On June 23, the U.S. Supreme Court held that a California provision requiring agricultural employers to allow unionizers onto their property violated the Fifth and Fourteenth Amendments – a clear win for employers. The named plaintiff in Cedar Point Nursery v. Hassid is a strawberry grower that employs more than 400 seasonal and 100 full-time workers. In October 2015, the United Farm Workers entered Cedar Point’s property and, using bullhorns, encouraged workers to join the organizers in a protest.

The growers filed suit in federal court against several members of the California Agricultural Labor Relations Board in their official capacity and argued that Cal. Code Regs., tit. 8 § 20900(e), which allows labor organizations the “right to take access” to an agricultural employer’s property in order to solicit support for unionization for up to three hours per day, 120 days per year, constitutes an unconstitutional per se physical taking of property in violation of the Fifth and Fourteenth Amendments. The district court and Ninth Circuit Court of Appeals ruled against Cedar Point and the growers, finding that the alleged taking was not per se, but should instead be evaluated under a multifactor balancing test established in Penn Central Transportation Co. v. New York City, 438 U.S. 104 (1978). The lower courts further found that the growers presented no arguments related to the Penn Central balancing test.

The Supreme Court, in a 6-3 decision, reversed. Broadly, the Court found that the California regulation constitutes a per se taking that affects the property owners’ rights to exclude.

More specifically, the Court considered the Ninth Circuit’s decision, which split takings claims based on state regulations into three categories:

1. Regulations imposing permanent physical invasions (per se)

2. Regulations depriving an owner of all economically beneficial use of his property (per se)

3. All other regulatory actions (not per se )

Breaking Down the Decision

According to the Ninth Circuit, the California regulation at issue fell into category three (not per se and subject to the balancing test). The Supreme Court disagreed.

The Court rejected the Ninth Circuit’s categorization of regulatory takings, saying that government action that appropriates private property for itself or a third party is a per se taking, while action that “instead imposes regulations that restrict an owner’s ability to use his own property” requires analysis under the Penn Central test. The fact that the taking may come from a regulation makes it “no less a physical taking” in the Court’s view. What matters is “whether the government has physically taken property for itself or someone else—by whatever means—or has instead restricted a property owner’s ability to use his own property . . . Whenever a regulation results in a physical appropriation of property, a per se taking has occurred, and Penn Central has no place.”

Turning to the facts at hand, the Court determined that the California union access regulation “appropriates a right to invade the growers’ property” and constitutes a per se physical taking. While the regulation does not permanently harm the owners’ ability to use their land, the Court held that the regulation appropriates the owners’ “right to exclude,” one of the “most treasured” rights of property ownership. The majority opinion then discussed the Court’s prior line of takings holdings which found that “government-authorized invasions of property—whether by plane, boat, cable, or beachcomber—are physical takings requiring just compensation.”

The dissent, written by Justice Breyer, said the regulation could not constitute a per se taking because it allows “access short of 365 days a year.” The majority disregarded that assertion, explaining, “[t]here is no reason the law should analyze an abrogation of the right to exclude in one manner if it extends for 365 days, but in an entirely different manner if it lasts for 364.” Invasions of property that are not permanent can still be takings in the same way that invasions that are intermittent rather than continuous can violate the takings clause. The Court elaborated: “Our cases establish that appropriations of a right to invade are per se physical takings, not use restrictions subject to Penn Central: ‘When government planes use private airspace to approach a government airport, the government is required to pay for that share no matter how small.’”

While the Court laid out a broad rule for takings claims, it did note meaningful distinctions between regulations affecting the access rights of private property and those affecting “business[es] generally open to the public.” The Court also expressly noted that the employees at-issue in the Cedar Point case did not live onsite, allowing the UFW access to the workers when they are off-the-clock.

The Court also rejected arguments that the regulation should be analyzed under the Court’s decision in NLRB v. Babcock & Wilcox Co., which balanced property and organizational rights under the National Labor Relations Act. The Court said that Babcock did not apply in this context because it did not involve a takings claim. “Whatever specific takings issues may be presented by the highly contingent access right we recognized under the NLRA, California’s access regulation effects a per se physical taking under our precedents.”

This case presents a clear win for employers. While the California regulation is unique in the United States, the Court’s decision seemingly opens challenges to similar state laws or regulations which grant third parties, including unions, the right to take access of employer property without just compensation.