Supreme Court raisin case a 'great victory' for property rights

The high court rejects the claim that government can take personal property without just compensation, even in a USDA raisin price-support program.

In an important decision bolstering protections for private property, the United States Supreme Court on Monday ruled that the government must pay compensation to a family of raisin farmers who had part of their crop appropriated under a mandatory agricultural price-support program.

Ruling 8 to 1, the high court said that a marketing order issued under a New Deal-era statute amounted to a “taking” of private property, thus entitling the raisin farmers to a fair payment for their seized raisins.

The decision stems from a dispute over the workings of the so-called Raisin Administrative Committee that requires raisin farmers in some years to turn over a percentage of their crop free-of-charge to the government in an effort to prevent oversupply and a collapse in the price of raisins.

The government sells the seized raisins in noncompetitive markets overseas or donates them for use in ways that won’t undercut market prices. Any profits left after paying the government’s expenses are returned to the farmers.

In the years 2002-03, raisin growers were ordered to set aside 47 percent of their crop. The following growing season they were ordered to set aside 30 percent.

California raisin growers Marvin and Laura Horne refused to surrender any of their crop to the government. They argued that under the Fifth Amendment the required surrender of their raisins was an unconstitutional “taking” of private property, unless the government paid just compensation.

The government sought to seize the Hornes' raisins, sending trucks to their farm. The family denied them access. In response, the government issued fines and civil penalties totaling more than $680,000.

The dispute then went to the courts, where an appeals court eventually ruled for the government. The San Francisco-based Ninth US Circuit Court of Appeals decided that a crop of raisins was not entitled to the same level of constitutional protection from a “taking” by the government as is real estate.

The appeals court also ruled that since the Hornes might still benefit from proceeds from any sale of the appropriated crop, they still retained an interest in the property.

In defending the price-support program, government lawyers argued that the Hornes were free to switch to other crops, or sell their raisin-variety grapes as table grapes or for use in juice or wine.

In rejecting the government’s arguments and overturning the Ninth Circuit on Monday, the high court said the Fifth Amendment’s requirement of just compensation applies to all private property, not just to real estate.

“The government has a categorical duty to pay just compensation when it takes your car, just as when it takes your home,” Chief Justice John Roberts wrote in the majority opinion.

He said the requirement imposed by the Raisin Committee amounted to a clear physical taking, since actual raisins were transferred from the growers to the government.

Justice Sonia Sotomayor filed a dissent. She said the Raisin Marketing Order did not deprive the Hornes of all of their property rights over the raisins and thus didn’t amount to a taking of property.   

A taking only applies “where all property rights have been destroyed by governmental action,” she said. “Where some property right is retained by the owner, no per se taking … has occurred.”

Justice Sotomayor said the Hornes retained the right to receive at least some money back from their appropriated raisins. She noted that the prospect of some kind of financial return was more than speculative.

During the life of the program, raisins have been held in reserve by the government 49 crop years, Sotomayor said. Of those years, farmers subsequently received net proceeds from the reserve raisins in 42 of those years.

“Granted, this equitable distribution may represent less income than what some or all of the reserve raisins could fetch if sold in an unregulated market. In some years, it may even turn out (and has turned out) to represent no net income,” she said.

“But whether and when that occurs turns on market forces for which the government cannot be blamed and to which all commodities – indeed all property – are subject,” she wrote.

Although eight justices agreed that the appropriation of the Hornes’ raisins was a taking, all eight did not all agree on what should happen next in the case.

Justices Stephen Breyer, Ruth Bader Ginsburg, and Elena Kagan would have remanded the case to the lower courts to decide whether any compensation was due to the Hornes.

The chief justice and Justices Antonin Scalia, Anthony Kennedy, Clarence Thomas, and Samuel Alito decided that there was no need for further action in the lower courts.

“The government has already calculated the amount of just compensation in this case, when it fined the Hornes the fair market value of the raisins: $483,843.53,” Justice Roberts said. “The government cannot now disavow that valuation.”

He said the Hornes should be relieved of their obligation to pay the earlier imposed fine and penalties. “This case, in litigation for more than a decade, has gone on long enough,” Roberts declared.

Several analysts said the decision is a strong affirmation of protections of private property in the face of government action.

“Today’s decision is a great victory for farmers and property owners in general,” J. David Breemer of the Pacific Legal Foundation said in a statement.

“The decision confirms what should be obvious: the government cannot come and take your personal property without compensation, whether raisins or other property, on the ground that the taking is for your own good,” Mr. Breemer said.

“Today the court reaffirmed the obvious constitutional principle that if the government decides to take someone’s property for its own use, the government must pay for it,” Carrie Severino of the Judicial Crisis Network said in a statement.

“The court struck a blow for all Americans today by tossing out the administration’s nonsensical argument that it doesn’t have to compensate people for seizing their personal property,” she said. “That argument is well past its expiration date.”

The case was Horne v. Department of Agriculture (14-275).