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We have four argued cases today.

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The first one is number 15-5006, Daimere Fresh versus U.S.

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Council ready to proceed?

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Yes, Your Honor.

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Mr. Turner?

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Thank you, Your Honor.

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You're reserving three minutes.

[00:00:18] Speaker 00:
Thank you.

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I may lapse over, but whatever I have left, I'll be glad to take.

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Your Honor, Stephen Turner for the

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of Tallahassee for the tomato producer claimants here this morning.

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We ask reversal of the dismissal of our complaint for regulatory taking resulting from the FDA's action classifying the perishable tomatoes of our clients as unsafe and publicly warning over a prolonged period that the tomatoes presented a hazardous danger

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of salmonella contamination and were unsafe to consume even if washed.

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Which actions caused the tomatoes to be unmarketable, lose all value when their shelf life expired?

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The federal claims judge ruled that a taking was not plausible because the government's action had no legal effect on the tomatoes, even though the government's actions were a regulatory means intended

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to stop sale and distribution of the tomatoes pending the government's investigation of the source of suspected... Would sale of the tomatoes have been illegal?

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I beg your pardon?

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Would sale of the tomatoes have been illegal?

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If they were in fact contaminated, yes sir, they would have been.

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Based on what the government said, would sale have been illegal?

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They would have been sold in the face of a warning of contamination and yes sir, they would

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Illegal, they would have been punishable.

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It would have been punishable.

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It would have been punishable to sell those tomatoes?

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It would have been if they had been diseased.

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Yes, sir.

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But as it stood?

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As it stood?

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As it stood, would there have been any punishable action if those tomatoes had been sold?

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No, I suppose not.

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As it turned out, since they weren't diseased, then there were no diseased tomatoes.

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But the fact was nobody knew what was going on because the information was held confidential by the government.

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Mr. Turner, let me see if I understand the breadth of your argument, because my concern is with the potential sweep of an argument that warnings without official coercion or regulatory restriction imposed

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seems to be a different kettle of fish from what we've typically dealt with in the takings area.

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There are an awful lot of government warnings, whether it's the Surgeon General on cigarettes or whether it's warnings about airbags potentially unsafe.

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A warning from Homeland Security, for example, that there is a threat of a bomb on a transatlantic flight.

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I mean, does Delta Airlines in that situation have a cause of action for a taking?

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Assume for a moment that it turns out that there was no bomb.

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And indeed, the basis for the warning was thin.

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But nonetheless, it was in good faith.

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I'll furnish you the statute on terrorist attack, because there's a statute on that.

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But each case would have to be examined.

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And you'd have to look at what was intended and what was the purpose here, what the property interest was, what the effect was.

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Flights can be rescheduled, for example.

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Events can be rescheduled.

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You have to see what happened.

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Here, we had an intentional idea to suspend it.

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Right, but the speeds on that flight can't be rescheduled.

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So if the airline loses all the passengers for that flight and loses all the money from that, how is that distinguishable from the situation you're arguing?

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I don't know that that wouldn't be a taking.

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I doubt it in the circumstances.

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I think you're entitled to look at what happened.

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I don't think that

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particular instance would amount to it.

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May not be enough damage to the property.

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I don't know the situation.

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Your honor, I can't speculate.

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I think the case law deals with what we've got here.

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And in this circumstance, we've got a distinct regulatory action directed to these tomatoes, intended to suspend the market, intended to stop their sale.

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And it does have that effect.

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And it wouldn't make any difference whether it was a prohibition,

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or whether it was an order of this nature.

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Indeed, this was an order entered.

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This action was taken under the regs as I furnished the court.

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It was the means, it was probably the most available means to the FDA to take this kind of an action.

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It was the least, it was the most effective one of the regs that I furnished.

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I think it was 217.42.

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It was the means that they showed when there was no other means to accomplish their purpose.

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This was the means they wanted.

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And they did that.

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And the case law says we look at the circumstances of each individual case, and we examine the factors underpin central.

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To me, that's not really very helpful in trying to tease apart this case, let's say, from a great bulk of cases, some of the examples that we talked about earlier.

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Let's take another one, which seems to me maybe close to the tomato case.

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The surgeon general says sugary soft drinks are very bad for your health.

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Now, that's a warning.

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It says school children in particular should not be drinking sugary soft drinks.

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Is that a taking from the soft drink manufacturers?

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there's going to be a loss.

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Presumably, if anybody listens to the surgeon general, there's going to be a loss of sales.

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That's an informational, neutral publication, release of information of scientific, perhaps controversial information.

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That is not a targeted device or regulatory means.

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Why is that not as targeted as this?

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You're targeting the soft drink industry, and you're saying soft drinks sold in schools are

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add for the health of children.

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That sounds targeted to me.

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I just believe that the government has the right to release information that would not be a taking unless it was intended.

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I think what we have here- No, it's intended if they decide to- I don't think so.

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I think that would be a neutral publication of scientific information that is not considered, is furnished in the capacity of enlightening the public.

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We're not doing that here.

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How is the government's warning?

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It's an initial reaction to people getting sick and they want to stop it.

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How is that not neutral?

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It's not neutral because what's the difference between that and saying don't sell?

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They know the result is going to be in the regulation.

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What's the difference between saying you shouldn't buy sugary soft drinks and saying don't sell?

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Because that is not directed to the property and intended to stop the taking of it.

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I mean, sure it is.

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A lot of these companies, suppose you're a local company and your business is putting soda machines in public schools.

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And the surgeon general comes out and says, don't sell these to kids.

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And all the school systems, based on that, remove the soda systems.

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That local business has lost its business.

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Isn't that just slightly the same?

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Sorry, Your Honor.

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If they had the enforcement power to back that warning up, it might be.

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If they had the enforcement power to back that up, that's the only difference.

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Because the cases provide for that.

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And when you get into the FAA cases, the Flowers Mill case, and the cases that Brenneman and the others cases that rely on that, you see that the cases say, when you don't have the power to back it up, when you just have a naked advisory power, that's not a taking.

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Or that can't be a taking.

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But when you have this power that FDA had to enforce their orders, when you know that the order can be enforced,

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when you know that there's penalties associated with what can happen, when you can induce the fear.

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That's just like this court's A&D decision saying the government can coerce.

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Here what we've got is a dissuasion coerce, which is even less because businessmen are risk averse.

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They simply don't buy.

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You're dealing, by the way, with bulk buyers.

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You're not dealing with a consuming public.

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You're consuming with bulk buyers who have no information,

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And sellers, by the way, the sellers don't want to distribute either, because you have no information other than what the government has given you that tells me this is dangerous.

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And no one is going to consume it.

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I'm not going to sell it.

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I'm not going to buy it.

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And the market is frozen.

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It's a perishable product.

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Mr. Turner, how many states produce tomatoes?

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Well, in this case, it was focused on this region, which primarily is Florida, Your Honor.

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Well, it seems to me the record showed that what they said was tomatoes from certain states are safe.

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What it boiled down to was Florida tomatoes.

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There were some in Georgia and I think a few in California in that area, but it was basically Florida providers that lost these three varieties of tomatoes and they lost the crop for that year.

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Another problem is this is delayed long enough to kill the property, to cause the property to perish.

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It was not simply a warning that was corrected.

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And the evidence of how it took place, of whether it could have been prevented, of whether it was stating effect a long time, there's criticism here that the evidence would show that they did not use industry traceback sources.

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that there is a problem here that needs to be examined and the interest and the evidence explored to determine the character of the taking.

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That's what we're talking about.

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The character of the government's action, which is to be considered as part of the Penn Central analysis.

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And we have to look at all the factors.

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This is not the only case where a prohibition has not been the issue.

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There are other cases that... You're not suggesting that the government acted unlawfully here, are you?

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I beg your pardon.

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You're not suggesting the government acted unlawfully here, are you?

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No, they have authority to act, Your Honor.

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They have to have authority to act to be a taker.

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I mean, all this stuff about its delay and things like that, I don't understand how that has any relevance to a taking theory.

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It goes to the character of the action.

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It goes to what was done.

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Why does that make, isn't the character of the action directed to whether the government action actually

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took the property.

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If it could have been avoided, that might be a factor.

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For example, if there'd been necessity here, that would have been an extremely important factor.

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If the government determined that the railroad lines running north out of Florida were in some fashion unsafe, and as a consequence, delayed the shipment of the tomatoes for a month, would that be a taking?

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If they had determined the rail line was unsafe?

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That's right.

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And you were unable to ship.

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And the line was not safe?

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And the line was safe or wasn't safe?

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What's the difference?

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It's a lot of difference, Your Honor.

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If you have a necessity, the government has a justification for its actions.

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But how is that?

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I don't understand at all how that relates to a taking theory.

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I mean, the government may have a necessity to take somebody's property to put a rail line through it.

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They're entitled to do that.

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It's clearly proper.

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But it's still a taking.

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And they still have to pay just compensation.

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Whether the government was correct or not in taking an action is irrelevant to the taking.

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The question is whether the government took some property, of course.

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Judge, I don't want to dispute the court.

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But there's a doctrine called the doctrine of necessity.

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And that is a big factor at play in these declarations of emergency.

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And if you have a necessity,

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And this court wrote about this, by the way, in 2013.

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Well, let me ask a hypothetical on that then.

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So suppose you have what you call this doctrine of necessity.

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And instead of issuing a warning, the FDA orders your producers to destroy the tomatoes.

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Since it was a necessity, because let's assume they were contaminated, do you not have a takings theory then because it was a necessity?

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No.

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If it is a true necessity, an actual necessity, to prevent a public danger, you do not have a takings.

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under the doctrine called the Necessity Doctrine, which this court wrote about the Necessity Doctrine.

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And the government's attempt to overuse that doctrine in a 2013 case, and it slips my mind right now, but I'll write it to you on the bottle.

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Well in your... Let me just say one question, follow up to Judge Hughes' question.

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Are you saying that if it had turned out that the tomatoes were

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were in fact infected, then there would be no taking.

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Are you also saying that if the government had acted entirely reasonable, so that there was very high likelihood that the Florida tomatoes were the source of a salmonella infection, but it turns out surprisingly that they weren't, would that be a taking?

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That would have to be examined as part of the factors that I think that would be.

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All of that would be an issue that we would have to look at and balance under Penn Central, Your Honor.

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That's a balance.

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If the tomatoes were diseased, you would have a nuisance defense.

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Right.

[00:14:03] Speaker 02:
But if they're not, in fact, diseased, but if the government was acting responsibly with no negligence and its decision to issue a warning was entirely justified, are you saying that would be qualified as a taker?

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It might be, except that Trenco, the Trenco case, talks about the doctrine of necessity of when you can use it and when you can't.

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And if there was an actual necessity, and you were taking preventative actions to prevent that, the danger, for example, if you were.

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I guess my question comes as to what's an actual necessity.

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Is it an actual necessity if it turns out after the fact that there wasn't a problem, even though it was reasonable to assume that there was?

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Under Trenco, this court's decision would not be.

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It would not be.

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You must have an actual necessity in fact.

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It wouldn't be a necessity, so it wouldn't qualify as potentially a necessity.

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That's right.

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And why should it?

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Why should a few suffer when the government takes action in an attempt to justify, in an attempt to protect the public?

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But it's wrong.

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Why should a few people suffer here?

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And why shouldn't the public pay for the fact that the government has exercised its regulatory authority to cause the problem here of our loss?

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That's the issue.

[00:15:19] Speaker 01:
Your time's up.

[00:15:20] Speaker 01:
Thank you, Your Honor.

[00:15:21] Speaker 01:
Appreciate it.

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I'll give you a minute.

[00:15:34] Speaker 01:
Mr. Loftgraven?

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Give Mr. Lockwood an extra minute to... May it please the court?

[00:15:50] Speaker 04:
The tomato producers cannot state a claim for a compensable regulatory taking because they, one, do not identify a regulation and do not identify any property interest that was taken.

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As the trial court found... Supposing that warning was in effect for a year?

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Would that make any difference?

[00:16:11] Speaker 04:
Well, it's a warning.

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So I need to, by virtue of a warning, it has no impact on the plaintiff's property rights.

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There's no impact on the plaintiff's rights to use their tomatoes, to sell them, to buy them, to dispose them, to do whatever they want with them.

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There is nothing that an FDA news release did that took by regulation.

[00:16:33] Speaker 01:
Any warning, no matter how

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severe and or inaccurate, can't create liability?

[00:16:43] Speaker 04:
If that warning, well, a warning doesn't take property rights.

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And I think that's what it boils down to here.

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There must be a restriction on the property.

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There must be something that the tomato producers could do before the FDA issued a press release or a warning, and something that they couldn't do afterwards.

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And there is nothing of that sort here.

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They were still entitled to sell their tomatoes,

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And purchasers were entitled to buy them.

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The authorities that plaintiff cite do not support their claim.

[00:17:15] Speaker 04:
They don't cite a single case in which the court found that a warning, that information disseminated to the public was sufficient to state a claim for a regulatory taking.

[00:17:26] Speaker 02:
Now, your position in your brief and now reiterated here seems to be that there has to be a regulation or statute that

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prohibits the action that's in question by the person that alleges to have been the victim of the taking or effectively appropriates the property of that person.

[00:17:46] Speaker 02:
But what about cases?

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I'm wondering whether that is too narrow a test.

[00:17:50] Speaker 02:
What about cases such as the auto dealer's case or the Yuba case in which there's action that may be coercive in nature but is not directed or

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specifically authorized by regulation or statute, a threat to bring litigation, pressure on contract parties that the government employs that is deemed to be coercive but isn't regulatory or statutory in nature.

[00:18:21] Speaker 02:
Wouldn't that qualify as the basis for taking?

[00:18:25] Speaker 04:
Well, under certain circumstances, when there is some sort of restriction, like I think you mentioned you have a goldfield, in that case,

[00:18:32] Speaker 04:
The Corps of Engineers sent the plaintiffs a letter saying, you are prohibited from mining on this property.

[00:18:37] Speaker 02:
But that letter was not the product of any regulatory authority to prohibit, I take it.

[00:18:45] Speaker 02:
I mean, they were simply saying, we're going to threaten you with a lawsuit, right?

[00:18:49] Speaker 02:
There are certain.

[00:18:51] Speaker 02:
But that would be the predicate for a taking, would it not?

[00:18:54] Speaker 04:
Well, the court found that it was in that case.

[00:18:57] Speaker 04:
And in A&D auto sales, the court found that a requirement

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And something that was alleged to be mandatory.

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It was mandatory that the dealer terminations take place as a condition of the government financing.

[00:19:09] Speaker 02:
So you're not really wedded to the regulation or statute line that you drew in the brief, right?

[00:19:15] Speaker 04:
We said that that was a principle.

[00:19:18] Speaker 04:
That would seem to be a common theme in every single case.

[00:19:21] Speaker 04:
And when there wasn't necessarily a formal rulemaking or a regulation, there was a statement of prohibition.

[00:19:27] Speaker 04:
I mean, if the government sends you like coercive action on the part of the government.

[00:19:30] Speaker 02:
So it, so the regulation and statute apply in every case except those in which it doesn't, they don't apply.

[00:19:36] Speaker 02:
Well, there are certainly exceptions.

[00:19:38] Speaker 03:
You know, there's certainly in this case, the FDA, instead of issuing a warning and said, we, we have some issues or some problems.

[00:19:47] Speaker 03:
We think the problem is these tomatoes, you know, these tomatoes are not to be sold.

[00:19:52] Speaker 03:
They didn't actually seize them.

[00:19:53] Speaker 03:
They didn't order the producers to destroy them.

[00:19:56] Speaker 03:
but they ordered them not to sell.

[00:19:57] Speaker 03:
Would that be a taking?

[00:20:00] Speaker 04:
I don't know if it would be a taking.

[00:20:01] Speaker 04:
That might be a situation in which a factual record could be developed.

[00:20:05] Speaker 04:
In this case, no factual record could be developed that would support a claim that these two press releases in which the government says FDA recommends, FDA advises, the complaint alleges, FDA publicized, FDA warrants, but there's nothing that says FDA restricted us from selling tomatoes.

[00:20:22] Speaker 04:
And Mr. Turner acknowledged that.

[00:20:24] Speaker 04:
There is no restriction.

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on his client's ability to sell their products.

[00:20:31] Speaker 04:
If the court has no further questions, we defer to our briefs.

[00:20:42] Speaker 04:
And we respectfully request that the trial court's judgment be affirmed.

[00:20:53] Speaker 01:
Mr. Turner, you've got a minute.

[00:20:58] Speaker 00:
Judge, I just would like to say that these were sophisticated buyer and seller.

[00:21:03] Speaker 00:
This is not the consumer.

[00:21:05] Speaker 00:
You poisoned the market.

[00:21:07] Speaker 00:
Do you poison the market?

[00:21:08] Speaker 00:
You knew nobody would sell.

[00:21:10] Speaker 00:
That had a coercive influence on those people and both the seller who stopped shipments and the buyers who canceled orders.

[00:21:18] Speaker 00:
They knew this was the intent and nobody would sell.

[00:21:21] Speaker 00:
And unfortunately, we just couldn't hold these tomatoes forever because they have a shelf life.

[00:21:25] Speaker 00:
If the court has no further questions.

[00:21:26] Speaker 00:
I actually do have a question.

[00:21:27] Speaker 02:
What do you think is your strongest case?

[00:21:31] Speaker 02:
I wasn't able to find any case that actually dealt with a pure warning.

[00:21:37] Speaker 02:
What do you think is the strongest authority you have for either covering a warning situation or giving you the basis for an argument that warnings ought to be extended to warnings?

[00:21:51] Speaker 00:
Well, I don't think the warning is peculiar.

[00:21:54] Speaker 00:
I think the case law says the novelty of all these things has to be explored.

[00:21:58] Speaker 00:
Right.

[00:21:58] Speaker 02:
But let me ask you first, very specifically, there isn't a warning case out there, is there?

[00:22:03] Speaker 00:
Well, there is, actually.

[00:22:04] Speaker 00:
There are some cases that are so close.

[00:22:06] Speaker 00:
But Morton Five Call case that I quote is very close in the brief where the government takes the position that they announce a position.

[00:22:16] Speaker 00:
And they say, this would be wrong, in effect, which is in the nature of a type of warning.

[00:22:22] Speaker 00:
And the court says, no businessman is going to risk this event, as Yuba does, too, by the way.

[00:22:29] Speaker 00:
No businessman is going to risk this situation and require anything formal.

[00:22:33] Speaker 02:
So Yuba and Morton South, I call you think would be the strongest case for you.

[00:22:36] Speaker 00:
I think there's two.

[00:22:36] Speaker 00:
I think the AAA Pharmacy case, the Delaware case, where the government tells tenants to get out.

[00:22:43] Speaker 00:
I mean, they don't have any authority.

[00:22:44] Speaker 00:
They just tell them and they leave.

[00:22:45] Speaker 00:
So the government can take action which is intended to cause a loss of property or which they can foreseeably will cause a loss of property.

[00:22:56] Speaker 00:
In this circumstance, we want the opportunity to prove that they knew it, that it had that intent, it logically flowed, and it caused a problem that we should not have to bear.

[00:23:08] Speaker 00:
That's the key.

[00:23:09] Speaker 00:
Thank you so much, Your Honor.

[00:23:13] Speaker 00:
Thank you councillor.