New York City’s Rent Stabilization Law and New York State’s Emergency Tenant Protection Law (together, “RSL”) allow the city and state to regulate residential rents and evictions during times of public emergency. Specifically, the RSL allows the city and state to limit the ability of landlords to increase rent and evict tenants. The appellants in this case, individual landlords and associations of landlords, have brought a facial challenge to the RSL, arguing that it violates, among other things, the Takings Clause of the Fifth Amendment, which provides that private property shall not “be taken for public use, without just compensation.”

The district court dismissed the appellants’ claims, concluding that the RSL, on its face, does not effect a taking within the meaning of the Takings Clause. The landlords and landlord associations appealed to the U.S. Court of Appeals for the Second Circuit, and CAC filed an amici curiae brief on behalf of professors of law, sociology, and urban studies, urging the Second Circuit to affirm the district court’s ruling.

Our brief argued that the RSL does not effect a taking requiring “just compensation” under the Constitution. It began by explaining that at the time of the Founding, the Takings Clause was understood to prohibit only actual appropriations of private property, like the taking of land to build a road or park.  Indeed, for decades following the Fifth Amendment’s ratification, the Supreme Court refused to extend the Clause beyond physical appropriations. Although the Court has since held that the Takings Clause also applies to the functional equivalent of a physical appropriation of property, it has only recognized two categories of regulations that it considers tantamount to actual appropriations such that they amount to takings per se: (1) regulations that involve a permanent physical invasion of property, and (2) regulations that render the property completely valueless. Regulations that do not fall into either of these two categories are evaluated under a multifactor test established in the Supreme Court case Penn Central Transportation Co. v. City of New York.

Our brief then argued that the RSL, on its face, does not effect a taking under any of these categories. First, the RSL would not have been considered a physical taking under the original understanding of the Takings Clause because it merely regulates how landlords can use certain property, without taking any property from them. Second, the RSL does not effect a regulatory taking under either of the Court’s categories of takings per se because it does not allow a permanent physical occupation of the landlords’ property and because it does not drain the landlords’ property of all economic value. Finally, the RSL does not effect a taking under the multifactor test laid out in Penn Central.

On February 6, 2023, the Second Circuit issued an opinion affirming the decision of the district court and holding that the landlords failed to state a claim that the Takings Clause had been violated. Echoing our argument, the Court applied the Penn Central test and concluded that the landlords failed to establish that the RSL effects a taking under any of the factors examined in the test. Much like our brief, the Court’s opinion emphasized that a reduction in certain landlords’ profits due to the RSL does not amount to a constitutional violation.