Supreme Court Backs Property Owners in Raisin Takings Case

Raisin growers won an important victory over the US government this week when the Supreme Court determined that the federal appropriation of significant percentages of raisin crop in order to influence the commercial market constitutes a taking and requires payment of just compensation.  In an 8 – 1 decision, the Justices overwhelmingly sided with raisin growers and struck down a Great Depression era law designed to increase raisin prices by artificially reducing the supply.

California Raisin Growers Sue Feds for Taking Crop

The case against federal seizure of raisin crop began when Marvin and Laura Horne, raisin growers out of Fresno, California, believed that they were exempt from a Great Depression program created to increase raisin prices by keeping some of the crop off the market.  The Agricultural Marketing Act of 1937 was passed to allow the Secretary of Agriculture to help maintain stable markets for particular products, including raisins, by ordering growers to set aside a certain percentage of the crop for the Government free of charge.  The Government either sells the reserve raisins in a non-competitive market, donates them, or otherwise disposes of them without selling them commercially in the United States.  In 2002 – 2003, the Raisin Administrative Committee ordered growers to set aside 47% of the crop, and in 2003 – 2004 the Government demanded growers reserve 30%.

The Hornes refused to set aside crop both years, and were consequently administered a fine consistent with the provisions of the Agricultural Marketing Act.  Arguing the Government’s requirement that growers set aside significant percentages of the raisin crop without compensating them was an unconstitutional violation of the Takings Clause, Marvin and Laura Horne sought relief from enforcement of the Agricultural Marketing Act in federal court.  The Ninth Circuit Court of Appeals sided with the Government, holding that personal property such as raisins was afforded fewer constitutional protections from takings than real property, which is land, and, as such, raisin growers were not victims of an unconstitutional taking.

This week, the Supreme Court disagreed with the Ninth Circuit and reversed the decision, and in doing so not only provided relief to the Hornes and other raisin farmers, but increased the level of protection afforded personal property that is the target of government takings.

Supreme Court Finds Raisin Takings Unconstitutional

In support of its authority to force raisin growers to set aside portions of their crop, the Government argued that the Takings Clause, which prohibits federal seizure of property without just compensation paid to the owner, does not offer the same protection to personal property as it does to real property.  After hearing oral arguments the Supreme Court came to a different conclusion.  Chief Justice John Roberts, who penned the majority opinion, wrote that offering fewer protections to personal property was inconsistent with the history and original purpose of the Takings Clause, which was created in part as a response to British confiscation of personal property during the colonial period before the American Revolution.

Justice Roberts wrote, “There is no dispute that the “classic taking [is one] in which the government directly appropriates private prop­erty for its own use….” Nor is there any dispute that, in the case of real property, such an appropriation is a per se taking that requires just compensation…. Nothing in the text or history of the Takings Clause, or our precedents, suggests that the rule is any different when it comes to appropriation of personal property. The Government has a categorical duty to pay just compensa­tion when it takes your car, just as when it takes your home.” Having established that personal property is protected from uncompensated government takings, the Court determined that a taking had occurred in this case because raisin growers completely lost control over a significant percentage of their crop as a result of the reserve requirement.

The one dissenting judge to the holding, Justice Sotomeyor, argued that a complete taking had not occurred because the raisin growers received a partial payment of the proceeds the government made on the sale of the raisins.  The majority disagreed, holding that any repayment of funds from the government may reduce the compensation owed, but does not affect the determination of whether a takings occurred.

Justices Split on Raisin Compensation

The eight judges on the majority opinion split 5 – 3 on the issue of compensation.  The five conservative Justices found that the Government owed the Hornes $483,000 – a figure that reflects the fair market value of the raisins that were taken.  The three liberal Justices argued the compensation decision be made by a lower court, and reduce the fair market value by the benefit the Hornes would have received had they participated in the program.

The ruling in Horne v Department of Agriculture will likely influence other government mandated programs that seek to influence food market prices by forcing growers to withhold portions of their crop.  Through legislation or future judicial action the trickle effect of Horne will start to become evident in other products, which could lead to reduction in food prices as the supply of these crops increases.

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