The Supreme Court today handed down its decision in Stop the Beach Renourishment, Inc. v. Florida Department of Environmental Protection, addressing the possibility that a judicial ruling might violate the terms of the Takings Caluse. Justice Scalia wrote for four justices, concluding that there is such a thing as a judicial taking, that such a taking arises when a plaintiff can show that she was deprived of a property right that she previously possessed, and that the plaintiffs in the Florida case failed to satisfy this burden. Justices Kennedy and Breyer each wrote separate partial concurrences, joined by Justices Sotomayor and Ginsburg, respectively, in which they expressed significant reservations about recognizing a new cause of action for a judicial taking as a general matter. Justice Kennedy suggested that problems arising where judges took previously existing property rights away from litigants were perhaps better addressed under the Due Process Clause, and Justice Breyer said there was no need to decide now what the rule should be for figuing out what should constitute a judicial taking. Justice Stevens recused, but the remaining eight justices agreed that the facts of the Florida dispute did not amount to a judicial taking. Ben Barros has already posted valuable analysis of the case here, and Tony Mauro has additional thoughts about the recusal here.
I want to address one crucial legal question raised by Jerry Anderson: Namely, what happens if a common law court changes its state's property laws somewhat? To take Jerry's example, what if a state moves from holding that only bad faith trespassers could adversely possess property to holding that the trespassers' state of mind was irrelevant? (Many states made this shift during the 20th century.) A landowner who loses his property under the new rule to a good-faith adverse possessor then sues, alleging a judicial taking. Can he prevail? More broadly, can a judicial decision holding that property presumptively owned by private party A is actually owned by private party B ever be a judicial taking? As Jerry points out, there is language on page 10 of the slip opinion suggesting that such a decision might be a judicial taking. ("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.").
I believe the answer to the question of whether an adjustment of property rights as between two private parties can be a judicial taking has to be no. My argument proceeds in two steps. First, Justice Scalia's opinion in Stop the Beach is quite clear (see pages 18-19 of the slip opinion) that the remedy for a judicial taking is not "just compensation" but rather an invalidation of the judicial decision depriving an owner of property.
The second step has to do with another important Supreme Court takings opinion, Kelo v. City of New London. In the Justice O'Connor dissent in Kelo, which Justice Scalia signed, the dissenters argued that absent blight the Takings Clause does not permit the government to transfer private property from private party A to private party B. Rather, the Takings Clause permits the use of eminent domain in which the government winds up as the owner of the property or the public has substantial access rights to the property. Thus, under the dissenting view in Kelo, the governments' takings power does not permit purely private transfers from A to B. If the government has the power to change its adverse possession law in a manner that disadvantages A, such power must come from elsewhere.
If you put steps one and two together you reach the following result: The state courts cannot change the rules of property as they affect private parties claiming a contested resource. But that cannot possibly be right. To return to Jerry's example, if it's the case that a rule making adverse possession by a private trespasser easier might amount to a judicial taking of the landowner's property, then the state courts can make no changes to its law of adverse possession. But as Justice Scalia recognizes, the courts have been making these sorts of tweaks to property law for centuries, and the risk of such changes is a "background principle of state property law" to which all land ownership claims are subject. (See pg. 27 of the slip opinion, citing Justice Scalia's earlier opinion in Lucas.) It is hard to see why Justice Scalia or anyone else would want the common law of property to be frozen in place with respect to doctrines like adverse possession law, landlord-tenant law, easement law, or any of the other private party-versus-private party disputes that are the bread and butter of all Property casebooks.
Cases in which the state government is depriving a private owner of property, and then claiming that the landowner never had those property rights to begin with are much more troublesome, precisely because the risk of self-dealing by the government is grave. That isn't to say that such risks aren't present in cases where a transfer of rights from a landowner to a trespasser occurs as a result of a judicial decision - we know from Kelo, Poletown, and other cases that private parties may exert substantial control over local government decisionmaking. But where, as in Stop the Beach, the government winds up with the property, there is no question in the minds of any of the justices that the "public use" test is satisfied and the state may therefore take the property upon paying compensation (if there's a judicial taking). Judicial takings claims where the government, rather than a private party, is the beneficiary of the judicial decision thus present a sound structural fit with the rest of takings doctrine. Stop the Beach, on the facts alleged by the plaintiffs, was one such case, because the government stood to benefit. But the Court just didn't buy the plaintiffs' arguments that the Florida state courts had deviated from their earlier precedents. If there are any bright lines to be drawn in the law of judicial takings, a divide between private-to-private transfers and private-to-public transfers is the sensible location for that line.
To summarize: The best way to make sense of Justice Scalia's plurality opinion in Stop the Beach is that judicial takings arise only in those instances in which the government now owns property that was previously held by a private party. Precisely because there is an ancient tradition of courts readjusting the property rights of private parties involved in ownership disputes, those sorts of judicial actions are not proper vehicles for asserting that a judicial taking has occurred.