This week, I’ve blogged on a forthcoming article about the Supreme Court case Tyler v. Hennepin County, Minnesota. As I showed on Monday, in Tyler the U.S. Supreme Court held that surplus equity constitutes “private property” sufficient to support claims under the Takings Clause. As I showed on Tuesday and Wednesday, the Court reached that conclusion (primarily) by figuring out what the general law in England and the American states held at the Founding on surplus equity but (secondarily) also by checking how Minnesota (the defendant in Tyler) treated surplus equity when it wasn’t foreclosing. Yesterday, I argued that this strategy makes practical sense in context. For originalists, the Tyler strategy provides a way to work out what “private property” means and covers when the historical record doesn’t make explicitly clear whether a particular legal entitlement was understood to be property. For non-originalists, the Tyler approach provides a way for federal courts to steer between two dangers. The approach avoids overaggressiveness, in second-guessing state property law, and passivity, when states use their powers to define property to expropriate it.
Today, I’ll devote this post to a “reader mailbag” day. Here’s one reaction I’ve gotten: How far might federal courts go in relying on general law? To make the question more pointed, consider a hypothetical. Assume that English and American practice pre-1790 ruled out the possibility that surplus equity was property, but that American state courts and legislatures gradually came to regard it as property later. The hypothetical differs from what happened in Tyler. In Tyler the Court focused on general law sources before or only shortly after the ratification of the Fifth Amendment, and there was no tension between post-ratification general law and English and pre-ratification practice. But the hypothetical raises some important questions, about how much one can rely on general law.
I have two different answers depending on what you think is the right approach to constitutional interpretation. If you are not an originalist, in situations like my hypothetical, courts could and probably should follow general law. The general law provides a baseline. The baseline stands separate from judges’ own views about whether a particular entitlement should or shouldn’t be property (or, whether a state has good grounds to regulate it). And, the baseline allows for comparison of a state’s law against the practices in other states.
If you are an originalist, however, then you should ignore “drift” in the general law of property if that drift causes the general law meaning of private property to differ from the phrase’s original meaning in the Constitution. “private property.” For originalists, general law, contemporaneous with the ratification of a constitutional clause, can supply evidence about what that clause means. When that phrase’s meaning is underdetermined, courts can also (but need not) consult later general law to fill in the meaning not determined fully by the phrase itself. But the general law ceases to be relevant (to originalist inquiry) when it conflicts with original meaning.
In comments over this week, ReaderY has argued that federal courts should ignore general law and focus only on the law within the state accused of a taking. In other words, federal courts “should hold [a] state to the same rules other creditors are held to” and stop there. I responded to that argument yesterday, but I’ve thought more on it and want to revise slightly what I said yesterday.
ReaderY is assuming that Tyler‘s general law approach is mutually exclusive with the approach focusing (as Brand did) entirely on the law of the state being sued. I don’t think Tyler treats early general law and the law of the state in question as mutually exclusive. In my read, in Tyler and other cases in its line, the Court is looking for as much assurance as it can get that the legal entitlement in dispute is indeed private property throughout law. In Tyler, the Court concluded that surplus equity is indeed property, both because it was recognized as such in English and early American state general law and because Minnesota recognized it as such in all foreclosures except real-estate tax foreclosures. Tyler followed (and in the process clarified) similar reasoning in Phillips v. Washington Legal Foundation. In Phillips, the Court held that, when a state compelled attorneys to deposit client funds in a pooled state account, when those funds produced interest the interest was the private property of the clients. The Court concluded that interest was private property in part because (more contemporary) general law held it as such and in part because Texas law held it as such except in the attorney/client trust fund context.
In other words, in both Tyler and Phillips the Court was using general law and the practice of the sued states as two independent points for reference and confirmation. So I’m not as worried as ReaderY seems to be, that the general law gives federal courts an independent basis to critique and find unconstitutional the policy of some state.
ReaderY is confident that a general law approach is more likely to give federal courts discretion to than the approach that focuses (as Brand does) on state law and stopping preferential treatment for state actors. I doubt that’s right. In a general law approach, a federal court must prove that there really is a body of law settled enough to call “general.” ReaderY suspects courts can manipulate that requirement; I doubt they can. Separately, I can envision hard hypotheticals going against the ones that concern ReaderY. Imagine that banking institutions in one state convinced the state legislature to let all foreclosing creditors, both private lenders and public tax collectors, keep surplus equity. In my hypothetical scenario, under the no-special-treatment-for-states approach, no debtors in that state would get the protection Ms. Tyler got in the Tyler case.
The approach the Court took in the actual case would give protection in my hypothetical case.
My posting yesterday prompted a disagreement between ReaderY and Rubbish! In the comments. I’m pro-Tyler, but Rubbish is even more pro- than I am: “Taking private property without fair compensation violates individual citizens’ federal constitutional rights,” and he’s for Tyler because Tyler stops such takings. ReaderY warns that Tyler‘s approach makes too easy for federal courts to stop (or, at least to make it a lot more expensive for) states to bar companies from working with cutting-edge and dubious property. Like gathering and making money from data gathered from ordinary people through surveillance or social-media-traffic harvesting. Or, like gathering and making money from people’s genetic sequences.
That exchange highlights two dangers that need to be avoided-when designing constitutional doctrines, and also when developing rules saying when federal courts should intervene in and stay out of state law. Constitutional law and federalism policy are both complicated and messy, because broad rules don’t always apply correctly in particular cases. So the first danger to avoid (pace Rubbish!) is to assume that courts will always apply a legal doctrine the way we want. It’s not enough to have a constitutional guarantee that states pay proprietors when states take private property. Sound doctrines should, on one hand, give people compensation when they really have property (and, the kinds of investment-backed expectations formal property rights protect) and, at the same time and on the other hand, avoid giving people compensation when their entitlements don’t count as property (and cover the kinds of expectations that don’t deserve treatment or protection as property). Takings doctrine has easy examples on both sides: Rights of exclusive control are clearly property, while revocable interests and discretionary benefits are clearly not. Bank-account interest (Phillips) and surplus equity (Tyler) are closer to the borderline, and a satisfying doctrine here should find ways to deal with close cases reliably. I trust a general law approach to do so.
The other danger to avoid is to design the necessary rules to avoid one set of bad results without anticipating other likely bad results. I sympathize very much with the policy outcomes ReaderY wants to become law with respect to property in genetic information and in social-media data. But legislatures have used the discretion ReaderY wants them to have to force lawyers and clients to pool money in ways they wouldn’t otherwise have done, and to let some actors in their states keep more than they need post-foreclosure to settle debts. So the law seems some mechanism for federal courts to sort different entitlements, in a manageable but accurate way, into ones where constitutional guarantees kick in and ones where they don’t. I think the Tyler approach strikes the right combination of manageability and accuracy.
I guess I am less worried about ReaderY’s examples also because I don’t regard them as problems about the scope of “private property” in takings law. ReaderY seems to assume that, if certain resources count as private property, any interference with the property rights will trigger compensation requirements. Not necessarily. Even when claimants have constitutional private property, laws that interfere with property rights may avoid takings limitations—if they can be shown to be justified police regulations. That is the subject of “regulatory takings” doctrine. In the hypotheticals ReaderY puts forth, I can imagine convincing reasons why a government would not be taking and would instead be regulating if it prevented the gathering or further use of patient genetic information without patient consent, or if it stopped social-media companies from gathering data about users without their consent.
To explain my views on problems like those, though, I’d need to explain when genetic information and data are property and when they’re (instead) the objects of “personal” rights like rights to an identity and a reputation. And, I’d need to explain the just grounds governments have to “regulate” rights without taking them or otherwise violating them. I don’t do any of that in my article on Tyler. In the byline Eugene gave me for this series of posts, he was kind enough to mention that I have a book forthcoming on Natural Property Rights. It’s scheduled to come out next month. That’s where I tackle the kinds of questions to which readers have been leading me here at the end of my run this week.
So I’ll stop blogging about Tyler for now. Eugene, thank you again for having me this week, and thanks very much to TVC‘s readers for their attention and their engagement this week. It has been a wonderful week, and I’d be most grateful to do it again when my book comes out!
The post Choice of Law in Takings Cases After <i>Tyler v. Hennepin County</i> (V) appeared first on Reason.com.
