COVID-19 Update: Takings Lawsuits May be Making Headway

Nossaman LLP

[author: Jillian Friess] 

We have been following for some time now the COVID-19 takings lawsuits that have been popping up since California’s first closure orders. As we previously reported, these cases did not seem to be making much traction in the courts. However, one ongoing case in the United States District Court for the Southern District of California may be trending in the opposite direction.

In the case of Bols v. Newsom (2021 U.S. Dist. LEXIS 15237), Plaintiffs’ businesses (commercial landlord, hair and nail salons) were deemed non-essential per the public health orders and experienced the revolving door of business openings and closures. Plaintiffs asserted a variety of claims, including takings claims under Federal and state laws. Defendants moved to dismiss all seven COVID-19 related claims. The Court denied all motions to dismiss, allowing this COVID-19 takings case to continue forward.

As to the federal takings claim, the Plaintiffs alleged that the shutdowns have taken away their occupations and businesses for the public good without compensation. The Court concluded that they have sufficiently stated a plausible claim for relief, such that their allegation should survive a motion to dismiss. For the state takings claim, the Court concluded that the County officials are not protected by the 11th Amendment’s bar on suits against State officials in federal court, as County officials are “not simply an arm of the State of California.” As such, the motion to dismiss was denied and the state takings suit in federal court against County officials may proceed. This COVID-19 takings case has survived one of the first hurdles and its progress will be worth keeping an eye on.

Also worth taking a look at are the two related COVID-19 cases of County of Ventura v. Westlake Fitness LLC (Case No. 56-2021-00549550-CU-MC-VTA) filed in Superior Court and Westlake Fitness LLC v. County of Ventura (2021 U.S. Dist. LEXIS 17652) filed only days later in the U.S. District Court, Central District of California. The first case sought a temporary restraining order to prevent a gym from operating in violation of County health orders. The subsequent federal suit asserted inverse condemnation claims based on violations of the takings clause under the Fifth and Fourteenth Amendments. The Plaintiffs in the federal suit sought to remove the state law case to federal court, but the District Court deemed the removal improper and ordered Plaintiffs to show cause as to why the suit should not be remanded back to the Superior Court. It will be interesting to watch how these related COVID-19 cases play out in state versus federal court.

Make sure to check back as we follow these cases and other COVID-19 takings lawsuits.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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