78 Cal.App.5th 840
Cal. Ct. App.2022Background:
- Governor Newsom declared a COVID-19 state of emergency and issued a series of orders: Executive Order N-33-20 (stay-at-home) and later Executive Order N-60-20 (authorized phased reopening and stated the APA would not apply), followed by Health Department Guidance and the Blueprint tier system restricting indoor dining and gym operations.
- Plaintiffs (owners of restaurants and gyms) filed a putative class action alleging the orders were procedurally invalid for failure to comply with the Administrative Procedure Act (APA), constituted an uncompensated taking (inverse condemnation), and violated equal protection and other rights.
- The operative pleading was the third amended complaint asserting causes of action for declaratory and injunctive relief, ultra vires acts, equal protection, inverse condemnation, and writ of mandate (failure to follow APA).
- The superior court sustained demurrers without leave to amend; plaintiffs appealed.
- The Court of Appeal affirmed: it held the Governor’s emergency orders were not subject to the APA (N-60-20 suspended APA and §8567 orders take effect immediately/exempt), the takings claim failed under Penn Central and related precedent, and other claims (equal protection, due process, commandeering) were forfeited or insufficiently pleaded.
Issues:
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Governor/Health Department orders were subject to the APA | Orders were regulations and must follow APA notice-and-comment | Executive Order N-60-20 suspended the APA; emergency statute (§8567) permits immediately effective orders and exempts them from APA | APA does not apply: N-60-20 validly suspended APA and §11340.9(f)/§8567 make immediate emergency orders APA-exempt |
| Whether the initial stay‑at‑home order (and other immediate orders) required APA procedures | Even immediate orders must follow APA or emergency APA process | §8567 requires orders to "take effect immediately"; where only one reasonable reading exists, APA rulemaking is inapplicable; emergency-APA procedures are distinct and less appropriate for a declared state emergency | Immediate-effect orders are exempt under §11340.9(f) and §8567; APA procedures were not required |
| Whether temporary business closures effected a compensable taking under the Fifth Amendment | Forced closures deprived owners of property value and constituted inverse condemnation | Temporary, non-physical restrictions adjusting public-health burdens are not equivalent to appropriation; Penn Central factors do not show a taking | Takings claim fails: economic impact/character/investment-backed-expectations do not show a compensable regulatory taking under Penn Central and related precedent |
| Whether equal protection or due process claims were sufficiently pleaded and preserved | Restrictions arbitrarily classified businesses and were adopted without notice/hearing | Complaint did not adequately plead these causes and plaintiffs omitted equal protection in opening brief | Equal protection claim forfeited on appeal; no cognizable due process cause pleaded |
| Whether orders amounted to "commandeering" actionable under Emergency Act §8572 | Temporary shutdowns functionally commandeered property and require compensation | Statutory "commandeer" means direct government seizure/use; mere restriction on owner’s use is not commandeering | Commandeering argument fails on the merits (and was forfeited/undeveloped) |
Key Cases Cited
- Missionary Guadalupanas of Holy Spirit Inc. v. Rouillard, 38 Cal.App.5th 421 (Cal. Ct. App. 2019) (APA exemption applies where agency interpretation is the only legally tenable reading)
- State Water Resources Control Bd. v. Office of Admin. Law, 12 Cal.App.4th 697 (Cal. Ct. App. 1993) (disfavors implied APA exemptions but recognizes narrow emergency exceptions)
- Alta Bates Hosp. v. Lackner, 118 Cal.App.3d 614 (Cal. Ct. App. 1981) (emergency circumstances can justify APA noncompliance)
- Newsom v. Superior Court, 63 Cal.App.5th 1099 (Cal. Ct. App. 2021) (discussing Governor’s police‑power authority in emergencies)
- Lingle v. Chevron U.S.A. Inc., 544 U.S. 528 (U.S. 2005) (clarifies regulatory takings framework and rejects per se tests beyond established categories)
- Penn Central Transp. Co. v. New York City, 438 U.S. 104 (U.S. 1978) (frames multi-factor test for regulatory takings)
- Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419 (U.S. 1982) (categorical taking for permanent physical occupation)
- Mugler v. Kansas, 123 U.S. 623 (U.S. 1887) (police power may forbid uses injurious to public health without compensation)
- Miller v. Schoene, 276 U.S. 272 (U.S. 1928) (permitting destruction of property to prevent public harm without compensation)
- United States v. Central Eureka Mining Co., 357 U.S. 155 (U.S. 1958) (temporary wartime shutdowns may not constitute a taking)
- Horne v. Dep't of Agric., 576 U.S. 351 (U.S. 2015) (takings principles and categorical rules)
- Kavanau v. Santa Monica Rent Control Bd., 16 Cal.4th 761 (Cal. 1997) (partial regulatory takings principles)