The Supreme Court's All-or-Nothing Approach to the Right to Exclude in Cedar Point Nursery v. Hassid

Posted on Nov 24, 2021

Carolyn Liziewski

 

I. Introduction

2021 has not been without significant challenges for American businesses. As the nation emerges from the COVID-19 pandemic, firms are grappling with dual labor[1] and global supply chain[2] crises. These crises have led to a national workforce that appears to be in a favorable collective bargaining position. Since January, over 175 unions or labor groups have organized to strike.[3] To attract employees in anticipation of the holiday season rush, retailers have been forced to raise minimum pay.[4] However, in a year of difficulty there have been notable bright spots for U.S. firms. One such bright spot appeared in June, when the Supreme Court handed firms a major victory over labor unions in Cedar Point Nursery v. Hassid,[5] a case at the intersection of labor and property law.

In Cedar Point, the Court held that a California regulation (the “Access Regulation”)[6] granting unions a limited right to approach employees on the property of an employer effects a per se physical taking under the Fifth Amendment.[7]Narrowly read, the decision primarily strikes a blow to the labor organizing movement. However, employers and other real property owners may be able to deploy the Court’s logic to exert even more control over their property, clawing back on a host of regulations related to property access and use. Legal scholars are divided over the true scope of the decision.[8]

II. Takings Clause Jurisprudence Prior to Cedar Point

Fifth Amendment regulatory takings fall into two categories: per se takings and ad hoc takings.[9] A per se taking occurs when the government physically appropriates private property for public use.[10] Until the middle of the 20thcentury, physical appropriation was the beginning and the end of any regulatory takings analysis.[11] However, in Pennsylvania Coal Co v. Mahon, the Court recognized that while the government may regulate private property to a certain extent, a regulation that “goes too far” effects a taking.[12] Later, in Penn Central Transportation Co. v. New York, the Court articulated a multi-factor balancing test to evaluate whether a regulation effects a taking.[13] The test considers the character of the challenged government regulation, the economic impact of the regulation on the property in question, and the extent to which the regulation interferes with the reasonable, investment-backed expectations of the property owner.[14]

III. The Controversy in Cedar Point

Cedar Point arose out of a controversy between two California agricultural growers and unions that attempted to access the growers’ properties to communicate with workers.[15] Following these access attempts, the growers sought to enjoin enforcement of the Access Regulation on grounds that it effected an uncompensated per se physical taking under the Fifth Amendment.[16] Both the district court and the Ninth Circuit rejected this argument.[17] Specifically, the Ninth Circuit concluded that the Access Regulation does not effect a per se taking because it does not authorize a permanent physical invasion.[18] In its decision, the Ninth Circuit noted that limitations on the growers’ right to exclude would be relevant under the multi-factor regulatory takings test set forth in Penn Central Transportation Co. v. New York City, but the growers failed to pursue this theory.[19]

IV. The Supreme Court’s Holding

In a 6–3 opinion, a divided Supreme Court reversed the Ninth Circuit, reasoning that the Access Regulation is not actually a regulation at all under the Fifth Amendment takings framework. Instead of restraining how California agricultural employers may use their property, the regulation appropriates the employers’ right to exclude for the enjoyment of unions by permitting unions to take access to employers’ property.[20] The Court—responding both to the Ninth Circuit and the dissent—concluded that the duration of invasion is immaterial to whether a regulation permitting the invasion is a per se taking. Accordingly, an invasion need not be permanent to effect a taking; invasion for any length of time is sufficient.[21]

V. Where Does Cedar Point Leave Businesses? 

The Cedar Point majority claims that its decision aligns with the Court’s per se takings precedent. And, to quell the dissenters’ concern that the Court’s holding endangers other access regulations, the majority goes one step further: a regulation requiring an employer to cede a right of access as consideration for some benefit to the employer does not effect a per se physical taking.[22] Under this exception, government health and safety inspection regimes do not effectper se takings.[23]

Nonetheless, the Court is conspicuously silent about takeccess regulations that are devoid of any tit-for-tat between the employer, who cedes a right of access, and the government, that grants a benefit. A plethora of these regulations—most notably, anti-discrimination regulations and disability access regulations—necessarily fall under the ambit of health and safety inspection regimes.[24] Further, the Court does little work to draw boundaries around what constitutes a physical invasion in the first place. At best, it points to its prior per se takings cases as examples.

In summary, the majority’s characterization that the Court’s holding does not disrupt the contemporary regulatory state is probably fair. But Cedar Point is still a significant cause for celebration for businesses. Not only does the holding stymy labor organizing efforts, but it stands for the proposition that when the Court is asked to adjudicate between a business’s right to exclude and a regulation limiting that right—even if the regulation is narrowly tailored[25] to achieve a particular end—the business will prevail. With respect to take-access regulations, the Court has moved into the realm of rights binaries: in certain contexts, a business’s right to exclude absolutely trumps any entry rights conferred by the government.[26]

Supply chain and labor crises are cyclical, but property law developments have significant staying power. Cedar Point is a markedly pro-business decision. While we do not yet know the actual sweep of its impact, businesses are right to acknowledge that their right to exclude is the strongest it has ever been.

 

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[1] See generally Nelson D. Schwartz & Talmon Joseph Smith, Job Gains Offer a Brighter Picture of the U.S. Economy, N.Y. Times (Nov. 5, 2021), https://www.nytimes.com/2021/11/05/business/economy/october-2021-jobs-report.html (discussing the low labor force participation rate in October 2021 relative to the pre-pandemic labor force participation rate and persistent high unemployment relative to pre-pandemic levels). 

[2] See The Daily, The Great Supply Chain Disruption, N.Y. Times (Oct. 15, 2021), https://www.nytimes.com/2021/10/15/podcasts/the-daily/supply-chain.html.

[3] Laura Bliss, MapLab: Document the Real Scope of U.S. Labor Strikes, Bloomberg (Oct. 20, 2021), https://www.bloomberg.com/news/newsletters/2021-10-20/the-real-scope-of-u-s-worker-strikes-mapped.

[4] Sapna Maheshwari & Michael Corkery, Retailers Scramble to Attract Workers Ahead of the Holidays, N.Y. Times (Nov. 8, 2021), https://www.nytimes.com/2021/11/08/business/retail-hiring-holidays-workers.html.

[5] 141 S. Ct. 2063 (2021).

[6] Cal. Code Regs. tit. 8, § 20900 (2021) (providing, inter alia, that organizers affiliated with a given union may enter an agricultural employer’s premises for one hour before commencement of the workday, one hour at lunch, and hour at the close of the workday during four thirty-day calendar periods per year).

[7] 141 S. Ct. at 2080.

[8] See generally Nikolas Bowie, Opinion, Do We Have to Pay Businesses to Obey the Law, N.Y. Times (Mar. 20, 2021), https://www.nytimes.com/2021/03/20/opinion/Supreme-Court-labor-property-rights.html (arguing that a conclusion that the California regulation effects a per se taking would compel health, safety, affordable housing, and antidiscrimination laws to effect per se takings); but see Thomas Griffith, A New Test or Merely a New Name for Some Regulatory Takings?, Yale J. on Reg.: Notice & Comment (Aug. 22, 2021), https://www.yalejreg.com/nc/a-new-test-or-merely-a-new-name-for-some-regulatory-takings/ (“A close read of the opinion . . . suggests that even though [the] Court may have reshuffled the categories it has used in the past to analyze takings claims, the law remains largely unchanged, if not slightly more obscure.”).

Griffith Yale Journal on Regulation [complete citation].

[9] See generally 141 S. Ct. at 2071 (discussing the development of Takings Clause jurisprudence in the 20th century).

[10] Id. See also Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419, 421 (1982).

[11] 141 S. Ct. at 2071.

[12] Id.

[13] 438 U.S. 104, 130–32 (1978).

[14] Id.

[15] 141 S. Ct. at 2069.

[16] Id. at 2070.

[17] Id.

[18] Id.

[19] Id.

[20] 141 S. Ct. at 2072.

[21] Id. at 2074.

[22] Id. at 2079.

[23] Id.

[24] Bowie, supra note 8.

[25] The California regulation at issue in Cedar Point arguably is narrowly tailored: while it permits union organizers to access agricultural growers’ premises for four thirty-day periods in a calendar year, organizers are permitted to enter the premises only prior to work, during a one-hour lunch break, and after work. Accordingly, the regulation does not deprive agriculture growers from the economic benefit of their land vis-à-vis interruptions.

[26] Professor Jamal Greene argues that discriminating between conflicting rights—here, the right to exclude and, inter alia, fair labor rights—is the dominant strategy in the United States for resolving rights conflicts. Cedar Point is a new example of rights discrimination. The Court could have mediated between the rights in conflict by upholding the labor regulation under the Penn Central regulatory taking balancing test. If the Court had pursued this option, neither the agricultural growers’ right to exclude nor the various labor rights at play would exist unfettered by one another. It is important to the Court has pivoted towards a rights binary in the context of the right to exclude because the outer bounds of the right are ill-defined. See Jamal Greene, How Rights Went Wrong: Why Our Obsession with Rights is Tearing America Apart (2021).