Legal Docket: Texas landowners seek compensation

NICK EICHER, HOST: It’s The World and Everything in It for this 19th day of February, 2024. We’re so glad you’ve joined us today. Good morning! I’m Nick Eicher.

MARY REICHARD, HOST: And I’m Mary Reichard. It’s time for Legal Docket, where we cover every oral argument heard by the U.S. Supreme Court. 

But before we get into the arguments let’s get caught up on a couple of opinions handed down.

The first one is a win for consumers with credit reports. The case involved a man named Reginald Kirtz who’d had a loan with the U.S. Department of Agriculture that he’d paid in full. But to look at his credit report you’d think he hadn’t. You’d have seen past-due loans. 

Kirtz notified the relevant parties to try to get it changed, but he got no response. And so his credit score didn’t reflect reality.

EICHER: Having a low credit score is costly and so Kirtz tried suing the government lender for violating the Fair Credit Reporting Act but the government claimed it couldn’t be sued.

The Supreme Court was unanimous in siding with Kirtz. You can hear the winning argument of his lawyer Sopan Joshi back in November:

SOPAN JOSHI: The Fair Credit Reporting Act imposes civil liability on any person that negligently or willfully fails to comply with FCRA's requirements. It expressly defines "person" to include any government agency.

Plain-text argument! Now consumers can hold federal agencies accountable if they violate fair-credit laws.

REICHARD: The second opinion in Murray versus UBS Securities, LLC eases the way for whistleblowers. 

In this case the whistleblower relied on the protections of the federal Sarbanes-Oxley Act. The argument was over whether an employee must prove his employer intended to retaliate because of protected whistleblowing activity.

EICHER: Last October, lawyer Easha Anand argued the answer to the question of who has to prove what is also a matter of plain-text interpretation:

EASHA ANAND: Congress believed that employees shouldn't have to have evidence of what was in the head of the decision-maker at the moment of the decision before the burden shifted.

REICHARD: Today’s oral argument has all the makings of a landmark property-rights case. Devillier versus Texas was argued last month, and it involves a man named Richie DeVillier. He’s the lead plaintiff in a consolidated case of about 80 other people. They sued the state of Texas for flooding their properties that run along Interstate Highway 10, about an hour east of Houston.

EICHER: I-10 runs from coast to coast, about 2,500-miles from Santa Monica, California, to Jacksonville, Florida. In the early 2000s, the Texas Department of Transportation renovated a stretch of I-10 raising the highway, installing more lanes, and–crucially– adding a concrete barrier that diverted water from the roadway onto adjacent properties. 

Ever since, whenever there’s heavy rain, DeVillier’s adjacent property becomes a lake.

REICHARD: I called up DeVillier last week to get some detail::

RICHIE DEVILLIER: We had 23 inches of water in our home. So all furniture, just anything that was that level. But even higher than that because when you go to rip out floors, sheetrock, so you have to go up several feet. It’s a huge undertaking to rebuild.

But it wasn’t just his house damaged. His entire cattle operation was underwater.

DEVILLIER: Our tools. We lost nine vehicles in the first flood. Tractors, equipment, air compressors, welding machines, horse riding tack and supplies, feed, hay bales…it was over a thousand round bales of hay that we put up to feed our cattle during the winter…and then, animals. Both events —between my immediate family, myself, my parents— during the first storm, we lost over 60 grown cows and bulls and numerous calves. We never really got a firm count on the calves and obviously they’re the ones that suffered the most just because they don’t have the elevation that the adult animals do. But we also lost horses and a colt. 

Looking out from his property after Hurricane Harvey, Devillier said it was surreal:

DEVILLIER: I mean, it looked like you’re out in the Gulf of Mexico. And right on the other side of that wall, there was traffic going back and forth. It's just crazy.

In case you’re wondering, he didn’t have flood insurance. He wasn’t in a flood plain. He still isn’t. He said his house is around 30 feet above sea level. In the nearly hundred years his family lived here, through hurricanes and storms, nothing like this had happened. 

He had to pay for all that damage out of pocket.

EICHER: So Devillier and others with the same kinds of problems sued the state of Texas for money damages in state court. They allege the state took their property without compensation, which it’s not supposed to be able to do under the Bill of Rights—specifically, the Fifth Amendment to the U.S. Constitution. 

The Fifth is brief  and in relevant part says that no person shall “be deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation.”

REICHARD: Otherwise known as the Takings Clause.

It’s clear you can sue the federal government for violating it. But here the question is whether a person can directly sue a state under it?

Listen to Devillier’s lawyer at oral argument, Robert McNamara:

ROBERT MCNAMARA: The question presented in this case is resolved by the text of the Fifth Amendment, which, unlike any other provision of the Constitution, imposes on the government an explicit duty to pay money. 

And this right of property owners to sue in inverse condemnation to obtain just compensation for an alleged taking is at the heart of modern American takings law.

EICHER: Let’s talk about that term “inverse condemnation.” That happens when a government damages private property for public use without following a process known as “eminent domain.” For our purposes today all we need to understand is that eminent domain requires compensation.

Arguing on behalf of Texas: state Solicitor General Aaron Nielson.

AARON NIELSON: The Court will be hard-pressed to find any government more committed to property than Texas. 

But still, he argued that there’s no specific language in the Fifth Amendment that lets someone sue a state for taking property.

NIELSON: All petitioners had to do was use Texas’s cause of action. Instead, petitioners insist they can bring a cause of action directly under the federal Takings Clause itself. This argument is wrong for many reasons.

REICHARD: One of those reasons, he argued, is that the Takings Clause doesn’t say anything about how “just compensation” is to be paid. Through litigation? Commissions? Or what? 

Now sitting in the courtroom listening to all this was Richie DeVillier, the lead plaintiff. He was thinking Texas can’t unflood my ranch or undamage my lost possessions. I need money damages to make things right. 

As DeVillier told me, he was a little uncomfortable at first when the justices began questioning his lawyer, particularly when Justice Clarence Thomas jumped right in with pointed questions:

DEVILLIER: He was … kind of against our, our position. And then justice, Justice Barrett and Justice Gorsuch were the same way, just one, two, three, one after the other and kind of pointed. And it made me a little uncomfortable. I got to tell you, cause I didn't expect that. I wasn't, wasn't prepared for that. 

EICHER: But DeVillier soon learned not to read too much into it. 

At oral argument justices are probing to find out the best and worst reasoning of each side. 

Once the justices finished questioning his attorney, Devillier began to feel a little better. Listen to this exchange between Justice Elena Kagan and lawyer Nielson for Texas:

JUSTICE KAGAN: But General do you agree with Mr. McNamara that if a state takes a person’s property and doesn’t give compensation, that state is violating the Constitution every day? It’s an ongoing violation. Do you agree with that?

NIELSON: That’s not how the Court has—I believe—I certainly agree that’s a violation of the Constitution. I don’t think this Court’s cases have ever—

KAGAN: But that’s what I want to know. It’s an ongoing violation of the Constitution, right? I've taken Mr. McNamara's property. I haven't paid him. Every day, I'm violating the Constitution, correct?

NIELSON: Yes, Your Honor.

KAGAN: Okay. So aren't courts supposed to do something about that?

Devillier remembers how Nielson answered:

DEVILLIER: And he danced around it and she asked him three times and he finally said, “yes, ma’am.”

REICHARD: Close enough. Nielsen knows court protocol and said, “Yes, Your Honor.” 

Anyway, it’s important to understand that this litigation started out in state court. Then Texas removed the case to federal court, its preferred forum. Once there, Texas convinced the federal court to dismiss the case. The grounds for that go back to the term we first encountered, “inverse-condemnation.” The federal court held that the property owners couldn’t bring an inverse-condemnation claim directly under the Fifth Amendment. 

The landowners would’ve had to sue under another federal law. But even there, because Texas isn’t a “person,” it can’t even be sued under that law. 

Chief Justice John Roberts called foul:

JUSTICE ROBERTS: Well, isn’t that a Catch-22. I mean, you say they have to proceed in—in state court. They can't proceed in federal court. And as soon as they do, you remove it to federal court under 1983, where you say they can't proceed?

EICHER: Nielsen said something about implied rights of action, and there was talk of sovereign immunity for Texas and also that the statute of limitations had already passed. 

But then Justice Sonia Sotomayor chimed in, listen to this:

JUSTICE SOTOMAYOR: This seems to me like a totally made-up case, because they did exactly what they had to do under Texas law. It's you who are telling me—it's almost a bait and switch.

REICHARD: Wow! When you have both conservative and liberal justices sounding so skeptical of Texas? I think it’s safe to say Devillier will get a chance to set out his case for money damages at a trial in lower court. 

After so many years, Devillier told me he is hopeful, even though the road is still very long:

DEVILLIER: Again, you know, we're from Texas and private property rights, I think is a big part of what this state was built on. You know, I mean, farmers and ranchers homesteaded it and built it, created wealth for the whole state, for the country. I mean, we pay a lot of taxes to our local state and federal governments. We're a big part of keeping this machine rolling. And if the state, any state, can take from us at will and know that they're not going to have to pay for it, they can just take what they want? We know what that is. That's tyranny. We can’t stand for that. We won’t stand for that. 

REICHARD: We will learn whether the Supreme Court will stand for that by the end of this term, within four short months. 

And that’s this week’s Legal Docket!

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