Supreme Court Docket Report - November 21, 2012

Editor: Richard B. Katskee Keywords: takings clause, government enforcement actions, AMAA, USDA

On November 21, 2012 the Supreme Court granted certiorari in one case of interest to the business community:

Takings Clause—Agricultural Producers—Government Enforcement Actions

The Takings Clause of the Fifth Amendment to the U.S. Constitution provides that private property shall not be taken for public use without just compensation. The Agricultural Marketing Agreement Act of 1937 ("AMAA"), 7 U.S.C. § 601 et seq., and its regulations, 7 C.F.R. Part 989, require "handlers" of raisins (i.e., those who process and pack raisins for distribution) to turn over to a federal entity a percentage of the raisins that they process in order to be allowed to sell the remainder on the open market. The AMAA also requires handlers to exhaust all claims and defenses in enforcement actions before the United States Department of Agriculture, with exclusive jurisdiction for review in federal district court. See 7 U.S.C. § 608c(15). Finally, the Tucker Act allows parties seeking compensation from the United States for a taking of their property to bring suit in the Court of Federal Claims. See 28 U.S.C. § 1491(a)(1).

On November 20 2012, the Supreme Court granted certiorari in Horne v. Department of Agriculture, No. 12-123, to resolve two related questions regarding the interaction among these provisions: (1) whether a party may raise the Takings Clause as a defense to a federal enforcement action seeking an order requiring the party to pay money to the Government, or must instead make the payment and then bring its takings claim by means of a separate action for return of the money under the Tucker Act in the Court of Federal Claims; and (2) whether the AMAA's requirement that all claims and defenses be raised in the administrative proceedings and reviewable in the regular federal courts allows petitioners to raise their Takings Clause defense in the AMAA enforcement action.

Petitioners are raisin producers in California who object to the AMAA's requirements as an improper confiscation of their property. Because those requirements apply to handlers only, not to producers, petitioners decided to bring their raisins to market without going through a traditional middle-man packer and without turning over to the Government the share of raisins arguably required by the regulations. The USDA responded by initiating an enforcement action, alleging that petitioners were...