Issue
Whether the portion of the Agricultural Marketing Agreement Act of 1937 AMAA that authorizes the Department of Agriculture to seize portions of raisin harvests to maintain stability in the raisin market is an unconstitutional taking of personal property without just compensation under the Takings Clause of the Fifth Amendment.
Facts
Raisin growers in the United States typically send their raisins to handlers, who then sell the harvests to buyers. Before this case was settled, the AMAA authorized the U.S. Department of Agriculture USDA to issue “marketing orders” to require raisin handlers to divide their raisings into “free tonnage” and “reserve tonnage” batches. The free tonnage raisins could be sold in the open market, but the reserve tonnage raisins had to be transferred to the USDA’s Raisin Administrative Committee RAC. Those raisins were variously exported, donated, or sold in non-competitive markets. Sometimes they were destroyed. If there were any leftover profits—after subtracting the government’s administrative expenses—they were distributed back to the raisin growers. Some years there were no leftover profits.
Marvin Horne was a raisin grower in California who had previously sold his harvest to handlers in accordance with the program. In the late 1990s he and other farmers formed a general partnership known as Raisin Valley Farms. In an overt attempt to bypass raisin handlers and the RAC, Horne then formed a partnership with Lassen Vineyards, whose handling and packaging equipment he merely rented before selling his raisins directly to wholesalers through a third entity, Raisin Valley Farms Marketing Association. The association included 60 other raisin growers besides Horne. From growing to packaging to selling to wholesalers, Horne and others maintained full ownership of the raisins, all while claiming that they were exempt from marketing orders because they were raisin growers, not handlers who had acquired the raisins.
Nonetheless the federal government sent its trucks to seize raisins from the Horne’s farm. But Horne refused to let them onto his property. A series of bureaucratic hearings, proceedings, and petition challenges ultimately resulted in Horne being fined about $680,000 in civil penalties and assessments. He then sued in federal court, arguing primarily that the requirement was an unconstitutional taking of his property under the Takings Clause of the Fifth Amendment, which reads, “nor shall private property be taken for public use, without just compensation.” The government argued primarily that the regulations did not impose a per se physical taking of property as understood under the Fifth Amendment, and Horne was subject to the federal program.
The Court Below
The U.S. District Court for the Eastern District of California was the first to hear the case. The court ruled in favor of the federal government, holding that Horne was indeed a “handler” and subject to the marketing order, that the fines were not excessive, that the marketing order was not a “physical taking,” and that the administrative proceedings were appropriate. See opinion below:
Horne v. U.S. Department of Agriculture, No. CV-F-08-1549 LJO SMS E.D. Calif., 2009
Horne appealed to the Ninth Circuit, which upheld the lower court rulings that Horne was a handler and that the fines were not excessive. It did not rule on the takings claim, however, holding that the claim was premature. See opinion below:
Horne v. Department of Agriculture, 673 F.3d 1071 9th Cir., 2012
Horne appealed to the Supreme Court, which remanded the case back to the Ninth Circuit and directed that Horne’s takings claim was indeed ripe for consideration and could be raised as an affirmative defense against the Department of Agriculture. See Horne I opinion below:
Horne v. Department of Agriculture, 133 S.Ct. 2053 2013
The Ninth Circuit heard the case again, ruling against Horne again, holding that the raisin marketing order did not work a physical per se taking of reserved raisins. See opinion below:
Horne v. Department of Agriculture, 750 F.3d 1128 2014
Horne again appealed to the Supreme Court in Horne II, which ruled in favor of Horne. The regulatory reserve requirement was indeed a physical taking, the Court held, and a failure to pay growers and handlers the proceeds from their raisins was a taking without just compensation. See Horne II opinion below:
Horne v. Department of Agriculture, 135 S.Ct. 2419 2015
Questions before the Court
- “Whether the government’s ‘categorical duty’ under the Fifth Amendment to pay just compensation when it ‘physically takes possession of an interest in property,’ Arkansas Game & Fish Comm'n v. United States, 133 S. Ct. 511, 518 2012, applies only to real property and not to personal property.
- “Whether the government may avoid the categorical duty to pay just compensation for a physical taking of property by reserving to the property owner a contingent interest in a portion of the value of the property, set at the government's discretion.
- “Whether a governmental mandate to relinquish specific, identifiable property as a ‘condition’ on permission to engage in commerce effects a per se taking.”
CCJ filed four different amici briefs in support of Horne, the first three of which were written in partnership with other organizations. The first two consider procedural issues for Horne I. The second two address the merits of the case in Horne II.
CCJ amicus curiae on the petition for writ of certiorari to the Supreme Court
CCJ amicus curiae in support of Horne in the Supreme Court Horne I
CCJ amicus curiae on the petition for writ of certiorari to the Supreme Court
This is a summary of CCJ’s amicus curiae for Horne II in the Supreme Court, the final Horne case and the one for which CCJ wrote an independent brief on the merits.
Summary:
The Ninth Circuit held that the regulations on raisins do not constitute a per se physical taking of property, nor does the Fifth Amendment protect personal property such as raisins as much as it protects real property such as land and buildings from government seizures. This is an erroneous understanding of the right to property and the legitimacy of government takings. First, the Magna Carta explicitly required prompt compensation for the government taking of personal property. Second and third, the American colonists inherited Magna Carta’s tradition of just compensation, and the Fifth Amendment restated Magna Carta’s principle. The U.S. Constitution protects all types of property, and the explicit protection in the Fifth Amendment was simply a codification of an ancient right dating back more than 1000 years.
Protecting property from unlawful government seizures dates to the Magna Carta, at least. By 1215 A.D. English kings were exercising their prerogative of “purveyance” of market goods such as food, horses, and other supplies at below-market prices under a form of eminent domain, supporting themselves and their entourages while travelling the country. King John abused the prerogative by also keeping some 70 castles stocked with local provisions, and just compensation for such military seizures was often delayed or otherwise avoided. Clauses in the Magna Carta variously prohibited outright seizures, required the king’s men to buy the provisions freely with the seller’s consent, and required them to pay for the provisions contemporaneously. This mirrors Horne’s grievance: the government was taking his crop against his consent, offering a future payment that might prove entirely illusory.
The American colonists inherited the Magna Carta’s property protections. For some 500 years Parliament had reaffirmed the document, establishing it as a “higher law” against which all subsequent statutes had to be considered under a form of constitutionalism. By the mid-18th century, any government-takings laws in America or Britain contrary to the 13th-century provisions were considered violations of the natural law and unconstitutional, as the colonial and state charters often stated. Colonial and state judiciaries similarly upheld the Magna Carta’s takings provisions protecting both real and personal property from government seizures without prompt and just compensation.
The history of the passing of the Fifth Amendment to the Constitution confirms that its ratification was a reaffirmation of the natural law and English common law principles derived from the Magna Carta. There was virtually no controversy surrounding its passage. Madison included it among the Bill of Rights, and his letters show he drew no distinction between land and personal property. St. George Tucker and John Jay both noted it was included at least in part to prevent military impressment of private property. The 800-year principle inherited and codified and preserved in the American Constitution is this: Governments are entrusted with the power of taking personal and real property from unwilling owners—including crops—but must always compensate them justly and promptly, ensuring that the burdens are borne equitably by society as a whole. The government’s seizure of Horne’s raisins fails to meet these requirements.
Final Outcome
The Supreme Court agreed with CCJ. The raisin reserve requirement qualified as a physical taking of personal property, and the government’s failure to pay the growers and handlers violated the Fifth Amendment’s requirement for just compensation.
