Law & Economics Working Papers
In Stop the Beach Renourishment v. Florida Department of Environmental Protection, 130 S. Ct. 2592 (2010), a plurality of the Supreme Court concluded that the Takings Clause of the United States Constitution prohibits the judiciary from declaring that "what was once an established right of private property no longer exists" unless the property owner in question receives just compensation. In this paper, we delineate the boundaries between a judicial taking and a violation of the Constitution's due process protections. The result is a judicial takings doctrine that is narrower and more coherent than the one suggested by Stop the Beach. Our argument proceeds in two parts. The first is a conceptual section that explains what factors are relevant to determining whether a judicial action diminishing a private property interest is a judicial taking or something else. In our view, where a judicial decision intentionally seizes private property in order to achieve a legitimate public end, the Takings Clause is an appropriate framework for evaluating the constitutionality of the state's action. Due Process is the more appropriate doctrinal pathway where the judiciary does not intend to abrogate a private owner's property rights, or where the diminution of private property rights results from a judicial action that serves no legitimate public purpose. By clarifying the boundaries of judicial takings, we also hope to shed light on the constitutional foundation for numerous state-court doctrines concerning the retroactivity of new property rules. The second section articulates a novel functional argument, which suggests that creating liability for judicial takings may cause litigants to underinvest in high quality legal representation, which will in turn increase the likelihood of judicial mistakes and contribute to the destabilization of existing entitlements. This phenomenon prompts us to argue that cases in which the underinvestment incentives are most pronounced should be litigated under the Due Process Clause, but cases where repeat-play or the government's involvement as a litigant mitigates the underinvestment problem represent more appropriate vehicles for judicial takings treatment. What rides on the distinction between judicial takings and due process violations? Under our approach, judicial takings cases should be (a) easier to win than due process cases, (b) more likely to result in damages remedies than injunctive remedies, and (c) may lend themselves to attractive "comparative fault" inspired solutions.
Eduardo Peñalver & Lior Strahilevitz, "Judicial Takings or Due Process?" (John M. Olin Program in Law and Economics Working Paper No. 549, 2011) available at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1791849..