."

Moving from raisins to ‘rachnids (of a sort), the Court in Kimble v. Marvel Entertainment (13-720) provided a primer on stare decisis, in the context of the competitive market for Spider-Man toys. In 1990, Stephen Kimble patented a toy that lets kids shoot "webs" of pressurized foam string from their hands. He tried to sell it to Marvel Enterprises for use in Spider-Man toys. Marvel turned him down but then promptly copied his idea for its popular "Web Blaster" Spider-Man toy. Kimble sued for patent infringement, and the parties ultimately settled. Marvel agreed to pay Kimble a sizable lump sum as well as a three percent royalty on all of Marvel's future sales of the Web Blaster or similar toys. Shortly afterward, however, Marvel's lawyers "discovered" the Supreme Court's 1964 decision in Brulotte v. Thys Co., which held that a patent holder cannot charge royalties for the use of his or her invention after the patent has expired. Marvel sought and obtained a declaratory judgment that Brulotte relieved it of its contractual obligation to pay Kimble royalties after 2010, the year the patent expired. The Ninth Circuit reluctantly affirmed. The Supreme Court then granted certiorari limited to the question of whether it should overrule the almost universally condemned Brulotte decision.

The Court affirmed, in a 6-3 decision (liberals and Scalia) penned by Justice Kagan. Patent law gives the patent holder exclusive rights to the patented article, typically for a period of twenty years. The Supreme Court has "carefully guarded" that cut-off date by striking down a variety of measures it believed would restrict free access to formerly patented inventions, since such measures effectively extend the twenty-year period of patent protection Congress created. Brulotte (an 8-1 decision) came out of this caselaw: The Court believed that permitting patent holders to collect royalties after the expiration of the patent "runs counter to the policy and purpose of the patent laws" by restricting the free use of information after the patent has expired. Thus Kagan characterized Brulotte as a statutory interpretation decision about the meaning of the patent laws, a reading that marked the primary disagreement with the dissenters.

With this understanding of Brulotte's rationale and basis, Kagan found no persuasive reason to depart from the foundational rule of stare decisis. Stare decisis only matters for decisions that are wrong, or at least arguably so, since rightly decided cases support themselves. Reversing a prior decision requires what the Court has called a "special justification." And in statutory interpretation cases, Congress can always overrule a decision it finds contrary to its intent (something Congress never did with Brulotte's rule). Likewise, in contract or property cases, parties rely on existing legal rules to arrange their affairs, so these rules should rarely be changed. Since Brulotte combined statutory interpretation with contract and property rules, a "superpowered" form of stare decisis applies, which required a "superspecial" justification to overrule Brulotte. The traditional reasons for discarding stare decisis—that a case's statutory or doctrinal underpinnings have eroded or that the case has proved unworkable—don't apply here: The cases Brulotte relied on are all still good law, and none of the parties had identified any special problem with Brulotte's rule in practice. Kimble argued that Brulotte was really an antitrust decision, and one based on simply erroneous economic analysis, and that it was contrary to sound patent policy, since it gave patent holders insufficient opportunity to monetize slow-to-market inventions. As to the first point, the Court recognized that in the antitrust context, it has been more willing to overrule prior decisions based on newer and sounder economic analysis. But that is because of the unique role Congress has given the Court to give substance to antitrust law. Since Brulotte was, in the majority's view, a statutory interpretation case, not an antitrust case, this principle was irrelevant; and in any event, the Court was skeptical that economics played much of a role in the Brulotte decision. Once that point is dismissed, the Court saw the rest of Kimble's arguments as nothing more than the claim that Brulotte was wrongly decided, and there is nothing superspecial about that. Justice Kagan, who cited Dr. Seuss earlier in the term, closed with a hat tip to Spider-Man creator Stan Lee, observing that, though the Court has the power to overturn precedent, "we should exercise that authority sparingly. Cf. S. Lee and S. Ditko, Amazing Fantasy No. 15: ‘Spider-Man,' p. 13 (1962) (‘[I]n this world, with great power there must also come—great responsibility.')."

Justice Alito, joined by the Chief and Justice Thomas, dissented. He saw little in the statutory framework that could support the Brulotte rule: Nothing about the patent statutes says anything about when the right to license a patent should end. Instead, they read Brulotte as an antitrust or common-law decision based on a concern that permitting patent holders to negotiate for (and collect) royalties even after the patent has expired would give them excessive market power. Since the economic assumptions behind this rule had been rejected by nearly every commentator (and Brulotte's per se rule was at odds with antitrust law's general "rule of reason" approach), the dissenters found no reason to persist in this unsound rule of patent policy.

Next up, in City of Los Angeles v. Patel (13-1175), the Court considered a facial challenge under the Fourth Amendment to a Los Angeles ordinance requiring hotel operators to record and keep specific information about their guests and make those records available to police for inspection on demand. The case presented a diversity of viewpoints on facial constitutional challenges, the Fourth Amendment's application to "closely regulated industries" and, at bottom, the seediness, vel non, of America's motels.

Los Angeles's ordinance, in effect for over 100 years and similar to ordinances found in over 100 other cities, requires hotel operators to record and keep specific information about their guests for a 90-day period and to make the records available to LAPD for inspection on demand, on pain of a fine and misdemeanor conviction for refusal. A group of motel operators brought a facial challenge to the ordinance on Fourth Amendment grounds. The District Court entered judgment in favor of the City after a bench trial, holding that the motel operators had no reasonable expectation of privacy in the records subject to inspection. The Ninth Circuit, en banc, reversed, holding that the ordinance was unconstitutional because it authorized inspections of hotel records without affording an opportunity to obtain judicial review of the reasonableness of the demand prior to being forced to comply.

In a 5-4 decision the Court affirmed, holding, first, that there is no categorical bar to facial challenges under the Fourth Amendment and, second, that the LA ordinance is unconstitutional on its face. Writing for the liberals and Kennedy, Justice Sotomayor emphasized that, while facial challenges are "the most difficult . . . to mount successfully," the Court has never held that they cannot be brought under any otherwise enforceable provision of the Constitution. The Fourth Amendment is no exception. Although an early case, Sibron v. New York (1968), could be read to foreclose facial challenges to statutes authorizing warrantless searches, the Court has subsequently entertained facial challenges under the Fourth Amendment and even declared statutes facially invalid. And, while there may be situations in which the warrantless search of a hotel registry would not be unconstitutional—i.e., where police are responding to an emergency or where the motel owner consents—the proper focus of the constitutional inquiry is on searches that the law actually authorizes, not those for which it is irrelevant.

Turing to the merits, Justice Sotomayor started with the baseline presumption that warrantless searches are per se unreasonable unless they fall within one of the few exceptions to the warrant requirement. Here, the City argued that the ordinance falls within the exception for administrative searches, but in order for an administrative search to be constitutional the subject of the search must be afforded an opportunity to obtain precompliance review before a neutral decisionmaker. Insofar as there is no such procedure available under LA's ordinance, the provision is facially invalid under the Fourth Amendment. Justice Sotomayor went on at some length, however, to stress the narrowness of the Court's holding. The only ordinance struck down was the one requiring hotel owners to make their registries available on demand; the ordinance requiring them to maintain the registries is still good law. Moreover, the majority only held that a hotel owner must have the opportunity to have a neutral decisionmaker review a police officer's demand to search the registry before facing penalties for failure to comply. This could be accomplished by use of an administrative subpoena, requiring the hotel owner to file a motion to quash if he or she objected to the search.

Justice Scalia, joined by the Chief and Justice Thomas, dissented, arguing that the ordinance should in fact be considered under a different exception for "closely regulated businesses." Quoting Marshall v. Barlow's Inc. (1978), Scalia observed that "‘[w]hen an entrepreneur embarks upon such a business, he has voluntarily chosen to subject himself to a full arsenal of governmental regulation,' and so a warrantless search to enforce those regulations is not unreasonable." While Justice Sotomayor contended that the closely-regulated business exception was meant to be exceedingly narrow—pointing out that the Court had only found four types of business to be "closely regulated"—Scalia countered that that number is simply a function of the Court's discretionary review; in fact, the Court had only identified one industry as not closely regulated. The lower courts have applied the Supreme Court's test to find a great number of industries to be closely regulated, from massage parlors to day care centers, "and yes, even rabbit dealers." Scalia similarly rejected Sotomayor's argument that the businesses that the Supreme Court has so far held to be "closely regulated"—liquor sales, firearms dealing, mining, and automobile junkyards—are all intrinsically dangerous. That has never been the test; rather, the question is whether those who engage in the industry have a reasonable expectation of privacy notwithstanding the comprehensive regulation of their business. Based upon the history of close regulation of the hotel industry (remarked upon as far back as Blackstone), Scalia concluded that anyone entering this industry does "so with an expectation that they will be subjected to especially vigilant governmental oversight." Accordingly, he would hold that the closely-regulated business exception to the warrant requirement applies, allowing for inspection of hotel registries without a warrant.

Justice Alito, joined by Thomas, issued a separate dissent, aimed at a different aspect of the majority opinion. Though he registered doubts about the majority's approach to administrative searches, his main beef was with the court's facial invalidation of the LA ordinance. He provided five examples of circumstances under which application of ordinance would be constitutional, thereby demonstrating his view that a facial challenge was inappropriate. "There are serious arguments that the Fourth Amendment's application to warrantless searches and seizures is inherently inconsistent with facial challenges," Alito wrote, but at the very least this particular challenge doesn't pass the test.

Finally, in Kingsley v. Hendrickson (14-6368), the Court provided some welcome summer reading for jailhouse lawyers. Michael Kingsley, detained in the county jail awaiting trial on a drug charge, tested his jailers' patience by refusing to comply with their instructions when trying to move him to another cell. The officers used force, but the precise details were in dispute. Kingsley sued the officers in federal court for excessive force under 42 U.S.C. § 1983, in violation of his due process rights. The jury found for the officers, and a divided panel of the Seventh Circuit affirmed. The Supreme Court agreed to review whether the jury charge correctly required that the jury evaluate both whether the officers' use of force was unreasonable under the circumstances and whether the officers acted in reckless disregard of Kingsley's safety.

In a divided 5-4 decision, the Court reversed and held the charge was error. Writing for the liberals and Kennedy, Justice Breyer clarified that excessive force claims by pretrial detainees must be evaluated under a purely objective standard, and the jury charge incorrectly added to the mix a subjective test for the officers' state of mind when using force. The Court explained that while the officer must intend to take the action that is in dispute (it can't be an accident), whether the force is excessive under the prism of due process can only be evaluated by asking whether the amount of force that was applied was objectively unreasonable. In Breyer's view, this more lenient standard does still offer protection against weak claims, because a jury must weigh all facts and circumstances from the perspective of the officer at the time of the incident, including the legitimate need to manage the jail. So, a jury could look at the security threat and the plaintiff's resistance, but also consider how much force was reasonably needed, the extent of the injuries, and efforts by the officers to temper the amount of force used. Regardless of what factors a jury considers in a particular case, however, the constitutional calculus cannot include whether the officer subjectively and maliciously intended to cause injury or acted in bad faith in reckless disregard of the risk of injury. The Court emphasized that it was applying its standard only to pretrial detainees. Claims by convicted prisoners could potentially raise different issues. Even Kingsley was not home free, though, because the Court directed the Seventh Circuit on remand to decide whether the jury charge error was harmful error based on the entire trial record, the only type of error that would warrant a new trial.

Justice Scalia dissented, joined by the Chief and Justice Thomas. He emphasized that the only constitutional issue raised by Kingsley was whether the county jail's officers intentionally inflicted punishment on a pretrial detainee without due process of law under the Fourteenth Amendment. No Fourth or Eighth Amendment claims were raised. The key words for the dissenters were "intentional infliction of punishment"—and a standard of objectively unreasonable force does not suffice to measure a constitutional due process violation. It does not, for instance, answer whether there was intent to punish in the heat of the moment. Perhaps objective reasonableness could be a stand-in for punitive intent when authorities decide on administrative matters, like the conditions of confinement, but it is a poor reflector of intent in an excessive force case. Justice Scalia concluded his constitutional lesson by explaining that there are always state-law claims like common-law assault and battery, but the Due Process Clause is more limited: "Today's majority overlooks this in its tender-hearted desire to tortify the Fourteenth Amendment."

Justice Alito issued a separate dissent, arguing that the Court should have dismissed the case as improvidently granted. His logic: A Fourth Amendment claim for unreasonable seizure employs an objective test and, while the Court has yet to decide whether a pretrial detainee can bring a Fourth Amendment claim for excessive force, if that issue is ever settled and the detainee can assert that sort of claim, there would be no need for the detainee to invoke substantive due process under the Fourteenth Amendment. That would, to Justice Alito's relief, avoid having to answer the question decided by the Court in this case.

That's it for today. If you made it this far, you'd better hope there are no "efficiency consultants" lurking around the office. We're now down to seven cases left for the term, with another round of decisions due tomorrow. ‘Til then!