Real Estate & Property Law

Wait, I Thought The Police Power and the Public Use Clause Were "Coterminous"

By Robert Thomas

An interesting decision on the Public Use Clause from the Court of Appeals for the Federal Circuit.  In Amerisource Corp. v. United States, No. 07-1521 (May 1, 2008), the court held that when an innocent party's property is seized for use in a criminal prosecution, but never used as evidence, no Fifth Amendment taking has occurred, even though the property was rendered valueless during the time the government possessed it.

The government had seized a large quantity of legal prescription drugs in its investigation of a pharmacy.  The seized drugs were never used as evidence, and expired before they could be returned to the owner, Amerisource.  The Federal Circuit held that the seizure for use in a criminal prosecution was not a taking for public use.  The court held that the seizure is an exercise of the government's "police power," and not an exercise of eminent domain. 

That much is obvious.  The case was filed in the Court of Federal Claims precisely because the taking resulted from an otherwise valid exercise of the government's police powers.  In order to prosecute a claim in the CFC, the property owner must concede that the taking is valid and for public use, as the only remedy available in the CFC for takings is money damages via an inverse condemnation suit.  If a property owner challenges the validity of the taking, the proper venue is a district court.  Amerisource didn't want the drugs back, it wanted compensation.  Thus, the court's conclusion that the seizure of the drugs was a valid exercise of the police power, and was not an exercise of eminent domain adds little to the analysis. 

Indeed, the Supreme Court has held that the analysis of whether a taking is for public use is accomplished by looking to the government's police powers.  See, for example, Hawaii Housing Auth. v. Midkiff, 467 U.S. 229 (1984), where the Court held the police power and the public use clause are "coterminous," and Kelo v. City of New London, 545 U.S. 469 (2005), where the majority equated the exercise of eminent domain with a local government's ability to zone property.  The public benefit from the seizure of Amerisource's property is pretty obvious.

It seems the Federal Circuit approached the issue from a practical standpoint -- requiring the feds to pay for seizing evidence from innocent owners may interfere with the administration of criminal prosecutions.  It concluded:

It is unfair that any one citizen or small group of citizens should have to bear alone the burden of the administration of a justice system that benefits us all.

Slip op. at 14.  Of course payment of compensation could impact criminal prosecutions.  Yet, this was just the type of situation the Takings Clause was meant to address, since it spreads the burden of the public benefit across the tax base.  Why is the uncompensated seizure of property for evidence from innocent parties any different than the unconstitutionality of denying compensation to a homeowner whose property stood in the way of a highway project because to do otherwise would overly burden the government's ability to provide for roads?  After all, the just compensation requirement was ?designed to bar Government from forcing some people alone to bear public burdens which, in all fairness and justice, should be borne by the public as a whole.?  Armstrong v. United States, 364 U.S. 40, 49 (1960). 

The Federal Circuit concluded:

While AmeriSource?s core theory is a sensible policy argument, it is just that, a policy argument that has been considered and discarded in the relevant precedents.  Someday Congress may well pass a law providing compensation for owners in AmeriSource?s position.

Slip op. at 14-15.  Two responses.  First, the just compensation requirement is self-executing, and does not depend on statutory authority from Congress; the Fifth Amendment itself requires compensation for a taking.  Second, Congress has passed a law for owners in Amerisource's position: its called the Tucker Act, the very statute Amerisource invoked when it went to the CFC.

The Volokh Conspiracy has several posts on this case.  Start here.

The Federal Circuit's opinion is located here.

Full post as published by inversecondemnation on May 18, 2008 (boomark / email).