Weekly litigation report — March 29, 2019

Oklahoma can no longer play favorites in defining who’s an American Indian artist
This week, a federal district court in Oklahoma ruled in favor of PLF client Peggy Fontenot in her challenge to Oklahoma’s restrictive definitions for American Indian artists. In Fontenot v. Hunter, we challenged an Oklahoma law that prohibited everyone but those who are members of federally recognized American Indian tribes from marketing their art as American Indian-made. This was problematic for artists like Peggy who are members only of state-recognized tribes or certified as artisans by a tribe. These new Oklahoma definitions put Peggy’s livelihood at risk. Because Oklahoma’s definitions were enacted in order to benefit members of politically connected tribes in Oklahoma, we challenged the constitutionality of the law because it impermissibly conflicts with a federal law intended to foster the American Indian art market nationally. Indeed, the federal law was specifically intended to include members of state-recognized tribes and certified artisans like Peggy. Fortunately, due to the federal law, the court agreed that Oklahoma cannot enshrine favoritism into its definitions for American Indian artists. For more information about the case and the court’s decision, see our blog.

Federal court reopens Wayside Church v. County of Van Buren
When Wayside Church fell behind on its 2011 property taxes on a parcel that the church had used as a youth camp, Van Buren County took the youth camp property and sold it for $206,000 to pay the church’s $16,750 in taxes, penalties, interest, and fees. The County kept the surplus proceeds—$189,250 more than the debt—as a windfall. Similarly, it also sold Henderson Hodgens’s childhood farm and home for $47,750 to pay a $5,900 debt. The County sold Myron Stahl’s property, where he was building his retirement home, for $68,750 to pay a $25,000 debt. The County kept all the proceeds from each of these sales. Each former owner lost everything.

These three parties came together and filed a lawsuit in federal court, alleging that the County violated the constitutional requirement that government pay just compensation when it takes private property for a public use. The trial court rejected the claim. And on appeal, the Sixth Circuit threw the case out of federal court, holding that it was barred by PLF’s longtime nemesis, the 1985 Williamson County Regional Planning Commission v. Hamilton Bank of Johnson City, the case where the Supreme Court essentially held that takings claims can be brought only in state courts.

The Supreme Court rejected our request for the Court to review the Wayside case and thus it seemed certain that the former landowners would be forced to start from scratch and file in Michigan state court, even though state courts have so far proven hostile to similar cases. But one year ago, we asked the federal trial court to reopen the case, in light of some major developments in the law. Such motions are rare, and even more rarely granted. But this week, the trial court granted the motion, and the Wayside Church case lives again! The same judge who had once ruled against the Wayside Church takings claims on the merits, held that the inequity caused by Michigan’s Property Tax law, and some changes in decisional law justify reopening the case. Read more here.

Tell me why?
Everyone has a First Amendment right to remain silent – the government cannot compel speech or association without a person’s affirmative consent. In Harris v. Quinn (2014), the Supreme Court held that the Service Employees International Union in Illinois unconstitutionally stole “dues” from Medicaid subsidies paid to more than 30,000 home-based caregivers. But the union refused to refund the money to anyone who didn’t object before Harris. In follow-up litigation, Riffey v. Pritzker, the caregivers sought to be certified as a class to recover their money. Lower courts refused, saying that it was a matter of individual determination whether each caregiver objected to the union taking their money. PLF filed an amicus brief today supporting the caregivers’ petition for writ of certiorari, arguing that people can invoke their constitutional rights for any reason or no reason at all and when constitutional rights are violated, the victims are entitled to recover, regardless of their state of mind. Our blog post is here.

Yellow-legged frog critical habitat upheld
We received a disappointing ruling this week that allows the government to impose significant restrictions on small business while evading judicial review. On behalf of the California Cattlemen’s Association, the California Wool Growers’ Association, and the California Farm Bureau Federation, PLF sued the U.S. Fish & Wildlife Service for violating the Regulatory Flexibility Act. Under that law, when an agency publishes a notice of a proposed rule and when it issues a final rule, the agency must consider the economic effects that regulations, including critical-habitat designations, will impose on small businesses, unless the agency’s head certifies that the rule will not significantly impact a substantial number of “small entities” (as defined in the Regulatory Flexibility Act).

Here, the Fish & Wildlife Service did not engage in this analysis when it published a proposed critical-habitat designation or when it adopted the final designation of over 1.8 million acres in 16 California counties as critical habitat (for three amphibious species). Instead, Fish & Wildlife has sought to evade its responsibility under the law. First, it claimed that (1) Section 7 of the Endangered Species Act requires federal government agencies to protect the listed species on designated land, (2) federal agencies are not “small entities” under the Regulatory Flexibility Act, and (3) therefore, the proposed and final designations would not have a significant impact on a substantial number of “small entities.” The government moved to dismiss our complaint. But in May last year, the United States District Court for the District of D.C. rejected the government’s argument and held that critical-habitat designations do, in fact, directly regulate small businesses, such as members of our clients.

Unfortunately, as explained in a later opinion issued this week, the court agreed with the government that that our clients lacked standing to pursue these claims. According to the court, our clients’ injuries could not be tied directly to the final critical-habitat designation. Instead, the court ruled, the restrictions that impeded the use of property within the critical habitat had been imposed before the habitat was designated. Thus does the government evade scrutiny. We will continue to look for cases to challenge the government’s ability to “front-load” restrictions to avoid scrutiny.

Maine Supreme Judicial Court sides with property owners, preserves their right to conserve their land
On Thursday, the Maine Supreme Judicial Court issued an important win for property rights in Ross v. Acadian Seaplants LTD. The case concerns whether a corporation can harvest rockweed—a species of seaweed—growing on private property without the owner’s consent. Citing the public trust doctrine, it argued that private property owners were powerless to manage this resource on their own land. Along with the Property and Environment Research Center, we filed an amicus brief explaining that this argument not only violates core property rights but also threatens conservation. Secure property rights are the most effective conservation tool—and will remain so in Maine thanks to the court’s decision. For more, see our blog post.

Ninth Circuit will not rehear donor disclosure case
On Friday, the Ninth Circuit declined to rehear Americans for Prosperity Foundation v. Becerra en banc. AFPF had won in the trial court, producing overwhelming evidence that their donors could face public harassment if their identities were disclosed, while the state failed to produce any evidence that disclosure served a legitimate investigative interest—indeed, they could not cite a single example where disclosure of donor names was used in an investigation. Worse, AFPF experts showed that California had inadvertently disclosed thousands of such forms to the public because of both human error and inadequate internet security. But last year, the Ninth Circuit overturned that decision, holding that donor disclosure laws are okay, despite the strict standard of review commanded many years ago by the Supreme Court in NAACP v. Alabama. NAACP is the seminal case on disclosure laws, where the Court well-understood the potential harm to both donors and the NAACP if the latter’s donor list had to be made public. In AFPF, Judge Ikuta wrote a stinging dissent from the denial. It seems likely that this case will now be headed to the Supreme Court. Read more on the blog.