California Eminent Domain Report

Since the U.S. Supreme Court’s decision in Knick v. Township of Scott (2019) 139 S.Ct. 2162 eliminated the requirement for a plaintiff to exhaust state court remedies before pursuing a takings challenge in federal court, there has been a significant uptick in federal lawsuits alleging a Fifth Amendment takings claim. For example, as we recently reported, a federal lawsuit was filed earlier this month alleging that the response by California agencies to the COVID-19 situation violated the state and federal Constitutions, and resulted in a partial or complete taking in violation of the Fifth Amendment. But as we noted in that post, there are serious questions as to the viability of alleging a Fifth Amendment takings claim in federal court against a state agency, given that “Knick did not contain any discussion of eliminating a state’s sovereign immunity, and at least two courts have expressly held that Knick did nothing to abrogate a state’s sovereign immunity in the takings context.” We now have a California district court decision to add to that growing list.

In O’Neil v. California Coastal Commission, a property owner filed an action in federal court alleging that the actions of the California Coastal Commission and a local public agency violated his substantive due process rights and resulted in a taking in violation of the Fifth Amendment. In response the Coastal Commission filed a motion to dismiss, arguing that because the Commission was an arm of the state, the doctrine of sovereign immunity recognized in the Eleventh Amendment to the United State Constitution prohibited the claim. In an effort to sustain his claim, O’Neil argued that after Knick the Eleventh Amendment was no longer a viable defense to a federal takins claim. The district court disagreed with Mr. O’Neil, and dismissed the takings claim against the Coastal Commission.

Addressing the Knick decision, the district court stated: “Knick did not address Eleventh Amendment immunity. Thus, as [the Coastal Commission] argues, Knick did not conceive of an additional exception to the Eleventh Amendment immunity.” The district court also noted that while the Ninth Circuit has not yet addressed this specific issue, two other circuits have, and in each instance the Circuit Court found that the Eleventh Amendment barred the takings claim.

The district court also found that the plaintiff could not rely on the Ex Parte Young exception to the Eleventh Amendment – which permits a plaintiff to sue a state official in federal court in order to seek prospective injunctive relief – because it could not “characterize O’Neil’s relief request as prospective as he seeks just compensation, or damages, for the prior allegedly unconstitutional taking.”

So even after Knick, the federal courthouse doors continue to remain closed to Fifth Amendment takings claims against the state or arms of the state.