When Property and Legality Diverge

Larissa Katz

There is a nearly universal assumption in contemporary property theory that clearly defining property rights in terms of exclusion enhances rule of law virtues of clarity, stability and predictability. And there is a corresponding assumption that a rival account, according to which property is a malleable bundle of rights, undermines those same values.¹ Judicial discretion is the main target of this prevailing view: a bundle of rights approach invites courts to configure the content of the “bundle” of rights in socially optimal ways. While there is much to be said for engineering property rights to advance social goals, this can be said against it: it leaves participants in the legal order—litigants, potential trespassers or buyers, even judges—in the dark about what the relevant rights and duties are.

In Property Against Legality, Aziz Huq provides doctrinal and theoretical grounds to doubt this dominant assumption: a stronger right to exclude, he argues, may erode legality. (P. 42.)² His point of departure is a recent US Supreme Court case, Cedar Point Nursery v. Hassid. Cedar Point concerned the constitutionality of a California “take access” regulation allowing union organizers to approach agricultural workers on company property three times a day. (P. 16.) The Court concluded that “take access” legislation was an appropriation of the right to exclude third parties—a taking per se. Much of Huq’s article provides a close analysis of Cedar Point itself, which he characterizes as a sharp break from settled takings law. (Id.) He argues that the decision puts property and legality in conflict for two related reasons: (1) it undermines the methodological foundations of takings doctrine by deviating from “ordinary meaning,” (P. 20)³ “original understandings,” (Pp. 22-23)⁴ and “applicable precedent;” (P. 26)⁵ and (2) it will lead to more arbitrary power in future, by expanding judicial discretion and enhancing arbitrary private power to decide matters affecting the core interests of other people.

While Cedar Point is widely seen as a victory for proponents of a strong right to exclude, Huq argues that the victory is pyrrhic. On Huq’s account, Cedar Point strengthens the right to exclude at the expense of the rule of law. How do exclusion and legality come apart? The answer Huq gives has more to do with the nature of legality than the nature of exclusion. On Huq’s account, the Cedar Point decision leads property and legality to diverge in a complex way, with rules directed at officials, including judges, becoming more uncertain and rules directed at some citizens (owners) becoming less so.⁶ Legality may be unevenly distributed across the constitutional order, with heightened legality in one set of institutions and diminished legality in others. Rules that constrain official action may suffer from a lack of clarity, predictability and stability as a result of a decision like Cedar Point even as rules that guide the conduct of individual citizens become clearer and more predictable. The lesson Huq wants us to draw from Cedar Point is that more protection for the right to exclude can lead to more arbitrary power, even if less of it is in the hands of the legislature and the executive. The net result, he argues, is a constitutional order with strong private property rights that weaken, rather than bolster, rule of law virtues. (Pp. 38-39.)

One of the most vibrant contributions of the article is its emphasis on a quiet form of privatization: the retreat of the state from the public sphere, leaving decisions concerning the fundamental interests of some (farm workers), including their rights of association, to other private actors (farm owners) to decide.⁷ Cases like Cedar Point effectively drives the state out of its proper regulatory sphere by forcing it to pay owners for regulation that limits the right to exclude (without any corresponding obligation to pay nonowners for the failure to regulate, protecting owners by limiting nonowners’ freedoms of association and speech). As Huq put it:

By elevating property rights above other entitlements of constitutional magnitude, and by allowing the state to intrude on property only to protect property (not other human goods), Cedar Point ushers into being a constitutional dispensation in which the state is materially deterred from protecting personal interests other than property. (P. 42.)

Cedar Point restrains state power by protecting property rights against state incursions, Huq concedes, but it does so at the expense of other entitlements that protect individuals against arbitrary private power: the Cedar Point farm workers’ associational and dignity rights will be impaired. (P. 42.) Even if Cedar Point increases private property owners’ protection from arbitrary state power, it did so by incurring a net larger increase in vulnerability of individuals at the hands of private power. (P. 43.) And Cedar Point increases arbitrariness even if the analysis is restricted to state action: because private property protections enhance owners’ power to call on state resources to enforce their right to exclude, stronger property protections enhance the unequal allocation of state violence. (Id.)⁸

Teeming with insights and provocative, Huq’s account of property and legality has left me with three related questions: (1) Can property rights ever serve as a constraint on the arbitrary exercise of public power—even if they might not in a post-Cedar Points world?⁹ (2) Can the apparent divergence Huq observes in legality (less clarity and predictability in property’s secondary rules for officials and more rule of law virtues in its “primary rules” for citizens) be explained in terms of greater complexity in exclusion? (3) Is judicial discretion to determine the line between appropriation and regulation as problematic as Huq makes it out to be? I will elaborate on each of these questions in what follows.

(1) Is Property Even Potentially a Constraint on Arbitrary Public Power? While Huq’s article takes aim at the claim that a robust right to exclude always bolsters legality by limiting arbitrary power, he does not appear to question that it can do so. But the idea that private property rights could serve to align public power with the rule of law –rather than simply to limit the scope for public decision-making—strikes me as itself deeply mistaken. Private property rights decentralize power by putting private actors in charge of setting agendas for things. That can be seen as shrinking the sphere for public decision-making. But the diffusion of power does not in itself assure the quality of the power left to the state, and, specifically, its alignment with the rule of law. Private property rights are neither necessary nor sufficient to guarantee that the state uses whatever power is left to it for proper (that is, non-arbitrary) purposes. In a world without private property rights, the state would have vastly more power but might still be subject to constraints on the use of public power for improper purposes (such as non-public ones.) And a world with private property rights, the state might uphold a strong right to exclude and yet still, in the sphere of jurisdiction left to it, exercise its power arbitrarily, in the manner of a capricious tyrant. Public power is not aligned with the rule of law from the outside, by making (legal or illegal) state action more expensive, but from the inside, by a constitutional order setting out the state’s mandate and by jurisdictional limits that require the use of public power just for the purposes for which it is conferred.¹⁰

(2) Does a greater complexity in property’s primary exclusion rules account for the apparent divergence between primary and second-order legality that Huq identifies, post-Cedar Point? “Exclusion” in US property law is on some accounts itself bifurcated, operating in the context of government-individual relations as a right to compensation vis-à-vis the state and as an exclusive right of control and use vis-à-vis private actors in the context of private relations.¹¹ Legality may not diverge in respect of primary and secondary rules but in respect of kinds of exclusion—weakening legality for both primary and secondary rules in respect of “exclusion” in the context of government-individual relations even as legality remains strong for exclusion in the context of private relations. This would explain away a puzzle I had reading Huq’s article: it seemed likely that any uncertainty judges face in drawing the line between an appropriation and regulation post-Cedar Point would have a corresponding effect on the clarity and predictability of any individual owner’s claim for compensation for an “appropriation” of the right to exclude. There may not be a divergence, then, between primary and secondary legality in respect to property rights vis-à-vis the state: both become less clear and predictable. By the same token, it seems like Cedar Point does not engender any new uncertainty either in primary rules or in secondary rules relating to the rights of owners vis-à-vis third parties. Owners will have to abide by state law, including any take access legislation, whether or not they have a right to compensation.¹² Judges post-Cedar Point will have no more (or less) discretion in determining whether a third party has authorization to enter the owner’s land than they had before and will face no more uncertainty in respect of how to decide a trespass action or how to apply state regulation in a particular case.

Primary and secondary legality may have suffered post-Cedar Point in respect of “exclusion” rules vis-à-vis the state while remaining robust in respect of exclusion rules vis-à-vis private actors. That would mean that primary and secondary legality are aligned, and there is only a divergence in legality for both primary and secondary rules across the different kinds of “exclusion.” Miinding the divergence in exclusion across different legal contexts might make sense of the divergence in legality that Huq identifies.

(3) Is judicial discretion to classify a limit on exclusion as appropriation vs regulation the problem? One reason that Huq gives for the rupture between property and legality post-Cedar Point is the increased judicial discretion it ushers in. Cedar Point replaces a settled distinction between appropriation and regulation with a novel definition of appropriation that is indeterminate and functionally indistinguishable from regulation. (P. 9.) In Huq’s view, the pre-Cedar Point takings doctrine that distinguished between appropriation and regulation was easy to apply and generated predictable outcomes. Post- Cedar Point, while it seems like owners can expect to win more cases as regulation is classified as appropriation, it is unclear when or why judges will classify a regulation as an appropriation. That leaves the decision up to judicial discretion—erasing any rule of law gain from a more robust right to exclude.

I wondered whether judicial discretion in drawing the line between appropriation and regulation is the right target for Huq. Montesquieu thought that if a public decision is not mechanistic, it is arbitrary.¹³ That, however, is not a plausible view of legality nor the one I take Huq to hold: The rule of law does not require the elimination of discretion. The application of abstract principles to particular cases,may not be fully predictable without becoming arbitrary. Clarity, stability and predictability are virtues for the law to approximate. It is unnecessary unpredictability in public office that is a vice.¹⁴ Huq acknowledges the difficulty in rooting out the diminished legality of decision rules directed at judge precisely because the judicial role involves contestable judgments about the proper path of the law. (P. 41.) That suggests to me that Huq’s proper target is not judicial discretion in respect of the classification of a limit as an appropriation vs a regulation, but rather the weakening of judicial tools for the proper exercise of that discretion.

1. See Henry E. Smith, Property as the Law of Things, 125 Harv. L. Rev.1691, 1706-08 (2012); see also Thomas W. Merrill and Henry E. Smith, What Happened to Property in Law and Economics, 111 Yale L. J. 357 (2001), and Hanoch Dagan, A Liberal Theory of Property 129 (2021).
2. Huq accepts as the “standard story “ that there is no tension, only intimate camaraderie, between the rule of law and the vindication of property rights” (P. 45). In my own view, property serves legality only when confined within the bounds of office. Larissa Katz, Offices and Ownership: The Building Blocks of a Legal Order, 70 U. Toronto L. J. 267 (2020).
3. Huq argues that Chief Justice Roberts selectively relied on an outdated and little-used dictionary definition and ignored the term’s ordinary English usage. Roberts held that the ordinary meaning of “appropriation” means “taking as one’s own,” which includes any transfer of a property right related to the right to exclude even if transient, temporary, and indefinite in scope. But he relied on a 30-year-old dictionary for this definition, and the definition in the most updated version of the same dictionary had a critical difference because it required a durable change in ownership. Roberts also omitted the first sentence of the 30-year-old definition, which seemed to weigh towards excluding temporary regulations. Huq notes that most other dictionary definitions take appropriation to require a transfer of possession.
4. Huq argues that early American law was full of statutory entitlements to enter property that were not considered takings; even early British law provided access rights for activities like accessing fisheries or allowing cattle to graze on fallow land.
5. Huq contends that Cedar Point’s use of precedent was faulty, laden with mischaracterization and selective citation of earlier takings cases.
6. Huq’s analysis draws from H.L.A. Hart’s work on primary versus secondary rules and Meir Dan-Cohen’s distinction between “conduct rules” and “decision rules.” Huq argues Hart and Dan-Cohen’s work can be distilled to the same basic idea: “first order legality” concerns the stability and predictability of rules governing private persons, while “second-order legality” concerns the stability and predictability of the rules officials (i.e., judges) apply when deploying, changing, or eliminating primary rules. Id. at 36-37 (discussing H.L.A. Hart, The Concept of Law 99 (postscript ed. Penelope Bulloch & Joseph Raz, 2d ed. 1994); and Meir Dan-Cohen, Decision Rules and Conduct Rules: On Acoustic Separation in Criminal Law, 97 Harv. L. Rev. 625, 629 (1984)).
7. For similar insights about the state’s retreat as a form of privatization in other contexts, see Elizabth Anderson, Private Government (2017); Malcolm Thorburn, Reinventing the Nightwatchman State, 60 U. Toronto L.J. 425 (2010).
8. Huq analogizes to Jeremy Waldron, Community and Property–for Those Who Have Neither, 10 Theoretical Inquiries L. 161, 168 (2009) (discussing homelessness).
9. As I see it, Huq’s account may be adding an important corollary to that story: in the context of state-owner relations, a right to exclude translates as a right to compensation for takings. While the right to exclude vis-à-vis third parties may generate simple, clear predictable conduct rules, the same right to exclude vis-à-vis the government (now taking the form of a “liability rule”) may lack clarity, predictability and security. Where the right to compensation depends on ad hoc judicial discretion, it presents increased information costs just like any approach to property analysis that depends on judicial discretion would.
10. Chris Serkin in correspondence points out that perhaps the concern is that the kind of public power that burdens ownership is more likely to be arbitrary and so one plausible view is that shrinking the scope for public decision-making in respect of property will also have the effect of reducing arbitrary power. That, in the end, rests an empirical claim. It is not intuitive to me that states are more likely to use the power they have arbitrarily in respect of a person’s property as opposed to in respect of non-proprietary interests or personal rights.
11. See Merrill and Smith, supra note 1; See also Yun-chien Chang & Henry E. Smith, An Economic Analysis of Civil versus Common Law Property, 88 Notre Dame L. Rev. 1, 27 (2012): “the government’s eminent domain power causes the property rights, as against the government, to be only protected by liability rules, while property right holders’ interests are generally protected by property rules as against all others without authorized eminent domain power.”
12. The standard response to a taking per se is to imply an obligation to compensate, not to invalidate the state law or regulation that constituted the taking. See First English Evangelical Lutheran Church v. County of Los Angeles, 482 U.S. 304 (1987) at 315: “[The] basic understanding of the [Fifth] Amendment makes clear that it is designed not to limit the governmental interference with property rights per se, but rather to secure compensation in the event of otherwise proper interference amounting to a taking.”
13. See discussion in David Dyzenhaus, The Very Idea of a Judge, 60 U. Toronto L. J. 61 (2010).
14. Chris Serkin in correspondence points out that there are other takings cases that seem to produce similar levels of unpredictability when studied in isolation, only for later cases to resolve how they should be applied. See, e.g., Loretto v Teleprompter Manhattan CATV Corp, 458 U.S. 419 (1982).