526 F.Supp.3d 331
W.D. Tenn.2021Background:
- Plaintiffs are owners/operators of several Shelby County, Tennessee limited-service restaurants/bars; they sued after Shelby County Health Directive 8 (the "Closure Order") closed "Bars/Limited Service Restaurants and Clubs" for 45 days in response to a COVID-19 surge.
- The Closure Order allowed other business models (curbside, pick-up, delivery) and regulatory conversion; a "limited service restaurant" is defined by local regulation as establishments with prepared-food receipts ≤50% of overall sales.
- Plaintiffs alleged the Closure Order violated the Fifth Amendment Takings Clause (and initially a Fourteenth Amendment substantive due process claim, which they later conceded and dismissed).
- Plaintiffs sought a TRO; the Court denied the TRO and later considered Defendants’ Rule 12(b)(6) motion to dismiss for failure to state a takings claim.
- Defendants argued the Order was a valid exercise of Shelby County’s police powers and thus not a compensable taking; alternatively, it was neither a categorical (Lucas) nor a compensable Penn Central regulatory taking.
- The Court granted the motion to dismiss, holding the Closure Order was not a taking: police-power justification (and the Penn Central character factor) weighed against compensation; plaintiffs failed to plead a total deprivation.
Issues:
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether government action under police power can be a compensable taking | The Closure Order eliminated economically beneficial uses, so it is a taking despite being a health regulation | Valid exercise of police power to protect public health is not a taking requiring compensation | Court: Action under police power here is not a compensable taking; plaintiff did not rebut this defense |
| Whether the Closure Order is a categorical (Lucas) taking (total deprivation) | The Order entirely prohibited economically beneficial/profitable uses of plaintiffs’ properties | The Order left alternative uses (delivery, curbside, conversion to full-service or non-restaurant uses); not a total loss | Court: Plaintiffs pleaded only a legal conclusion of total loss; insufficient factual allegations—not a categorical taking |
| Whether Penn Central factors establish a regulatory taking | Economic impact and interference with investment-backed expectations favor plaintiffs | The character of the government action (temporary, police-power public-health measure) strongly favors defendants | Court: First two factors favor plaintiffs, but the third (character) overwhelmingly favors defendants; overall no compensable taking |
Key Cases Cited:
- Lucas v. South Carolina Coastal Council, 505 U.S. 1003 (categorical taking only when regulation eliminates all economically beneficial use)
- Penn Cent. Transp. Co. v. New York City, 438 U.S. 104 (multi-factor test for non-categorical regulatory takings)
- Tahoe-Sierra Pres. Council, Inc. v. Tahoe Reg'l Planning Agency, 535 U.S. 302 (clarifies Lucas and requires Penn Central analysis for less-than-total deprivations)
- Connolly v. Pension Benefit Guar. Corp., 475 U.S. 211 (character-of-government-action framing; balancing public benefits and private burdens)
- Keystone Bituminous Coal Ass'n v. DeBenedictis, 480 U.S. 470 (police-power regulations do not automatically require compensation)
- Goldblatt v. Town of Hempstead, 369 U.S. 590 (valid police-power regulation may deprive property of most beneficial use without being a taking)
- Mugler v. Kansas, 123 U.S. 623 (historic statement that prohibitions under police power are not takings)
- Tennessee Scrap Recyclers Ass'n v. Bredesen, 556 F.3d 442 (6th Cir.) (temporary regulatory burdens for legitimate public purposes weigh against a taking)