Federal jurisdiction and the constitutionality of eviction moratoriums

The Relist Watch column examines cert petitions that the Supreme Court has “relisted” for its upcoming conference. A short explanation of relists is available here.

The Supreme Court made short work of two of last week’s first-time relists. The court granted review in United States Postal Service v. Konan to determine whether the Federal Tort Claims Act provision exempting claims arising from “the loss” or “miscarriage” of letters or postal matter extends to claims that the Post Office deliberately refused to deliver mail to an address. But the court denied review of landlord Lebene Konan’s cross-petition claiming that Postal Service employees conspired to deny her civil rights.

Turning to new business: There are 116 petitions and applications scheduled for this week’s conference. The justices will be discussing two of them for a second time.

First up is The Hain Celestial Group, Inc. v. Palmquist. Texas residents Sarah and Grant Palmquist filed a Texas state-law suit against Hain Celestial (a New York/Delaware food producer) and Whole Foods (a Texas-based grocery chain), alleging that their son developed autism and related disorders from consuming Hain’s Earth’s Best™ baby food — sold at Whole Foods — which allegedly contained traces of heavy metals. Hain moved the case to federal court, asserting that the Palmquists had fraudulently included Whole Foods in the case to defeat diversity jurisdiction under a Texas statute protecting “innocent sellers” from liability. 

The district court agreed and dismissed Whole Foods with prejudice. After extensive litigation (including a two-week jury trial), the district court granted Hain’s Rule 50(a) motion for judgment as a matter of law, finding that the Palmquists failed to establish that their son’s symptoms had been caused by the heavy metals. 

But on appeal, the U.S. Court of Appeals for the 5th Circuit revived claims against Whole Foods, concluding that the Palmquists had stated a colorable breach of express warranty claim — even if it came by way of clarifying amendments to the complaint that they had made only after the case had been moved to federal court. Under the 5th Circuit’s understanding, the district court had never had subject-matter jurisdiction, so the whole proceeding was vacated and sent back to state court.

Hain and Whole Foods argue that the 5th Circuit’s decision splinters sharply from several others — including the U.S. Court of Appeals for the 8th Circuit’s ruling in Junk v. Terminix — that have upheld federal judgments despite erroneous earlier dismissals of non-diverse defendants. The companies invoke Caterpillar Inc. v. Lewis, in which the court held that a district court’s error in failing to remand an improperly removed case is not fatal if federal jurisdictional requirements are met at the time judgment is entered. They argue that the 5th Circuit erred in vacating a final judgment entered when the only remaining parties in the case were completely diverse and the trial had concluded. And they say that plaintiffs like the Palmquists cannot defeat diversity jurisdiction after removal by amending the complaint to add facts supporting a previously unviable claim against a non-diverse party.

The Palmquists argue that the 5th Circuit got it right. They emphasize that unlike in Caterpillar, the non-diverse party here (Whole Foods) was improperly dismissed rather than voluntarily dropping out. Thus, they say, the jurisdictional defect was never cured. They also say the alleged circuit split is based largely on pre-Caterpillar or distinguishable cases. Finally, they stress that their complaint always encompassed an express warranty claim — it was simply clarified after removal to meet federal pleading standards, not to add new jurisdiction-defeating allegations.

Our second relist is in GHP Management Corp v. City of Los Angeles, California. In March 2020, Los Angeles enacted an eviction moratorium, prohibiting property owners from evicting residential tenants who couldn’t pay rent due to the COVID-19 pandemic. The moratorium remained in effect until early 2023, with some protections continuing into 2024. Under the ordinance, landlords faced steep penalties if they “endeavored to evict” tenants protected by the moratorium.

A group of owners of mostly high-end rental properties brought suit, alleging that the city had effectively conscripted their buildings for public housing without paying for it, in violation of the Constitution’s takings clause. They claimed the ordinance functioned as a physical occupation akin to Cedar Point Nursery v. Hassid, in which the court held that laws requiring property owners to give access to union organizers represented a physical occupation of land. 

The district court dismissed the case at the pleading stage, and the U.S. Court of Appeals for the 9th Circuit affirmed in a short unpublished opinion that relied heavily on Yee v. City of Escondido, a 1992 case holding that when property owners invite tenants onto their land voluntarily, the government can regulate that relationship (there, through rent control) without necessarily effecting a taking.

GHP’s petition argues that the 9th Circuit has misread Yee and failed to appreciate the newer rule from Cedar Point: that government-authorized occupations — even temporary ones — are takings when they deny owners the right to exclude. According to GHP, Los Angeles did precisely that by prohibiting landlords from removing tenants who weren’t paying rent. They allege that the decision below creates a direct circuit split with decisions of the U.S. Court of Appeals for the Federal Circuit and the 8th Circuit, which it argues both recognized that eviction moratoria can constitute physical takings. 

The City of Los Angeles and tenant-rights intervenors paint a different picture. They say that the ordinance merely provided an affirmative defense to evictions, rather than a flat ban, and that landlords never even tried to evict tenants, so no tenant actually used the city’s protections against the landlords. 

Moreover, they argue that Yee squarely governs because the lease agreements were voluntary and the ordinance didn’t force landlords to accept new tenants or physically occupy the property. And, they insist, there’s no meaningful circuit split. The Federal and 8th Circuits, they say, involved distinct facts and have not actually broken with Yee. They also argue that the issue is stale: The pandemic-era policies have been repealed, and dozens of similar cert petitions have already been denied.

We should have a better idea soon whether either of these cases will be set for argument in the fall. Until next time!

New Relists

GHP Management Corp v. City of Los Angeles, California, 24-435

Issue: Whether an eviction moratorium depriving property owners of the fundamental right to exclude nonpaying tenants effects a physical taking.

(Relisted after the Apr. 17 conference.)

The Hain Celestial Group, Inc. v. Palmquist, 24-724

Issues: (1) Whether a district court’s final judgment as to completely diverse parties must be vacated when an appellate court later determines that it erred by dismissing a non-diverse party at the time of removal; and (2) whether a plaintiff may defeat diversity jurisdiction after removal by amending the complaint to add factual allegations that state a colorable claim against a non-diverse party when the complaint at the time of removal did not state such a claim.

(Relisted after the Apr. 17 conference.)

Returning Relists

Apache Stronghold v. United States, 24-291

Issue: Whether the government “substantially burdens” religious exercise under the Religious Freedom Restoration Act, or must satisfy heightened scrutiny under the free exercise clause of the First Amendment, when it singles out a sacred site for complete physical destruction, ending specific religious rituals forever.

(Relisted after the Dec. 6, Dec. 13, Jan. 10, Jan. 17, Jan. 24, Feb. 21, Feb. 28, Mar. 7, Mar. 21, Mar. 28, Apr. 4 and Apr. 17 conferences.)

Ocean State Tactical, LLC v. Rhode Island, 24-131

Issues: (1) Whether a retrospective and confiscatory ban on the possession of ammunition-feeding devices that are in common use violates the Second Amendment; and (2) whether a law dispossessing citizens without compensation of property that they lawfully acquired and long possessed without incident violates the takings clause of the Fifth Amendment.

(Relisted after the Jan. 10, Jan. 17, Jan. 24, Feb. 21, Feb. 28, Mar. 7, Mar. 21, Mar. 28, Apr. 4 and Apr. 17 conferences.)

Snope v. Brown, 24-203

Issue: Whether the Constitution permits Maryland to ban semiautomatic rifles that are in common use for lawful purposes, including the most popular rifle in America.

(Relisted after the Jan. 10, Jan. 17, Jan. 24, Feb. 21, Feb. 28, Mar. 7, Mar. 21, Mar. 28, Apr. 4 and Apr. 17 conferences.)

L.M. v. Town of Middleborough, Massachusetts, 24-410

Issue: Whether school officials may presume substantial disruption or a violation of the rights of others from a student’s silent, passive, and untargeted ideological speech simply because that speech relates to matters of personal identity, even when the speech responds to the school’s opposing views, actions, or policies.

(Relisted after the Feb. 21, Feb. 28, Mar. 7, Mar. 21, Mar. 28 and Apr. 4 conferences.)

First Choice Women’s Resource Centers, Inc. v. Platkin, 24-781

Issue: Where the subject of a state investigatory demand has established a reasonably objective chill of its First Amendment rights, is a federal court in a first-filed action deprived of jurisdiction because those rights must be adjudicated in state court?

(Relisted after the Apr. 11 and Apr. 17 conferences.)