ROY LYNN MCCUTCHEN, PADUCAH SHOOTER‘S SUPPLY, INC., INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED v. UNITED STATES
20-1188
United States Court of Appeals for the Federal Circuit
October 1, 2021
Appeal from the United States Court of Federal Claims in No. 1:18-cv-01965-EDK, Judge Elaine Kaplan.
JENNIFER GELMAN, Flint Law Firm LLC, Edwardsville, IL, argued for plaintiffs-appellants. Also represented by ADAM MICHAEL RILEY.
KENNETH DINTZER, Commercial Litigation Branch, Civil Division, United States Department of Justice, Washington, DC, argued for defendant-appellee. Also represented by JEFFREY B. CLARK, ROBERT EDWARD KIRSCHMAN, JR., LOREN MISHA PREHEIM, NATHANAEL YALE.
Before TARANTO, WALLACH,* and CHEN, Circuit Judges.
Opinion for the court filed by Circuit Judge TARANTO.
Opinion concurring in the result filed by Circuit Judge WALLACH.
On December 26, 2018, the U.S. Department of Justice, exercising congressionally granted authority to implement various federal firearms statutes, promulgated a rule that is the basis for the takings claim in this case. Bump-Stock-Type Devices, 83 Fed. Reg. 66,514 (Dec. 26, 2018) (Final Rule). The impetus for the proceeding was the massacre in Las Vegas on October 1, 2017, when a lone shooter, using “rifles with attached bump-stock-type devices,” fired “several hundred rounds of ammunition in a short period of time, killing 58 people and wounding approximately 500.” Id. at 66,516. Since 1986,
Plaintiffs Roy McCutchen and Paducah Shooter‘s Supply, Inc. brought this action against the United States in the Court of Federal Claims (Claims Court) under the Tucker Act,
The government moved to dismiss the claim under Court of Federal Claims Rule
We affirm, but we do so on a threshold ground different from, though related to, the Claims Court‘s grounds. The interest that plaintiffs allege was taken was the interest in continued possession or transferability of their devices. The takings claim depends on plaintiffs having an established property right in continued possession or transferability even against a valid agency implementation of the preexisting statutory bar on possession or transfer. But plaintiffs’ title, which we assume is otherwise valid under state law, was always inherently limited by
I
A
In 1934, Congress enacted the National Firearms Act, Pub. L. No. 73-474, 48 Stat. 1236 (NFA or 1934 Act). The Act regulated the importation, manufacture, transfer, sale, and possession of certain firearms, including “machineguns.”1 See
About thirty years later, Congress enacted the Gun Control Act of 1968, Pub. L. No. 90-618, 82 Stat. 1213 (GCA or 1968 Act). See
In 1986, Congress adopted the Firearm Owners’ Protection Act, Pub. L. No. 99-308, 100 Stat. 449 (FOPA or 1986 Act), which amended the Gun Control Act and National Firearm Act. The 1986 Act added
(o)(1) Except as provided in paragraph (2), it shall be unlawful for any person to transfer or possess a machinegun.
(2) This subsection does not apply with respect to—
(A) a transfer to or by, or possession by or under the authority of, the United States or any department or agency thereof or a State, or a department, agency, or political subdivision thereof; or
(B) any lawful transfer or lawful possession of a machinegun that was lawfully possessed before the date this subsection takes effect [May 19, 1986].
§ 102, 100 Stat. at 453;
The crucial term, “machinegun,” is declared, in
The term “machinegun” means any weapon which shoots, is designed to shoot, or can be readily restored to shoot, automatically more than one shot, without manual reloading, by a single function of the trigger. The term shall also include the frame or receiver of any such weapon, any part designed and intended solely and exclusively, or combination of parts designed and intended, for use in converting a weapon into a machinegun, and any combination of parts from which a machinegun can be assembled if such parts are in the possession or under the control of a person.
In
B
A rifle is semiautomatic if, after it has been fired, rechambering of ammunition is automatic but refiring is not. Specifically, “[t]he term ‘semiautomatic rifle’ means any repeating rifle which utilizes a portion of the energy of a firing cartridge to extract the fired cartridge case and chamber the next round, and which requires a separate pull of the trigger to fire each cartridge.”
A variety of devices with different mechanisms for using the firearm‘s recoil energy to refire without a new movement of the finger (a separate new pull motion of the finger) came to ATF‘s attention long before the proceeding that ended with the Final Rule. In 2002, ATF “initially reviewed the Akins Accelerator.” Id. at 66,517. Unlike the devices at issue here, the Akins Accelerator used springs to cause the trigger to continue to make contact with the shooter‘s finger rather than relying on the shooter to maintain pressure on the trigger and the firearm. See id. at 66,514, 66,516-17; see also Akins v. United States, 312 F. App‘x 197, 200 (11th Cir. 2009) (“After a single application of the trigger by a gunman, the Accelerator uses its internal spring and the force of recoil to fire continuously the rifle cradled inside until the gunman releases the trigger or the ammunition is exhausted.“).
Initially, in 2002, ATF determined that the device was not a machine gun “because ATF interpreted the statutory term ‘single function of the trigger’ to refer to a single movement of the trigger.” Final Rule, 83 Fed. Reg. at 66,517 (emphases added). But in 2006, ATF reversed course in a published ruling. See ATF Ruling 2006-2. After retesting the Akins Accelerator, ATF determined that with the device, “a single pull of the trigger initiates an automatic firing cycle [that] continues until the finger is released or the ammunition supply is exhausted.” Id. at 2. This time ATF interpreted the statutory phrase “single function of the trigger” as ”single pull of the trigger.” Id. (emphases added). Given that interpretation, ATF readily determined that the Akins Accelerator was a machine gun under the NFA and GCA. Id. at 2-3. When Akins challenged ATF‘s determination in federal court, the Eleventh Circuit, agreeing with the district court, affirmed ATF‘s statutory interpretation and consequent determination that the Akins Accelerator
Thereafter, ATF considered other bump-stock-type devices. As ATF later described its actions, ATF advised that a number of such devices were not machine guns—including the ones at issue here. See Final Rule, 83 Fed. Reg. at 66,517. Specifically, in ten unpublished classification rulings between 2008 and 2017, ATF “provided different explanations for why certain bump-stock-type devices were not machineguns, but none of them extensively examined the meaning of ‘automatically.‘” Id. at 66,518. All those decisions were subject to ATF‘s publicly available handbook warning that such rulings could not be relied upon as guaranteeing inapplicability of the existing statutory prohibitions if reconsidered and modified. See National Firearms Act Handbook § 7.2.4.1 (Handbook) (relevant portions have stayed the same from at least 2007 to now). Indeed, the Eleventh Circuit relied on ATF‘s power to “reconsider and rectify” a classification decision when upholding ATF‘s 2006 ruling on the Akins Accelerator after ATF‘s contrary 2002 ruling. See Akins, 312 F. App‘x at 200 (“Based on the operation of the Accelerator, the Bureau had authority to ‘reconsider and rectify’ what it considered to be a classification error.“).
C
Within a few months of the October 1, 2017 massacre in Las Vegas, reconsideration of bump-stock-type devices began. The Department of Justice issued an Advanced Notice of Proposed Rulemaking on December 26, 2017, to get “information and comments from the public and industry regarding the nature and scope of the market for” “certain devices, commonly known as ‘bump fire’ stocks.” Application of the Definition of Machinegun to “Bump Fire” Stocks and Other Similar Devices, 82 Fed. Reg. 60,929, 60,929 (Dec. 26, 2017). About two months later, the President “direct[ed] the Department of Justice to dedicate all available resources . . . as expeditiously as possible, to propose for notice and comment a rule banning all devices that turn legal weapons into machineguns.” Application of the Definition of Machinegun to “Bump Fire” Stocks and Other Similar Devices, 83 Fed. Reg. 7,949, 7,949 (Feb. 20, 2018).
Nearly a month after that, the Department issued a Notice of Proposed Rulemaking that sought “to clarify that [bump-stock-type devices] are ‘machineguns.‘” See Bump-Stock-Type Devices, 83 Fed. Reg. 13,442, 13,442 (Mar. 29, 2018). On December 26, 2018, the Department completed its process of “reexamining” its 2008-17 decisions and issued the Final Rule, which adopted new regulations, with an effective date of March 26, 2019. 83 Fed. Reg. at 66,514, 66,520-21, 66,553-54.
The regulations specifically interpret one phrase and one term in the detailed statutory definition of “machinegun.” Id. at 66,553-54; see also
The Final Rule‘s consequence was that individuals would be subject to “criminal liability only for possessing bump-stock-type devices after the effective date of [this] regulation“—March 26, 2019. Id. at 66,514, 66,525; see also, e.g., id. at 66,525 (“The rule would criminalize only future conduct, not past possession of bump-stock-type devices that ceases by the effective date of this rule.“). To avoid liability, possessors of bump-stock-type devices had to destroy their devices or abandon them at an ATF office by March 26, 2019. Id. at 66,549 (describing “[d]isposal” options); see also, e.g., id. at 66,514-15, 66,530, 66,539, 66,543.
II
On December 26, 2018, plaintiffs sued the United States in the Claims Court. See J.A. 22-30 (Complaint).3 McCutchen and Paducah possessed bump-stock-type devices before the publication of the Rule and destroyed those devices before the Rule‘s effective date. J.A. 23-24, ¶¶ 10-11; McCutchen, 145 Fed. Cl. at 45 (citing ECF No. 12).
The government moved to dismiss the complaint for failure to state a claim under Rule 12(b)(6), and the Claims Court granted the motion. See McCutchen, 145 Fed. Cl. at 45. In reaching that result, the court determined that the Final Rule did not effect a taking for public use because ATF acted “pursuant to its police power.” Id. at 51. The Claims Court also concluded that plaintiffs’ claim of a physical taking failed because the term “take[]” does not cover a regulation compelling dispossession of property by requiring the owner to destroy the property (or else surrender it to the government) and that plaintiffs’ alternative claim of total elimination of value failed because personal (not real) property is “subject to pervasive government regulation.” Id. at 53-55. Finally, the court determined that plaintiffs “waived” any argument for a taking under the flexible takings standard governing use restrictions and, in any event, could not show such a taking. Id. at 55-57.
Plaintiffs timely appealed. We have jurisdiction under
III
We review the grant of a motion to dismiss de novo. Prairie County v. United States, 782 F.3d 685, 688 (Fed. Cir. 2015). “To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.‘” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). We may consider “documents incorporated into the complaint by reference, and matters of which a court may take judicial notice.” Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 322 (2007). “Whether a taking has occurred is a question of law based on factual underpinnings.” Caquelin v. United States, 959 F.3d 1360, 1366 (Fed. Cir. 2020).
A
The Takings Clause of the Fifth Amendment provides that “private property [shall not] be taken for public use, without just compensation.”
We do not reach the grounds on which the Claims Court relied. In particular, we do not decide under what circumstances a measure that newly bars possession of personal property (as opposed to restricting a use of property) and that serves a “police power” purpose (and is constitutionally authorized for the federal government) is not a “taking,” and thus requires no compensation.4 Nor do we decide whether mandating permanent dispossession by ordering destruction of personal property cannot be a “physical taking,” even if the government-specified alternative to destruction is surrender to the government and the mandate is backed by government remedies of seizure and forfeiture for a willful violation as well as criminal remedies for a knowing violation.
We do not resolve substantial questions raised by those issues. For example, the Supreme Court has said that the Takings Clause both bars takings that are not for a “public use” and requires payment for takings that are for such a use, see Kelo v. City of New London, 545 U.S. 469, 480 (2005); Hawaii Housing Authority v. Midkiff, 467 U.S. 229, 240 (1984), and it has also said that “[t]he ‘public use’ requirement is . . . coterminous with the scope of a sovereign‘s police powers,” Midkiff, 467 U.S. at 240; see also Ruckelshaus v. Monsanto Co., 467 U.S. 986, 1014 (1984). Under those premises, the question arises: If a “police
These and other questions would be unavoidable were we to address the Claims Court‘s rationales. We have no precedent that is so on point—involving facts and holdings so close to those presented here—that we could justifiably apply the rationales without extensive exploration of the doctrinal issues. Notably, the main authorities from this court relied on by the Claims Court for its police-power analysis involved government dispossessions of personal property that rested on specific government authority that long predated the possession of the personal property at issue. See, e.g., Kam-Almaz v. United States, 682 F.3d 1364, 1372 (Fed. Cir. 2012) (evidentiary seizure at airport upon entry from overseas, exercising the “government‘s power to police the border“); AmeriSource Corp. v. United States, 525 F.3d 1149, 1150, 1153 (Fed. Cir. 2008) (seizure of drugs for use in criminal prosecutions); Acadia Tech., Inc. v. United States, 458 F.3d 1327, 1328-29 (Fed. Cir. 2006) (seizure and forfeiture of goods entering country with counterfeit trademarks). Reviewing the Claims Court‘s rationales would call for extensive analysis to decide how far beyond such circumstances a “police power” rationale properly applies and whether it properly reaches this case. Cf. Cedar Point, 141 S. Ct. at 2079 (discussing “longstanding background restrictions on property rights” including “background limitations” of “traditional common law privileges“).
We resolve the case on a threshold ground that differs from, though is related to, the Claims Court‘s grounds—one that involves the preexisting-law circumstance that was present in the just-cited cases. Plaintiffs’ takings claim depends on the “threshold matter” of whether they have “established a property interest for purposes of the Fifth Amendment” against the government action. Huntleigh USA Corp. v. United States, 525 F.3d 1370, 1377 (Fed. Cir. 2008); see also Stop the Beach Renourishment, Inc. v. Florida Dep‘t of Envt‘l Prot., 560 U.S. 702, 715 (2010) (plurality) (“If a legislature or a court declares that what was once an established right of private property no longer exists, it has taken that property, no less than if the State had physically appropriated it or destroyed its value by regulation.” (second emphasis added)). “[T]o have a cause of action for a Fifth Amendment taking, the plaintiff must point to a protectable property interest that is asserted to be the subject of the taking.” Palmyra Pacific Seafoods, LLC v. United States, 561 F.3d 1361, 1364 (Fed. Cir. 2009); see also, e.g., Gadsden Indus. Park, LLC v. United States, 956 F.3d 1362, 1368 (Fed. Cir. 2020) (“The plaintiff in a takings case bears the burden to demonstrate a protectable property interest.“); American Bankers Ass‘n v. United States, 932 F.3d 1375, 1384-85 (Fed. Cir. 2019) (“To state a claim for a taking under the Fifth Amendment, a plaintiff must identify a legally cognizable property interest.“); Wyatt v. United States, 271 F.3d 1090, 1096 (Fed. Cir. 2001) (“It is axiomatic that only persons with a valid property interest at the time of the taking are entitled to compensation.“); Alimanestianu v. United States, 888 F.3d 1374, 1380 (Fed. Cir. 2018); Sharifi v. United States, 987 F.3d 1063, 1068 (Fed. Cir. 2021).5
As explained next, we conclude that, given the preexisting federal statutory prohibition on possession or transfer of “machineguns,”
B
“[P]roperty interests . . . are created and their dimensions are defined by existing rules or understandings that stem from an independent source.” Ruckelshaus, 467 U.S. at 1001 (cleaned up); see also Phillips v. Washington Legal Found., 524 U.S. 156, 164 (1998) (similar). Here, we assume that, as a matter of state law standing alone, plaintiffs had property rights in the personal property at issue. But “the government does not take a property interest when it merely asserts a ‘pre-existing limitation upon the [property] owner‘s title.‘” Cedar Point, 141 S. Ct. at 2079 (quoting Lucas, 505 U.S. at 1028-29). As we have explained, “[t]he Supreme Court in Lucas made clear that property interests are acquired subject to ‘background principles’ of law, and that limitations on property rights that otherwise would effect a categorical taking are permissible if they ‘inhere in the title itself.‘” Bair v. United States, 515 F.3d 1323, 1327 (Fed. Cir. 2008) (quoting Lucas, 505 U.S. at 1029); see also A & D Auto Sales, Inc. v. United States, 748 F.3d 1142, 1152-53 (Fed. Cir. 2014) (explaining the principle). And valid preexisting federal-law limitations on what otherwise would be state-law property rights are among the limitations that may inhere in title so as to limit compensable property rights. See Bair, 515 F.3d at 1329 (explaining that “a federal statute or authority can constitute a ‘background principle’ that inheres in the title to property interests arising after its enactment, therefore precluding a takings claim based on the application of the statute to those property interests“); see also Dames & Moore v. Regan, 453 U.S. 654, 674 n.6 (1981) (rejecting takings claim on this basis); cf. Columbus Reg‘l Hosp. v. United States, 990 F.3d 1330, 1349 (Fed. Cir. 2021) (rejecting exaction claim for lack of protected property interest based on Dames & Moore and American Bankers Ass‘n).
In this case, the federal-law prohibition on possession and transfer, together with a congressional grant of implementation authority, predated the existence, let alone plaintiffs’ possession, of the bump-stock-type devices that plaintiffs were
Moreover, plaintiffs accept that the Final Rule‘s implementation of the preexisting prohibition is an authorized and legally valid interpretation of the statutory prohibition, making no argument to the contrary. For that reason, and in light of our precedents, we accept that premise. See Rith Energy, Inc. v. United States, 270 F.3d 1347, 1352 (Fed. Cir. 2001) (“[I]n a takings case we assume that the underlying governmental action was lawful . . . .“); Rith Energy, Inc. v. United States, 247 F.3d 1355, 1366 (Fed. Cir. 2001) (stating that a plaintiff must “litigate its takings claim on the assumption that the administrative action was both authorized and lawful“); see also St. Bernard Par. Gov‘t v. United States, 887 F.3d 1354, 1360 (Fed. Cir. 2018); Acadia, 458 F.3d at 1330-31; Lion Raisins, Inc. v. United States, 416 F.3d 1356, 1369-70 (Fed. Cir. 2005); Del-Rio Drilling Programs, Inc. v. United States, 146 F.3d 1358, 1362 (Fed. Cir. 1998); Crocker v. United States, 125 F.3d 1475, 1476 (Fed. Cir. 1997).
The accepted validity of the Final Rule as an interpretation of the preexisting statutory prohibition on possession and transfer must, at least in this case, rest on one of three premises: (1) the interpretive-deference doctrine of Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984), is inapplicable, and the Final Rule is valid as the best interpretation of the statutory prohibition; (2) Chevron applies and the Final Rule is valid at Step 1, so that the statutory prohibition unambiguously requires the interpretation articulated in the Final Rule; or (3) Chevron applies and the Final Rule is valid at Step 2, so that it is (merely) one reasonable interpretation of the statutory prohibition. We do not decide which possibility would govern in a determination of the validity of the Final Rule (which we assume); in particular, we do not decide whether
1
The analysis of the first two possibilities is particularly simple. If Chevron is inapplicable,
The remaining possibility for the validity of the Final Rule‘s interpretation—that Chevron applies and the interpretation is valid only at Chevron Step 2—requires somewhat more analysis, but the conclusion is the same. The additional element is the pair of preexisting statutory grants of implementation authority to the Executive.
By 1986, the Supreme Court‘s 1984 decision in Chevron already made clear that the law, for a statute like
At least in the absence of other circumstances not present here, we conclude, the preexisting law limiting title means that plaintiffs had no property interest in continued possession or transferability that was taken when the Final Rule—validly, by assumption here—required destruction or surrender of their bump-stock-type devices.
2
Only one more circumstance requires discussion, but it does not support a different conclusion. As the Final Rule describes, between 2008 and 2017, ATF issued “ten letter rulings” stating that certain bump-stock-type devices, including the ones at issue here, did not meet the statutory definition of “machinegun” and so were not within the prohibition of
ATF‘s handbook, which is public, states that a classification provided by letter is “subject to change if later determined to be erroneous” by ATF:
7.2.4 Do you know how ATF would classify your product? There is no requirement in the law or regulations for a manufacturer to seek an ATF classification of its product prior to manufacture. Nevertheless, a firearms manufacturer is well advised to seek an ATF classification before going to the trouble and expense of producing it. Perhaps the manufacturer intends to produce a GCA firearm but not an NFA firearm. Submitting a prototype of the item to ATF‘s Firearms Technology Branch (FTB) for classification in advance of manufacture is a good business practice to avoid an unintended classification and violations of the law.
7.2.4.1 ATF classification letters. ATF letter rulings classifying firearms may generally be relied upon by their recipients as the agency‘s official position concerning the status of the firearms under Federal firearms laws. Nevertheless,
classifications are subject to change if later determined to be erroneous or impacted by subsequent changes in the law or regulations. To make sure their classifications are current, FFLs/SOTs [federal firearms licensees/special occupational taxpayers] should stay informed by periodically checking the information published on ATF‘s website, particularly amendments to the law or regulations, published ATF rulings, and “open letters” to industry members.
Handbook § 7.2.4 (italics emphasis added); see also id. §§ 1.2.6, 1.2.11 (definitions for “FFL” and “SOT“). The quoted express reservation is present in the 2007 Handbook, predating the 2008-17 classification letters at issue, and remains there today. Id. § 7.2.4.1. Moreover, it was long ago established that, even for formal approvals of import applications, ATF “must necessarily retain the power to correct [an] erroneous approval,” consistent with the widespread recognition of “an implied authority in other agencies to reconsider and rectify errors even though the applicable statute and regulations do not expressly provide for such reconsideration.” Gun S., Inc. v. Brady, 877 F.2d 858, 862-63 (11th Cir. 1989). And the Eleventh Circuit, in early February 2009, confirmed specifically with respect to a classification ruling involving an early bump-stock-type device (the Akins Accelerator) that ATF “had authority to ‘reconsider and rectify’ what it considered to be a classification error.” Akins, 312 F. App‘x at 200 (quoting Gun S., 877 F.2d at 862-63).
Given the clear provisional character of a classification letter, plaintiffs cannot be said to have a compensable property right in the classification letters sent between 2008 and 2017, which have been properly corrected (as the assumption of the Final Rule‘s validity entails). The Supreme Court in Dames & Moore concluded that the President‘s nullification of an attachment against certain bank assets was not a taking because the pre-attachment regulations made clear that, in the Court‘s words, “any attachment is null and void ‘unless licensed,’ and all licenses may be revoked at any time.” 453 U.S. at 674 n.6; see also id. at 663 (quoting regulations). On that basis, the Court held, the “petitioner did not acquire any ‘property’ interest in its attachments of the sort that would support a constitutional claim for compensation.” Id. at 674 n.6. We drew a similar conclusion in American Bankers Ass‘n. We held that the plaintiffs lacked a property right, for takings purposes, in continuation of a particular statutory dividend rate on Federal Reserve stock, where Congress had “expressly reserved” its right to change the dividend rate. 932 F.3d at 1385; cf. Bowen v. Pub. Agencies Opposed to Soc. Sec. Entrapment, 477 U.S. 41, 55 (1986) (“The provision simply cannot be viewed as conferring any sort of ‘vested right’ in the face of precedent concerning the effect of Congress’ reserved power on agreements entered into under a statute containing the language of reservation.“); Columbus Reg‘l Hosp., 990 F.3d at 1349 (concluding that the plaintiff “never had an unconditional interest” in certain funds because the government “expressly reserved the right to recover those funds for certain reasons within a specific period of time“). For the same reason, plaintiffs here had no property right in the 2008-17 classification letters, which the agency could correct for error without effecting a taking.
Although we think that no more is needed to reject plaintiffs’ reliance on the 2008-17 letters, we note in addition several aspects
Plaintiffs point to the D.C. Circuit‘s conclusion that the Final Rule is a “legislative rule.” See Guedes v. Bureau of Alcohol, Tobacco, Firearms & Explosives, 920 F.3d 1, 17-20 (D.C. Cir. 2019). But that ruling does not aid plaintiffs in their takings claim. It does not adjudicate the essential question here—whether plaintiffs had a compensable property right in continued possession and transferability when, as assumed here, the Final Rule adopted a valid interpretation of the preexisting ban on possession and transfer of “machineguns,” as defined.
IV
For the foregoing reasons, we affirm the Claims Court‘s judgment.
The parties shall bear their own costs.
AFFIRMED
WALLACH, Circuit Judge, concurring in the result.
I agree we should affirm the Court of Federal Claims’ decision. I do not, however, agree with the majority‘s reasoning and concur as to the result only. I believe the “inhere in title” exception, set forth in Lucas, is not the proper vehicle to ascertain whether Mr. McCutchen and Paducah failed to state a compensable takings claim. That exception may inadvertently grant protections reserved to real property, and limited instances of personal property under extraordinary circumstances, to dangerous and unusual weapons. I write separately to explain why the Court of Federal Claims correctly concluded that the Bump Stock Rule was not a compensable
I. PROCEDURAL HISTORY
In December 2018, Mr. McCutchen and Paducah filed their Complaint in the Court of Federal Claims. J.A. 22; see J.A. 22-30 (Complaint). Paducah is a registered firearms dealer and retailer of “firearm parts and accessories.” J.A. 24. Prior to the Bump Stock Rule, it “had a property interest in multiple bump-stock devices.” J.A. 24. Mr. McCutchen previously purchased multiple bump stocks “for both his personal use and for economic gain.” J.A. 23. The Complaint alleged that the Bump Stock Rule constitutes a compensable Fifth Amendment taking of bump stocks as it “destroyed all economic value and all investment-backed expectations in [parties‘] bump-stocks.” J.A. 29. The Government moved to dismiss Paducah‘s Amended Complaint for failure to state a claim on which relief can be granted. J.A. 31, 37 (Motion to Dismiss).
The Court of Federal Claims dismissed Appellants’ Amended Complaint. See McCutchen v. United States, 145 Fed. Cl. 42, 45 (2019). The Court of Federal Claims concluded that Appellants had “failed to state a takings claim,” because its “bump-stock devices were not taken for a public use, but were instead prohibited through the government‘s exercise of its police power” and, further, “[e]ven if the police power doctrine were inapplicable,” it “would nonetheless dismiss the complaint because there [wa]s no merit to [Appellants‘] argument that the [Bump Stock] [R]ule effected a categorical taking of [its] bump-stock devices.” Id. at 53. The Court of Federal Claims concluded that Appellants suffered neither a physical taking, id. at 53-55, nor a regulatory taking of their bump stocks, id. at 55-56 (noting that Appellants had failed to raise any regulatory taking arguments and that, “even if the argument were not waived, [Appellants] ha[d] failed to state a regulatory takings claim“).
There is no dispute that the Court of Federal Claims correctly concluded that Mr. McCutchen and Paducah failed to state a compensable takings claim. However, as I explain below, I do not agree with the majority‘s reasoning that the Lucas “inhere in title” exception should extend to dangerous and unusual weapons. See Maj. Op. at 4, 16-17. In my view, the police power doctrine supports affirming the decision of the Court of Federal Claims. For the reasons which follow, I agree with the Court of Federal Claims that the Bump Stock Rule was “an exercise of police power and did not effect a taking for public use.” McCutchen, 145 Fed. Cl. at 51 (capitalization normalized).
II. THE “INHERE IN TITLE” EXCEPTION IS NOT THE PROPER VEHICLE TO ASCERTAIN WHETHER MR. MCCUTCHEN AND PADUCAH FAILED TO STATE A COMPENSABLE TAKINGS CLAIM
Lucas holds that a “categorical” takings analysis is appropriate “where regulation denies all economically beneficial or productive use of land.” Lucas v. S.C. Coastal Council, 505 U.S. 1003, 1015 (1992); see id. at 1015-16 (“As we have said on numerous occasions, the Fifth Amendment is violated when land-use regulation denies an owner economically viable use of his land.” (emphasis in original) (internal quotation marks and citation omitted)). The cases in which the Supreme Court has applied Lucas‘s total takings rule have involved real property, and Circuit
However, Lucas understands its categorical rule to be an application of the Supreme Court‘s prior land-use regulation cases, see Lucas, 505 U.S. at 1015 (citing Agins v. City of Tiburon, 447 U.S. 255, 260 (1980), abrogated by Lingle v. Chevron U.S.A. Inc., 544 U.S. 528 (2005); Nollan v. California Coastal Comm‘n, 483 U.S. 825, 834 (1987); Keystone Bituminous Coal Ass‘n v. DeBenedictis, 480 U.S. 470, 495 (1987); Hodel v. Virginia Surface Mining & Reclamation Ass‘n., Inc., 452 U.S. 264, 295-96 (1981)), and limited by “background principles of nuisance and property law that prohibit [specific] uses” of real property, id. at 1031. As such, “a landowner may not recover for a taking when the government forbids a use that is a nuisance at common law.” A & D Auto Sales, 748 F.3d at 1152 (citing Lucas, 505 U.S. at 1029-30). “The law of nuisance inheres in the landowner‘s title, so there is no taking if a use restriction falls within the scope of nuisance law.” Id. (citing Lucas, 505 U.S. at 1029-30).
As such, Lucas itself expressly declines to extend its reasoning to the regulation of personal property. Lucas, 505 U.S. at 1028; see Horne v. Dep‘t of Agric., 576 U.S. 350, 361-62 (2015) (clarifying that Lucas‘s per se regulatory taking analysis applies to real property). Lucas contrasts real property, which it concludes is subject to its per se regulatory taking rule, with “personal property,” which is not subject to the same per se rule. Lucas, 505 U.S. at 1028; see Horne, 576 U.S. at 361-62. The contrast makes sense, as real property is afforded greater protections than personal property. See Lucas, 505 U.S. at 1027-28 (“[H]e ought to be aware of the possibility that new regulation might . . . render his property economically worthless” “by reason of the [government‘s] traditionally high degree of control over commercial dealings[.]” (citing Andrus v. Allard, 444 U.S. 51, 66-67 (1979))); see Andrus, 444 U.S. at 66-67 (finding no regulatory takings even where “regulations . . . prevent[ed] the most profitable use of [the owners’ personal] property“).
Bearing in mind that Lucas warns that personal property owners “ought to be aware of the possibility that new regulation might . . . render [their] property economically worthless” “by reason of the [government‘s] traditionally high degree of control over commercial dealings,” Lucas, 505 U.S. at 1027-28, this court has “applied the categorical test to
I fear that the majority has overread our case law by extending Lucas‘s per se regulatory taking analysis to dangerous and unusual weapons; here, bump stocks. The majority cites cases that appear inapplicable here; those cases address non-physical personal property—not physical personal property, like bump stocks. See Maj. Op. at 15-18 (citing Dames & Moore v. Regan, 453 U.S. 654, 674 n.6 (1981) (discussing whether the petitioner acquired a property interest in its attachment against foreign banks’ assets); American Bankers Ass‘n, 932 F.3d 1375, 1384-85 (discussing whether plaintiff had a property interest in a higher statutory dividend rate); A & D Auto Sales, 748 F.3d at 1152-53 (discussing whether Lucas should extend to “intangible [personal] property“); Bair, 515 F.3d at 1327 (discussing whether plaintiff had property interest in statutory processor liens)). Additionally, the majority does not cite a single case where a court concluded that a claimant did not have a cognizable property interest in physical property. See Maj. Op. at 15-18. Such an overextension of our case law may inadvertently afford dangerous and unusual weapons special protections that are reserved to real property and limited instances of personal property, as discussed in Lucas. Consequently, in my opinion, the “inhere in title” exception is an inappropriate vehicle to ascertain whether Mr. McCutchen and Paducah failed to state a compensable takings claim. Instead, for the reasons to follow, I would affirm under the police powers doctrine.
III. MR. MCCUTCHEN AND PADUCAH‘S TAKINGS CLAIMS ARE PRECLUDED BY THE POLICE POWERS DOCTRINE
The Court of Federal Claims concluded that the Bump Stock Rule “did not effect a taking for public use” under the police powers doctrine. McCutchen, 145 Fed. Cl. at 51 (capitalization normalized). The Court of Federal Claims explained that “it is well established that there is no [compensable] taking for ‘public use’ where,” as here, “the government acts pursuant to its police power” to “criminalize[] or otherwise outlaw[] the use or possession of property that presents a danger to the public health and safety.” Id. (citing Keystone Bituminous, 480 U.S. at 491; Miller v. Schoene, 276 U.S. 272, 279-80 (1928); Mugler v. Kansas, 123 U.S. 623, 668-69 (1887); AmeriSource Corp. v. United States, 525 F.3d 1149, 1153 (Fed. Cir. 2008)). Mr. McCutchen and Paducah argue that the Court of Federal Claims “erred” when it “determin[ed] that [their] property was not taken ‘for public use‘” under the police powers doctrine. Appellants’ Br. 9. I disagree with Appellants.
compensable, “loss due to an exercise of the police power is properly treated as part of the burden of common citizenship.” Kimball Laundry Co. v. United States, 338 U.S. 1, 5 (1949); see Andrus, 444 U.S. at 65 (“The Takings Clause . . . preserves governmental power to regulate, subject only to the dictates of justice and fairness.” (internal quotation marks and citation omitted)). For example, “[c]ourts have consistently held that [the government] need not provide compensation when it diminishes or destroys the value of property by stopping illegal activity or abating a public nuisance.” Keystone Bituminous, 480 U.S. at 492 n.22; see Appolo Fuels, Inc. v. United States, 381 F.3d 1338, 1347 (Fed. Cir. 2004). Similarly, “[w]hen property has been seized pursuant to the criminal laws or subjected to in rem forfeiture proceedings, such deprivations are not [compensable] takings.” Acadia Tech., Inc. v. United States, 458 F.3d 1327, 1331 (Fed. Cir. 2006) (internal quotation marks omitted) (citing Bennis v. Michigan, 516 U.S. 442, 452-53 (1996); Calero-Toledo v. Pearson Yacht Leasing Co., 416 U.S. 663, 680 (1974); Van Oster v. Kansas, 272 U.S. 465, 468 (1926)).
The Court of Federal Claims correctly concluded that the Bump Stock Rule was
Further, the ATF promulgated the Bump Stock Rule pursuant to its statutory authority to make such regulations necessary to enforce the NFA and GCA. Bump Stock Rule, 83 Fed. Reg. at 66,515-16; see
“[T]he cases authorizing” such government action without compensation are “firmly fixed in the punitive and remedial jurisprudence of the country.” Bennis, 516 U.S. at 453 (internal quotation marks and citation omitted). In promulgating the Bump Stock Rule, the ATF acted pursuant to a well-established regulatory regime and in consonance with a known “limitation on the right to keep and carry arms“—“the historical tradition of prohibiting the carrying of ‘dangerous and unusual weapons,‘” including machine guns. District of Columbia v. Heller, 554 U.S. 570, 627 (2008) (citing, inter alia, 4 Commentaries on the Laws of England 148-49 (1769); State v. Langford, 10 N.C. 381, 383-84 (1824))2; see
“While it is insufficient to avoid” the Takings Clause “to invoke the ‘police powers’ of the state,” the prohibition of dangerous and unusual weapons, and the enforcement of that prohibition through the criminal laws, “is the kind of exercise of the police power that has repeatedly been treated as legitimate even in the absence of compensation.”
Acadia, 458 F.3d at 1332-33; see Bennis, 516 U.S. at 453; Calero-Toledo, 416 U.S. at 683. Mr. McCutchen and Paducah, therefore, lack a compensable takings claim for their bump stocks against the Bump Stock Rule, because it is precluded by the police powers doctrine. Accordingly, the Bump Stock Rule‘s requirement that possessors destroy or relinquish their bump stocks as illegal machine guns is not a taking of “private property . . . for public use, without just compensation.”
Appellants ignore that the Bump Stock Rule was promulgated to enforce an existing criminal law—the prohibition on transfer and possession of machine guns, including parts designed to convert weapons into a machine gun, manufactured after 1986.
Second, Mr. McCutchen and Paducah assert that the Court of Federal Claims erred because “[t]he Supreme Court‘s early ‘police powers’ cases do not defeat the public use prong of [their] claims.” Appellants’ Br. 11 (citing Miller, 276 U.S. 272; Mugler, 123 U.S. 623). They argue that “the ‘harmful or noxious use’ principle,” articulated in the ”Miller and Mugler cases was nothing more than the Supreme Court‘s early formulation of the police power justifying a regulatory diminution in value of property without compensation,” id. (citing Lucas, 505 U.S. at 1004), and therefore inapplicable to the “total depriv[ation] of their property” effected by the Bump Stock Rule, id. at 14. This argument is without merit.
As an initial matter, the police power doctrine is not directed to the “public use” prong of our takings analysis. The police power doctrine is directed to the question of whether property has been “taken.” Keystone Bituminous, 480 U.S. at 491 n.20. If property has not been taken, then compensation is not required. See Lingle, 544 U.S. at 536-37. The public use prong is directed to whether property, having been taken, was taken for a “public use.” See id. at 543. If property has not been taken for “public use,” then “[n]o amount of compensation can authorize [the] action.” Id.; see Hawaii Hous. Auth. v. Midkiff, 467 U.S. 229, 239 (1984). The police power doctrine is premised “on the simple theory that since no individual has a right to use his property so as to create a nuisance or otherwise harm others, the [s]tate has not ‘taken’ anything when it asserts its power to enjoin the nuisance-like activity.” Keystone Bituminous, 480 U.S. at 491 n.20; see Bennis, 516 U.S. at 453; Acadia, 458 F.3d at 1331. It focuses on specific exercises of the police power in furtherance of the health, safety, and general welfare of the public. Keystone Bituminous, 480 U.S. at 491-92; see Berman v. Parker, 348 U.S. 26, 32 (1954) (explaining that “‘p]ublic safety” and “public health” are “some of the more conspicuous examples of the traditional application of the police power,” and therefore “they merely illustrate the scope of the power and do not delimit it“). In contrast, the public use prong seeks to prevent the government from taking property “for the purpose of conferring a private benefit on a particular private party.” Kelo v. City of New London, Conn., 545 U.S. 469, 477 (2005). It focuses broadly on whether a taking is for “public purpose,” id. at 480, and, therefore, unlike the police powers doctrine, is “coterminous” with the full “scope of a sovereign‘s police powers,” Midkiff, 467 U.S. at 240; see id. at 239 (“An attempt to define [the police powers‘] reach or trace its outer limits is fruitless, for each case must turn on its own facts.” (quoting Berman, 348 U.S. at 32)); Kelo, 545 U.S. at 483 (“[Supreme Court] public use jurisprudence has wisely eschewed rigid formulas and intrusive scrutiny in favor of affording legislatures
More substantively, Appellants misunderstand the import of the Supreme Court‘s early police power cases to our analysis here. We do not need to analogize solely from cases about the state-mandated closure of breweries, see Mugler, 123 U.S. at 623, and compelled destruction of diseased cedar trees, see Miller, 276 U.S. at 279-80, to conclude that the government may ban dangerous and unusual weapons, see Heller, 554 U.S. at 627, and enforce that ban without compensation, see Bennis, 516 U.S. at 452-53; Calero-Toledo, 416 U.S. at 683; Acadia, 458 F.3d at 1331-32. Rather, because the Supreme Court‘s takings jurisprudence has “traditionally been guided” by the reasonable expectations of property owners, we may look to these early cases to establish that, “[a]s long recognized, some values are enjoyed under an implied limitation and must yield to the police power.” Lucas, 505 U.S. at 1027 (quoting Pennsylvania Coal, 260 U.S. at 413); see, e.g., Keystone Bituminous, 480 U.S. at 490 (explaining that in Miller, 276 U.S. 272, the Supreme Court concluded that “the Takings Clause did not require the [state] to compensate the owners of cedar trees for the value of the trees that the [s]tate had ordered destroyed,” because “it was clear that the [s]tate‘s exercise of its police power to prevent the impending danger was justified, and did not require compensation“), 491-92 (quoting Mugler, 123 U.S. at 665, for the proposition that “[l]ong ago it was recognized that ‘all property in this country is held under the implied obligation that the owner‘s use of it shall not be injurious to the community‘“); Allied-Gen. Nuclear Servs. v. United States, 839 F.2d 1572, 1576 (Fed. Cir. 1988) (noting that in Keystone Bituminous “the Supreme Court has dusted off Mugler and put it back on its pedestal“).
Further, contrary to Appellants’ arguments, the Supreme Court‘s early police-power cases are not limited to the “diminution of rights” through “government regulation of use,” Appellants’ Br. 14, but instead confirm the government‘s longstanding authority to regulate personal property, even to “the destruction of [that] property,” without a categorical duty to compensate. Samuels v. McCurdy, 267 U.S. 188, 196 (1925). For example, in Samuels, the Supreme Court concluded that the seizure of “certain intoxicating liquors” pursuant to a state‘s criminal prohibition, even to “the destruction of property” and disappointment of a previously legal interest, was not a compensable taking because the case did “not involve the power of eminent domain,” but the “police power.” Id. at 190, 195-96. Similarly, in Omnia Com. Co. v. United States, the Supreme Court concluded that Federal requisition of a “steel company‘s entire production of steel plate for the year 1918” was not a compensable taking of another company‘s preexisting contract to buy that steel, as the “destruction of, or injury to, property is frequently accomplished without a ‘taking’ in the constitutional sense.” 261 U.S. at 507-08 (1923). Thus, the early police power cases support the conclusion that “not every destruction or injury to property by governmental action” is a “taking’ in the constitutional sense,” Armstrong v. United States, 364 U.S. 40, 48 (1960), but rather may be a non-compensable exercise of the police
IV. CONCLUSION
I would affirm the decision of the Court of Federal Claims that, “[Mr. McCuthcen and Paducah‘s] bump-stock devices were not taken for a public use, but were instead prohibited through the government‘s exercise of its police power.” McCutchen, 145 Fed. Cl. at 53. I therefore concur in today‘s result.