The Takings Clause protects against governmental takings of property without just compensation.1 Traditionally, takings claims have not expanded beyond actions performed by the political branches of government. This invites the question: What about the third branch? When a court overrules a prior declaration of common law property rights, has it “taken” property? The Supreme Court has wrestled with the question of judicial takings but has yet to give a decisive answer. Its most recent encounter, Stop the Beach Renourishment, Inc. v. Florida Department of Environmental Protection,2 offered the most robust analysis of a potential judicial takings doctrine but left the question open, with four Justices in favor of the doctrine and four Justices declining to reach the issue. This Note serves as a cautionary flag as the Court continues to develop its understanding of judicial takings. The judicial takings doctrine advocated by the Stop the Beach plurality poses a serious risk to the autonomy of states and state courts to adhere to their preferred jurisprudential philosophies. By categorically assuming that all state courts are making law, Stop the Beach set a course for judicial takings that would impose federal judges’ views of jurisprudence onto state courts.
While Stop the Beach broke new ground in judicial takings, its understanding of jurisprudence did not chart new territory so much as continue along the trail blazed by Justice Holmes in the early twentieth century and followed by a majority of the Court in 1938. In Erie Railroad Co. v. Tompkins,3 the Court derisively dismissed the declaratory theory of common law in favor of legal realism, abolishing federal general common law in the process. Ironically, while grounding its constitutional holding in the independence of state courts from federal interference, Erie at best assumed and at worst mandated a particular jurisprudential philosophy for state courts. The Stop the Beach plurality followed in Erie’s footsteps in assuming all state courts were making law.
A judicial takings doctrine that perpetuates Erie’s jurisprudential assumptions risks exacerbating its error. As this Note argues, the viability of a judicial takings doctrine depends critically on the nature of common law adjudication.4 If common law judicial decisions themselves establish novel property rights — that is, if judges make new law — then the concept of a judicial taking is conceptually sound, at least in terms of jurisprudential philosophy. If, on the other hand, judicial decisions merely declare the law as it has existed — that is, if judges only ever find law — then a judicial takings doctrine is conceptually hollow, for the simple reason that an overruling declares that the claimant did not have a property right to be taken in the first place. A categorical judicial takings doctrine blind to this distinction would preclude state courts from adhering to the declaratory theory of common law adjudication in property law.
This Note offers a course correction. To protect the autonomy and independence of state judiciaries — indeed, to comply with the principles of judicial federalism underlying Erie’s constitutional holding — it is essential that any judicial takings doctrine account for the possibility of differing jurisprudential philosophies among the states. While the declaratory theory has taken a beating in the United States, it retains significance in legal scholarship and jurisprudence; for instance, at least one state supreme court recently reaffirmed its commitment to the declaratory theory in the choice-of-law context.5 Fortunately, the Court’s existing doctrine for review of state court decisions on state law issues easily accommodates a more nuanced approach to judicial takings without compromising the security of Takings Clause protection against unfaithful state evasion.
This Note proceeds as follows. Part I provides a brief overview of the judicial takings issue and Stop the Beach. Part II argues that the Takings Clause protects rights, not mere expectations, and therefore that the nature of common law adjudication is conceptually crucial to judicial takings. Part III describes the irony of Erie and the risk that a judicial takings doctrine poses for judicial federalism. It then proposes a path forward that fits within current Supreme Court jurisprudence.
I. The Question of Judicial Takings: Long Asked, Never Answered
In 1897, the Supreme Court held that the Takings Clause of the Fifth Amendment applies to the states through the Fourteenth Amendment.6 Since then, courts have regularly imposed takings restrictions on the political branches of state governments.7 What is unclear is the extent to which the Takings Clause’s prohibitions extend beyond the political branches to the judicial branch. It remains an open question whether courts can “take” property by overruling prior judicial decisions that appeared to grant private property rights.
An example illustrates what a judicial taking might look like. Suppose that Rivera owns land abutting a bend in a river. The state owns the submerged lands underlying the river.8 At Time 1, the state’s highest court issues a decision declaring that the common law confers upon riparian landowners ownership of adjacent, previously submerged lands that are uncovered by a sudden, avulsive change in the course of a river. At Time 2, a fierce hurricane causes the river to straighten its course such that the bend adjacent to Rivera’s property is no longer submerged. Rivera, who has been longing for some extra land on which to build a greenhouse, initiates a quiet title action to establish her ownership of the now-dry riverbed.9 At Time 3, the high court rules in favor of the state, overruling its decision at Time 1. The court looks to the ancient common law of riparian ownership, noting the distinction between accretions and avulsions: When the course of a river changes slowly over time, riparian owners gain title to the accretions that gradually build up on their property.10 On the other hand, when a river changes course suddenly due to an avulsive event, title to the riverbed remains fixed.11 These principles were recognized by Blackstone12 and date back as far as Roman civil law.13
Under the law as stated in the Time 1 decision, a property right in the uncovered riverbed vested in Rivera at Time 2. After the Time 3 decision, Rivera lacks such a property right. Does Rivera have a colorable claim that the state high court violated her federal constitutional rights at Time 3 by taking her property without just compensation?
The Supreme Court did not squarely address the issue of judicial takings until 2010 in Stop the Beach, but the question of whether courts can “take” property by changing state law has been floating around the courts since the early 1900s.14 Despite having been on the table for over a century, the question of judicial takings remains without a definitive answer from the Supreme Court; most perspectives that touch on the issue appear in dicta, plurality opinions, separate opinions, or lower court opinions, and some are only tangentially related to judicial takings.15 Much of the contorted history of judicial takings has been capably reported by other scholars,16 and there is little need to reiterate it here. Suffice it to say that by the time Stop the Beach finally addressed the issue head-on, the question of judicial takings had been thoroughly muddled.
Unfortunately, while Stop the Beach elucidated some of the arguments for and against a judicial takings doctrine, it did little to clarify the state of the law. The case involved a Florida statute authorizing local governments to combat beach erosion by depositing sand onto the state’s submerged lands.17 A group of waterfront landowners challenged one such restoration, arguing that it unconstitutionally took certain littoral rights that existed under Florida common law without compensation, including “the right to receive accretions to their property” and “the right to have the contact of their property with the water remain intact.”18 The Florida Supreme Court disagreed, citing the common law doctrine of avulsion, which allows a landowner to reclaim land lost due to an avulsive event.19 Thus, the statute authorizing reclamation of the state’s shoreline lost due to avulsive storms was constitutional because the common law supported such actions.20
Persistent as the tides, the landowners sought review in the United States Supreme Court, arguing that the Florida Supreme Court’s decision itself unconstitutionally took their property without compensation.21 All Justices agreed that the Florida Supreme Court’s decision in that case did not effect a taking because it was “consistent with . . . background principles of state property law.”22 However, the Court split 4–423 on whether a decision by a state high court could amount to an unconstitutional taking.
Justice Scalia’s four-Justice plurality proclaimed that a judicial taking occurs when a court rules in such a way as to revoke a claimant’s “established right of private property.”24 Noting that the text of the Takings Clause “is not addressed to the action of a specific branch or branches,”25 Justice Scalia argued that “[i]t would be absurd to allow a State to do by judicial decree what the Takings Clause forbids it to do by legislative fiat.”26 In a strange move for the Court’s leading originalist, he conceded that “the Framers did not envision the Takings Clause would apply to judicial action,” but he brushed that historical nugget aside because “the Constitution was adopted in an era when courts had no power to ‘change’ the common law.”27 Justice Scalia declared that courts had “assume[d]” this power in the nineteenth century but could not use it to eliminate established property rights.28 Brazenly ignoring many of the Court’s early twentieth-century cases asserting that state courts may overrule their decisions free from federal constitutional restraints,29 he concluded that “[o]ur precedents provide no support for the proposition that takings effected by the judicial branch are entitled to special treatment, and in fact suggest the contrary.”30
The four other Justices to consider the case declined to hold that judicial decisions can violate the Takings Clause. Justice Kennedy’s concurring opinion, joined by Justice Sotomayor, flagged “certain difficulties” raised by the prospect of a judicial takings doctrine31 and argued that the Due Process Clause was a more appropriate vehicle for protecting established property rights from judicial reconstruction.32 Justice Breyer’s concurring opinion, joined by Justice Ginsburg, criticized the plurality for failing to “decid[e] only what is necessary to the disposition of the immediate case”33 — here, that the Florida court’s decision was not an unconstitutional judicial taking, if there was such a thing — and expressed concerns about opening the floodgates to federal takings claims that would allow federal judges to shape state property law.34
Despite the relative depth of analysis regarding judicial takings in Stop the Beach, the case’s precedential value leaves much to be desired. As no position commanded a majority of the Court, the narrowest concurring opinion controls under the rule set forth in Marks v. United States.35 Both nonplurality opinions in Stop the Beach ruled on narrower grounds than did the plurality opinion, as the nonplurality opinions held that the decision below did not constitute a judicial taking without deciding the broader question of whether such a creature can exist.36 Arguably, Justice Breyer’s opinion is narrower than Justice Kennedy’s because it did not suggest due process as an alternative claim. But both opinions, while casting doubt upon the possibility of judicial takings, reserved the question for another day.37 Thus, all Stop the Beach ultimately stands for is that, whether or not judicial takings can occur, this was not one.
II. Judicial Takings’ Implicit Jurisprudential Philosophy
Part I demonstrated that the possibility of a judicial takings doctrine remains unresolved. This Part argues that implicit in the notion of a judicial taking is a certain understanding of the nature of common law adjudication. As section B describes, when courts “make” new law, they change the law. And when any branch of government changes the law such that you now lack a property right you previously possessed, that branch has taken your property. On the other hand, when courts “find” the law, they declare what the law has been. When a court declares that the law has been, up to and including at the time of decision, such that you lack a property right, you possessed no property right for the court to take, even if you (or a court) previously thought otherwise. Of course, a prerequisite for this distinction is that the Takings Clause protects only actually held property rights rather than mere expectations. Section A establishes this preliminary premise.
A. Rights and Expectations Under the Takings Clause
The next section relies on the fundamental premise that the Takings Clause protects rights, not expectations. In other words, in order to have a legitimate takings claim, it is not enough that one reasonably expects to possess a certain property right; one must actually possess that right. If reasonable expectations were sufficient for Takings Clause protection, the importance of a jurisdiction’s jurisprudential philosophy would evaporate; even under the declaratory theory, a claimant could have a strong claim to a reasonable expectation of a property right based on a court’s prior erroneous characterization of the law. Professor Barton Thompson recognizes ambiguity in the Court’s opinions as to what exactly the Takings Clause protects38 and suggests that an expectations approach better advances the Takings Clause’s motivations, given the indeterminacy of whether a decision actually changes legal rights.39 Similarly, Professor Thomas Merrill argues that reasonable expectations about what kinds of interests qualify as property sometimes supersede actual positive law in motivating the Court’s takings decisions.40 Professor Jerry Anderson argues that “any right in property must be grounded in the property owners’ legitimate expectations about what interests the law will protect.”41 On the other hand, Professors Stacey Dogan and Ernest Young caution against an expectations approach because “federal courts should stay out of the business of assessing the certainty and predictability of state common law.”42 And Professor Joseph Sax thinks it “self-evident” that “[o]ne cannot claim that property was taken away if one did not have property to begin with.”43 This section argues, in accord with Sax, that even expectations backed by judicial assertions of law are not subject to the Takings Clause unless those expectations are grounded in an actual property right.
We can begin (and arguably end) with the text of the Takings Clause, which protects “private property.”44 Evidence of the clause’s original meaning is relatively lacking,45 and most originalist analyses of the clause focus on whether it originally applied to regulatory takings.46 But if we are to take Justice Scalia seriously that “[w]here the text [the Framers] adopted is clear, . . . what counts is not what they envisioned but what they wrote,”47 the clause unequivocally requires a claimant to possess “property.”
The Court’s treatment of the clause comports with this interpretation. In Board of Regents of State Colleges v. Roth,48 the Court made clear that the Constitution itself does not create “property.”49 Instead, the property interests the Constitution protects “are created and their dimensions are defined by existing rules or understandings that stem from an independent source such as state law.”50 Generally, then, a claimant must establish possession of a legitimate property right under state law. The Supreme Court has consistently treated this principle as a necessary antecedent condition in takings cases, requiring that a claimant actually possess “property” — whatever that is — in order to invoke the clause’s protection. In the early twentieth century, for example, the Court stated that state courts “may ordinarily overrule their own decisions without offending constitutional guaranties, even though parties may have acted to their prejudice on the faith of the earlier decisions.”51 A more explicit rejection of an expectations approach would be hard to come by.
The Court has adhered to a rights-based understanding of the Takings Clause in its more recent cases as well. In Roth, it stated that “[t]o have a property interest in a benefit, a person clearly must have more than an abstract need or desire for it. He must have more than a unilateral expectation of it. He must, instead, have a legitimate claim of entitlement to it.”52 Roth was a due process case, but the Court has since extended the requirement of a “legitimate claim of entitlement” into the takings context.53 In Webb’s Fabulous Pharmacies, Inc. v. Beckwith,54 for example, the Court emphasized that “a mere unilateral expectation or an abstract need is not a property interest entitled to protection” under the Takings Clause.55 The Court found the creditors in that case entitled to Takings Clause protection because they “had more than a unilateral expectation. . . . [They] had a state-created property right to their respective portions of the fund.”56 Similar language in other cases has the same effect.57
Notably, the plurality opinion in Stop the Beach itself is an especially strong rejection of an expectations approach to the Takings Clause. Justice Scalia repeatedly emphasized that a judicial taking requires the claimant to possess an “established property right.”58 He made clear that “[t]he Takings Clause only protects property rights as they are established under state law, not as they might have been established or ought to have been established.”59 And he explicitly foreclosed an expectations approach by rejecting the petitioner’s proposal that “a decision that constitutes a sudden change in state law, unpredictable in terms of relevant precedents,” is sufficient to constitute a judicial taking.60 Rather, “a judicial property decision need not be predictable, so long as it does not declare that what had been private property under established law no longer is.”61
To be sure, the Court frequently considers a claimant’s justified expectations when determining whether a taking has occurred, particularly in the context of regulatory takings.62 But whether there has been a taking is a separate inquiry from the antecedent question whether there can be a taking, and that question turns solely on the existence of a private property right.63 In other words, a justified expectation may in some cases be necessary for there to be a taking, but it is never sufficient. The distinction is well illustrated in Ruckelshaus v. Monsanto Co.,64 where the Court engaged in a sequential analysis of Monsanto’s takings claim, first asking whether Monsanto’s trade secrets were “property” eligible for the Takings Clause’s protection and only then asking whether the Environmental Protection Agency’s use of the data in reviewing other applicants and in public disclosures effected a taking.65 In determining that Monsanto’s data were “property for the purposes of the Taking Clause,”66 the Court looked only to Missouri law and the similarity of trade secrets to other forms of recognized property; it made no mention of Monsanto’s expectations.67 Only after holding that Monsanto possessed a protected property right did the Court consider justified expectations in deciding whether a taking of that right occurred.68 Monsanto highlights the relationship between rights and expectations in the takings context: a claimant’s justified expectations may play a role in determining whether to extend Takings Clause protection to governmental regulation of a particular property right, but they do not extinguish the requirement that the claimant have a property right in the first place.69
Furthermore, an expectations-based understanding of the Takings Clause would lead to strange results in contexts less controversial than the declaratory theory of common law. Consider, for example, judicial construction of statutes granting property rights. Most agree that when the Federal Circuit departs from a prior interpretation of a patent statute in a manner that limits patentholders’ rights, it does not take rights that the statute previously conferred. Rather, the statute never conferred the rights in the first place, and the more recent judicial interpretation simply clarifies the statute’s meaning.70 Yet surely such adeparture contravenes patentholders’ justified expectations. Thus, assuming patents are property for Takings Clause purposes,71 an expectations-based approach to the Takings Clause necessarily implies that these decisions are unconstitutional judicial takings.
A rights-based approach in the judicial takings context might seem to unfairly upend reliance interests based on prior judicial statements of law.72 But the fact of the matter is that “[j]udicial decisions have had retroactive operation for near a thousand years.”73 Indeed, the Supreme Court did not consider whether a state court could decide not to apply its decisions retroactively until the 1930s.74 The Supreme Court itself recognizes a general rule under which “a rule of federal law, once announced and applied to the parties to the controversy, must be given full retroactive effect by all courts.”75 Judicial decisions containing new assertions of common law, new interpretations of statutes, and new understandings of constitutional principles are frequently applied retroactively to actions performed under a different understanding of the law. There is little reason to think the Takings Clause creates an implicit exception for property rules, especially because it was drafted at a time when the prevailing understanding of common law adjudication inherently produced retroactive results.76
B. Common Law Adjudication and the Stakes for Judicial Takings
Because the Takings Clause protects rights rather than expectations, the conceptual validity of a judicial takings doctrine hinges on a longstanding debate between two competing theories of common law adjudication. The first, the “declaratory theory,” maintains that common law judicial decisions merely recognize and declare preexisting rights and duties and do not themselves make law. The second, “legal realism,” holds that common law judicial decisions themselves establish novel rights and duties, meaning that courts actually make new law and change the law when they overrule precedent. This section provides a brief overview of the debate, and then illustrates why a judicial takings doctrine is conceptually sound under legal realism but not the declaratory theory.
In the seventeenth century, Sir Edward Coke proclaimed that “[i]t is the function of a judge not to make, but to declare the law, according to the golden mete-wand of the law and not by the crooked cord of discretion.”77 William Blackstone picked up the declaratory banner in his highly influential Commentaries on the Laws of England, in which he expounded a view of the judge’s role as a “depositar[y] of the laws.”78 On Blackstone’s account, the common law is not created by judicial decisions but rather exists independently in the “maxims and customs” of the land, which date back to time immemorial.79 Judges therefore have no authority to make law and their decisions are merely “evidence” of the ancient customs that constitute the common law.80 Because judicial decisions do not create law, “the law, and the opinion of the judge, are not always convertible terms, or one and the same thing; since it sometimes may happen, that the judge may mistake the law.”81 Thus, when judges overrule precedent, they “do not pretend to make a new law, but to vindicate the old one from misrepresentation.”82 In other words, “if it be found that [a] former decision is manifestly absurd or unjust, it is declared, not that such a sentence was bad law, but that it was not law.”83
This vision of the common law carried the day for quite some time in U.S. jurisprudence. Professor Stephen Sachs notes that “the early American states inherited a tradition in which courts were charged to find law rather than make it.”84 Until 1938, the federal courts also adhered to a conception of general common law that existed outside the judicial decisions of any particular sovereign. The Supreme Court expressly embraced the declaratory theory in Swift v. Tyson85 when it stated: “[I]t will hardly be contended that the decisions of Courts constitute laws. They are, at most, only evidence of what the laws are; and are not of themselves laws.”86 When state courts and federal courts ruled on common law issues under the Swift regime, they were applying neither state law nor federal law; instead, they were both applying the same general common law, which, as Justice Holmes put it, was “a transcendental body of law outside of any particular State but obligatory within it unless and until changed by statute.”87 Thus, under Swift’s regime, federal courts were not bound by state court common law decisions and could reach their own independent interpretations of the general common law.88
The twentieth-century legal realist movement pushed back against the notion of a body of common law existing independently of judicial decisions.89 Realism’s greatest champion on the Court was Justice Holmes, who, as early as 1897, when he still sat on the Supreme Judicial Court of Massachusetts, rejected the view that the law “is something different from what is decided by the courts of Massachusetts or England, . . . which may or may not coincide with the decisions.”90 Justice Holmes derided the notion of the general common law as a “brooding omnipresence in the sky,”91 calling it a “fallacy and illusion.”92 He believed that a sovereign’s common law exists only insofar as it is contained in the decisions of the sovereign’s judges.93 Under this realist conception, overruling a prior common law decision does not correct mistaken law but rather makes new law.
A majority of the Court embraced Justice Holmes’s realism in 1938 in the groundbreaking Erie decision.94 In an opinion by Justice Brandeis, the Court overruled Swift and abolished federal general common law.95 Erie and its implications are discussed in more detail below. For now, the important point is that Erie fully endorsed legal realism and, in doing so, “overruled a particular way of looking at law.”96
Erie’s realism dominates the American legal academy today,97 but there are some holdouts in the declaratory camp. For example, Georgia’s choice-of-law jurisprudence is grounded in the notion “that there is one common law that can be properly discerned by wise judges, not multiple common laws by which judges make law for their various jurisdictions.”98
Similarly, a number of contemporary scholars have stood their ground against the realist tidal wave by defending the declaratory theory in some form or another.99 These modern defenses of the declaratory theory hail from a range of jurisprudential perspectives,100 and not all of them are committed to the strong Blackstonian form under which judicial decisions can never make law and overruled decisions were never law. Some contemporary scholars concede that judges can make law, but insist that they do so by finding law.101 Ironically, Justice Scalia himself usually held this view of common law adjudication.102 Importantly for our purposes, many modern defenses of the declaratory theory do not insist that the overruled precedent was never the law; they simply maintain that it was not the law at least as of the time of the dispute at issue.103
The debate between legal realism and the declaratory theory has significant implications for a judicial takings doctrine.104 This is because, as established in section II.A, a necessary condition for a successful takings claim is that the claimant possessed an actual property right prior to the alleged taking.105 And in a judicial takings case, whether the plaintiff possessed an actual property right prior to the alleged taking depends critically on the jurisdiction’s jurisprudential philosophy.
Our friend Rivera from Part I will help illustrate. In a jurisdiction whose courts have the power to make law at Time 3 that did not exist at Time 2, Rivera may have a legitimate claim that the state court took her property by overruling its prior decision. In such a system, the Time 1 decision was the law at Time 2, even if it was bad law that failed to account for centuries of countervailing precedent. Thus, at Time 2, Rivera possessed an actual property right to the adjacent riverbed under the common law of her jurisdiction. At Time 3, the court revoked this property right. On this understanding, the court acted like a legislature by changing the law to conform to ancient common law principles.106 Under a conception of common law that allows courts to make law in this way, “[i]f a legislature or a court declares that what was once an established right of private property no longer exists, it has taken that property.”107
The analysis looks different in a jurisdiction whose courts adhere to a form of the declaratory theory. Under the strong Blackstonian form, neither the decision at Time 1 nor the decision at Time 3 was ever law; both were mere declarations about what the court perceived the law to be. On this understanding, the Time 3 decision did not change a bad law that was made at Time 1, but rather corrected the mistaken assertion of law at Time 1, which never was the law. On a weaker, more contemporary version of the declaratory theory, the Time 1 decision may have been the law of the jurisdiction for a time, but at least as of Time 2 the law was as stated in the Time 3 decision. Under either understanding, at Time 2 Rivera lacked an actual property right to the avulsively exposed riverbed for the court to “take” at Time 3. In other words, the court did not take Rivera’s property at Time 3; it simply declared that she lacked the property to begin with. As this example shows, a judicial takings doctrine is flatly inconsistent with the declaratory theory.
III. Avoiding Erie’s Trap in Judicial Takings
Part II established that the nature of common law has high stakes for a judicial takings doctrine. In fact, it’s the whole conceptual ballgame. It comes as no surprise, then, that Erie — “a sea change in how judges view law”108 — has serious reverberations in the judicial takings context. This Part explores the intersections of Erie and judicial takings. Section A discusses the tension between Erie’s constitutional holding and its jurisprudential assumptions, showing how Erie’s insistence that judges make law and dismissal of the declaratory theory undermine the very value its constitutional holding sought to vindicate: state judicial independence from federal interference. It then explains how a judicial takings doctrine risks perpetuating and exacerbating this error. Section B proposes a way forward under existing doctrine that limits the impact of Erie’s dogged realism on state judicial independence while avoiding the risk of turning a judicial takings doctrine into a mere drafting guide for state courts to circumvent the Takings Clause.
A. Erie’s Irony and the Risk of Judicial Takings for State Autonomy
1. Erie’s Irony. — At bottom, Erie was about state judicial independence and the allocation of power between the federal and state judiciaries.109 The constitutional logic of the case, although the subject of much debate, underscores this point: the Constitution grants neither Congress, through Article I, nor the federal courts, through Article III, the “power to declare substantive rules of common law applicable in a State.”110 Thus, this power is “reserved by the Constitution to the several States” through the Tenth Amendment,111 and federal courts’ practice of departing from state law under Swift was “an unconstitutional assumption of powers by courts of the United States.”112 Reaffirming the centrality of state judicial independence to Erie’s Tenth Amendment holding, Justice Brandeis quoted a passage by Justice Field at length, part of which is worth reproducing here:
[T]here stands, as a perpetual protest against [the Swift doctrine’s] repetition, the Constitution of the United States, which recognizes and preserves the autonomy and independence of the States — independence in their legislative and independence in their judicial departments. Supervision over either the legislative or the judicial action of the States is in no case permissible except as to matters by the Constitution specifically authorized or delegated to the United States. Any interference with either, except as thus permitted, is an invasion of the authority of the State and, to that extent, a denial of its independence.113
As this passage demonstrates, the independence of state judiciaries from federal interference provided both a motive and a constitutional basis for Erie’s holding. While courts often place greater emphasis on Erie’s policy goals than on its constitutional holding when applying the Erie doctrine,114 Erie’s federalism endures and continues to animate its application today.115
But beneath the cloak of its federalism holding, Erie smuggled in a theory about the nature of common law: that common law exists only insofar as it is contained in the decisions of the sovereign’s judges. To Justice Brandeis, as to Justice Holmes, “the assumption that there is ‘a transcendental body of law outside of any particular State but obligatory within it unless and until changed by statute’”116 was a “fallacy.”117 Instead, Erie embraced a purely realist conception of the common law in which the decisions of state judges themselves establish law:
[L]aw in the sense in which courts speak of it today does not exist without some definite authority behind it. . . . [T]he authority and only authority is the State, and if that be so, the voice adopted by the State as its own [whether it be of its Legislature or of its Supreme Court] should utter the last word.118
Thus, Erie declared that “the law to be applied in any case is the law of the State,” whether that law “shall be declared by its Legislature in a statute or by its highest court in a decision . . . . There is no federal general common law.”119
The consequences of Erie’s endorsement of realism did not stop at abolishing federal general common law.120 As Sachs describes, Erie also “insisted that the states had adopted precisely the same views toward general law as happened to be held by Justices Holmes and Brandeis.”121 The assumption that state judiciaries embraced legal realism and the lawmaking function of courts is traceable to Justice Holmes’s bold assertion that “when the Constitution of a State establishes a Supreme Court it by implication” declares “that on all matters of general law the decisions of the highest Court should establish the law.”122 The assumption was unsupported and probably incorrect.123 Yet the federal courts have perpetuated the assumption in spite of its historical dubiousness.124
An important question for our purposes is whether Erie’s assumption mandates that federal courts treat state court decisions as making law even where the state itself adheres to the declaratory theory. It comes as no surprise that there remains a difference of opinion on this issue,125 since in most instances it makes little difference whether the federal court views the state court as making or declaring law. In either case, the federal court can satisfy Erie’s requirements by applying state law as asserted by the state court. But there are rare instances, and judicial takings are one of them, where it matters how the federal court views the state court’s philosophy on common law adjudication.126
If Erie does require federal courts to treat state court decisions as though they make law, then it works a devious sleight of hand. With one hand it grants the states full independence over the substance of their common law while with the other it revokes their ability to adhere to their preferred jurisprudential philosophy. Surely, the “autonomy and independence” of state judicial systems from federal oversight on which Erie based its constitutional holding127 include the freedom to practice the state’s desired jurisprudential philosophy.128 It is a stretch to say that allowing federal courts to reach independent conclusions on matters of general common law is a gross intrusion into state courts’ autonomy and independence but that binding the states to the jurisprudential philosophy of a few Justices on the U.S. Supreme Court is not. As Justice Holmes himself recognized in Black & White Taxicab & Transfer Co. v. Brown & Yellow Taxicab & Transfer Co.,129 a state’s choice of jurisprudential philosophy is beyond the scope of federal control.130 In Erie’s words, how the states apportion lawmaking power “is not a matter of federal concern.”131
Indeed, Erie’s constitutional logic applies identically to a state’s substantive common law and jurisprudential philosophy. Erie held that, because the Constitution does not grant the federal government control over state substantive common law, the Tenth Amendment reserves that power to the states.132 Similarly, nothing in the Constitution grants the federal government control over state jurisprudential philosophy.133 Therefore, the power to adhere to a particular jurisprudential philosophy is also reserved to the states via the Tenth Amendment. A federal court’s projection of its jurisprudential philosophy onto a state court is equally “an unconstitutional assumption of powers.”134
Moreover, even if Erie’s constitutional logic applies only to substantive law, in judicial takings cases, a state’s jurisprudential philosophy is essentially part of its substantive law. The antecedent state law question in a takings case is whether the claimant had a property right, clearly an issue of substantive law. And, as argued in Part II, a state’s approach to jurisprudence is a critical component of that inquiry when the taking is alleged to have occurred via judicial decision. In Klaxon Co. v. Stentor Electric Manufacturing Co.,135 the Court held a different type of meta-law — choice-of-law rules — to be “substantive” for Erie purposes because those rules are frequently outcome determinative.136 Similarly, in judicial takings cases, it makes little sense to draw a line between substance and jurisprudence when a state court’s jurisprudence is dispositive of the substantive issue.
In the years leading up to Erie, Justices Holmes and Brandeis — and the Court as a whole — repeatedly affirmed state autonomy over jurisprudential philosophy. This line of cases makes it unlikely Erie was intended as a Trojan Horse that revoked the states’ jurisprudential freedom under the guise of granting them control over their substantive law.137 Perhaps the clearest assertion of state jurisprudential autonomy came just six years earlier in the Court’s unanimous138 opinion in Great Northern Railway Co. v. Sunburst Oil & Refining Co.,139 which proclaimed that the “federal constitution has no voice” on whether a state court applies its decisions prospectively or retroactively.140 In enabling state courts to prospectively overrule their prior cases, Sunburst offered the states complete jurisprudential freedom to accept or reject the declaratory theory.141 This judicial federalism is in line with Justice Holmes’s dissent in Black & White Taxicab — which Justice Brandeis joined and which provided a theoretical basis for Erie — arguing that federal courts have no power to second-guess state courts’ declarations of jurisprudential philosophy.142 While Justice Holmes was advocating the states’ freedom to reject the declaratory theory and adopt legal realism,143 the same principle would prevent federal courts from second-guessing the states’ acceptance of the declaratory theory. Indeed, two years later Justice Brandeis himself wrote in Brinkerhoff-Faris Trust & Savings Co. v. Hill144 that “[s]ince it is for the state courts to interpret and declare the law of the State, it is for them to correct their errors and declare what the law has been as well as what it is,”145 indicating that he accepted state courts’ use of the declaratory theory. And over and over again, the Court stressed that state courts are free to overrule their precedents without violating the federal Constitution.146 It would be underhanded indeed for Erie to walk back this jurisprudential autonomy while espousing the independence of state courts.
2. The Risk of Judicial Takings. — But whether or not Erie in fact requires federal courts to treat all state court decisions as making law, its mistaken assumption continues to pervade the federal courts.147 Most of the time, this assumption is harmless. Sometimes, it is not.148 Judicial takings make up one context in which the assumption has particularly pernicious results for state autonomy and independence.
By advocating a categorical judicial takings doctrine that assumes all state courts are making law, the Stop the Beach plurality perpetuated Justices Holmes and Brandeis’s mistake. Its adherence to the realist assumption is evident in the opinion. Justice Scalia rejected Justice Kennedy’s originalist argument because, in his view, courts “assume[d] the power to change the common law” in the nineteenth century.149 The plurality’s realist assumptions shine through most prominently in its statement that “courts have no peculiar need of flexibility. It is no more essential that judges be free to overrule prior cases that establish property entitlements than that state legislators be free to revise pre-existing statutes that confer property entitlements, or agency-heads pre-existing regulations that do so.”150 This passage asserts that “cases” establish actual property rights, precisely as the political branches’ statutes and regulations do. This assertion is in direct conflict with the declaratory theory, which holds that judicial decisions are different in kind from statutes and regulations in that judicial decisions do not themselves establish rights but merely declare them. Thus, while Justice Scalia did little to clarify his “established property right” test,151 it is clear he considered common law judicial decisions sufficient to establish law such that a subsequent overruling would be a taking.
Stop the Beach was not the first time this realist assumption made its way into the judicial takings discussion. Dissenting from a denial of certiorari in an earlier case, Justice Scalia argued a judicial taking would occur if a state court changed property rights “by invoking nonexistent rules of state substantive law.”152 This is flatly inconsistent with the declaratory theory, under which newly announced rules were not previously “nonexistent” but rather were part of the state’s common law even before being recognized in a judicial decision. And Justice Stewart’s concurrence in Hughes v. Washington153 argued that “a State cannot be permitted to defeat the constitutional prohibition against taking property without due process of law by the simple device of asserting retroactively that the property it has taken never existed at all.”154 Of course, this kind of retroactive assertion is the modus operandi of the declaratory theory.
The consequence of sticking to Erie’s jurisprudential assumptions in the context of judicial takings is that state courts are precluded from adhering to the declaratory theory in certain cases. Because the issue whether a claimant has a property right under state law is antecedent to the question of federal right — whether there was a taking under the U.S. Constitution — federal courts may independently review state court decisions on the existence of a property right in judicial takings cases.155 Thus, under the Stop the Beach plurality’s approach, if a state court overrules a clear, incorrect statement of property law, it will get reversed for taking property even though, on the state’s understanding, the claimant never had property to begin with. By restricting states’ abilities to engage in their preferred jurisprudential philosophy, such a doctrine embraces Erie’s realism while undermining its vision of autonomy and independence for state judiciaries.
B. A Path Forward
If we are to have a judicial takings doctrine, it is essential that it preserves state autonomy and independence over jurisprudential philosophy. The simplest way to achieve this goal is for federal courts to let the states decide whether to accept or reject the declaratory theory and to respect their decisions. In short, in Justice Cardozo’s words, “[t]he choice for any state may be determined by the juristic philosophy of the judges of her courts, their conceptions of law, its origin and nature.”156 Thus, when a state court overrules a prior decision about property rights, a judicial takings claim is possible if and only if the state court rejects the declaratory theory. This Note goes further than Dogan and Young’s argument for substantial deference to state courts on whether their decisions are in fact inconsistent with precedent;157 it argues that even when a state court explicitly overrules its precedent, there is no taking so long as that court adheres to the declaratory theory. Happily, a system that takes account of states’ jurisprudential philosophies fits neatly into the existing framework for review of state court decisions on state law.
Recall that federal courts conduct independent reviews of state courts’ rulings on state law issues antecedent to questions of federal right. But in doing so, federal courts are still bound to apply state law.158 Indeed, federal courts accord a significant degree of deference to state courts when reviewing these antecedent state law questions.159 An important antecedent question in takings cases is whether the claimant possessed a property right under state law.160 Thus, in takings cases, federal courts must look to state law to determine whether a claimant has a property right.161 It is a small step, arguably no step at all, for “state law” here to include both state substantive law (“the statutes of the State and the decisions of its courts”162) and state jurisprudential practice (whether state courts make or find law).163 This solution allows for a robust judicial takings doctrine, assuming such a thing should exist at all, while preserving the autonomy of the states envisioned by Erie.
In determining state law on this jurisprudential issue, federal courts should look first to state constitutions, statutes, and judicial decisions that bear on the state’s approach to common law adjudication. If those sources legitimately express the state’s acceptance or rejection of the declaratory theory, the presumption should be that a judicial decision by that state’s courts adheres to that mandate. Next, federal courts should look to the reasoning of the state court decision at issue to determine whether the court engaged in making new law or declaring already-existing law when it overruled its precedent. If the state court’s jurisprudential methodology remains unclear, the federal court may make an “Erie guess” as to how the state high court would characterize its approach164 or it may certify the question to the state high court.165
Once a federal court determines how the state understands its jurisprudence, the federal court should defer to that view so long as there is a “fair or substantial basis” for the assertion that the state court adhered to the state’s understanding in the case at issue.166 If there is no fair or substantial basis — for example, if a state’s legislature or high court announces that the state’s courts follow the declaratory theory but the high court issues an opinion that screams “judicial legislation” — the federal court need not defer to the state’s assertions.167 The “fair or substantial basis” standard is rooted in the Court’s “adequate and independent state grounds” jurisprudence168 and was proposed for judicial takings by the respondents in Stop the Beach.169 Contrary to Justice Scalia’s musings that the test is “not obviously appropriate” in the takings context,170 the fact that the test was “designed to determine whether there has been an evasion” of federal review171 makes it seem particularly appropriate for addressing the concern of state circumvention of the Takings Clause.172 Indeed, the Court applied the test in the very context of antecedent state law questions of constitutional property in Demorest v. City Bank Farmers Trust Co.173
Demorest provides an example of how respect for state court characterizations of prior cases with regard to a federally protected right could work in practice. In that case, petitioners challenged a New York statute under the Due Process Clause, arguing that the statute retroactively took their property established by prior New York Court of Appeals cases.174 The Court of Appeals held that its prior decisions did not establish a property right,175 reading the rule pronounced in those cases as “tentatively stated and expressly recognized as subject to change.”176 Furthermore, the court made a statement about the state’s treatment of precedent: “Before a judicial declaration, thus tentatively stated, becomes a rule of property, it must have become permanently fixed and long continued.”177 Having concluded that its prior decisions did not establish a property right, the New York court disposed of the case because petitioners “never possessed under New York law such a property right as they claim has been taken from them.”178
The Supreme Court’s treatment of the New York court’s ruling in Demorest is instructive for how it might approach judicial takings cases. Although Demorest was brought as a due process case, it could just as easily have been a judicial takings case; state high court precedent arguably vested petitioners with certain property rights that the state court later declared nonexistent. And in Demorest, the Court respected the state court’s approach to common law jurisprudence. It held that the state court could “formulate general rules”179 without establishing property rights. It asked only “whether the decision of the state court rests upon a fair or substantial basis”180 and concluded that it did.181 Similarly, state courts should be able, in good faith, to recognize prior common law decisions as misstatements of the law that did not establish property rights.
Three potential concerns with this proposal are worth addressing. First, because the Takings Clause confers a federal constitutional right, it may seem odd to have its scope determined in part by state law and the practice of state courts. Second (and relatedly), it may appear counterintuitive that the clause’s protections would apply unequally to states that accept the declaratory theory and those that reject it. The simple response to these objections is not that they are necessarily wrong but that they are too late. Antecedent to any federal takings claim is the question of whether the claimant possesses a property right.182 At least as of Roth, that question is generally one of purely state law.183 This farming out of the definition of constitutional property to the states means the Supreme Court may not be comfortable with the results, creating what Professor Jerry Mashaw and others have labeled the “positivist trap.”184 Moreover, it means that the scope of the Takings Clause’s protections varies along with the varying property laws of the several states. Thus, the Supreme Court has already relinquished complete control over the Takings Clause’s scope and forgone its uniform application among the states by placing this prerequisite in the states’ hands. Section II.B established that this necessary condition of a legitimate property right turns not only on a state’s substantive law but also on its jurisprudential philosophy. Recognizing that the relevant state law includes the latter would not effect a shift in power from federal to state courts or create discrepancies among the states to a significantly greater extent than Roth’s framework already has.
The third objection is that acknowledging a distinction in the application of a judicial takings doctrine based on acceptance or rejection of the declaratory theory amounts to a drafting guide for states and state courts to get around the strictures of the Takings Clause. This concern is understandable, but there are at least two reasons why it is not entirely well founded.
First, as discussed above, a federal court need not defer to a state court’s claim of adherence to the declaratory theory if there is no fair or substantial basis for the state court’s assertion. While federal courts accord deference to state courts when reviewing antecedent state law questions,185 they retain the power to reach their own conclusions.186 This check allows federal courts to police bad faith evasion of the Takings Clause by state courts.
Second, as a practical matter, the fear that state courts will exploit the distinction to avoid federal constitutional limitations rests on a mistrust of state courts that is probably unjustified. While many state courts took an openly hostile approach to Supreme Court opinions in the 1950s and 60s,187 the Supreme Court has since recognized that state courts are perfectly appropriate forums for vindicating federal constitutional rights.188 Furthermore, while many state judges are elected or otherwise subject to political pressure, potentially raising concerns that they may sacrifice a lone property owner’s rights to the will of the majority, there is little empirical or historical evidence backing this concern, at least in the takings context.189 For one thing, state courts have more experience than federal courts in adjudicating takings cases.190 For another, empirical analysis has found “strong evidence of parity in the takings area” between state and federal courts.191 One study analyzed state and federal court interpretations of Nollan v. California Coastal Commission,192 which applied the Takings Clause to conditions on land-use permits,193 and found that, “as a whole, the state and federalcourts have interpreted Nollan very similarly.”194 Similarly, the Justice Department, in a letter to the House Committee on the Judiciary, found “no evidence that State courts, on the whole, are failing to do an adequate job of protecting property owners in the hundreds, if not thousands, of cases that come before them each year.”195 Instead, “[g]uided by recent Supreme Court decisions, State courts are likely to be as sympathetic to local property owners as Federal courts and as competent as Federal courts to decide Federal constitutional claims under the Just Compensation Clause.”196 Thus, there is little support for a mistrust of the “presumptively competent” state courts to adjudicate in good faith respecting the Takings Clause.197
Conclusion
The question of judicial takings is far from settled. While the Supreme Court has been aware of the question for over a century, it has yet to provide a definitive answer as to whether a judicial takings doctrine even exists. Ironically, while we still do not know whether a judicial takings doctrine exists, we have a sense of what one might look like from the plurality opinion in Stop the Beach. This Note’s purpose is to flag a potential unintended consequence of that approach before it is embraced by a majority of the Court. The Court should not blindly follow Erie’s mistaken assumption about the nature of common law while unintentionally undermining its spirit by revoking state autonomy over jurisprudential philosophy. Should a majority of the Court wish to adopt a judicial takings doctrine, this Note suggests a framework for doing so that can be easily implemented in a manner consistent with the Court’s current doctrine and that strikes a balance between preserving state judicial independence and protecting federal rights.