CINCINNATI (CN) — Michigan bowling alleys and roller rinks argued before the Sixth Circuit on Wednesday that the state is not entitled to sovereign immunity on claims stemming from several executive orders that forced the businesses to close during the Covid-19 pandemic.
Skatemore Inc., which operates as the Roll Haven Skate Center, among others, sued Governor Gretchen Whitmer and the Michigan Department of Health and Human Services last year after they were forced to shut down for over six months during the pandemic.
The bowling alleys' suit alleged the state violated their Fifth Amendment rights when it seized their property without just compensation after the implementation of executive order 2020-9 in March 2020.
The Michigan Supreme Court eventually declared the order unconstitutional in October 2020, but the businesses were forced to shutter operations in the interim, with no benefits provided by the state.
U.S. District Judge Hala Jarbou, an appointee of Donald Trump, granted the state's motion to dismiss in September 2021, finding all of the defendants were entitled to sovereign immunity.
Jarbou rejected the bowling alleys' claim of an exception to immunity in suits that bring Fifth Amendment takings claims -- based on the U.S. Supreme Court case Knick v. Township of Scott -- and cited the Sixth Circuit's 2020 decision in Ladd v. Marchbanks.
"'The fatal flaw in plaintiffs' argument is that the court's opinion in Knick says nothing about sovereign immunity,'" she said. "Thus, 'Knick cannot be the basis for abandoning' the Sixth Circuit's precedent holding that 'the states' sovereign immunity protects them from takings claims for damages in federal court.'"
In their brief to the Cincinnati-based appeals court, the businesses argued "the 11th Amendment and a state's police power are not absolute," and that the state supreme court's decision to strike down the executive order as unconstitutional requires Michigan to provide compensation.
"Just because it took eight months for the judicial process to run its course and the Michigan Supreme Court to hold that defendants' actions were not valid does not absolve defendants of all liability," the brief states. "The bottom line is that Michigan's highest court held that defendants' actions were not valid, thus, they are not deserving of any protection."
In its brief, the state called the businesses' arguments "beyond novel," and argued even if the immunity issue was put aside, the Fifth Amendment cannot be read to include claims related to "broad public-health measures enacted pursuant to a state's police power."
The state emphasized it is entitled to 11th Amendment immunity because the bowling alleys seek damages for past injuries.
"They cannot do that in this forum," the brief says, "because the only pertinent exemption to Eleventh Amendment immunity for official capacity suits applies to claims seeking prospective equitable relief based on ongoing violations of federal law." (Emphasis in original.)
Attorney Stephen Kallman argued Wednesday on behalf of the bowling alleys, telling the Sixth Circuit panel that the total shutdown of the businesses qualifies as an unlawful taking.
"There is no takeout roller skating," Kallman said. "We were completely shut down, which qualifies as a categorical taking."
U.S. Circuit Judge Richard Griffin, a George W. Bush appointee, asked the attorney if he had any case law to support his argument that executive orders passed in response to the Covid-19 pandemic could be used as the basis of a takings claim.
Kallman admitted he did not, but pointed out that no other cases involved orders that were eventually struck down as unconstitutional.
Michigan Assistant Attorney General Daniel Ping disputed his counterpart's argument about Whitmer's orders.
"The lack of statutory authorization is not relevant to this inquiry," he told the three-judge panel, while reminding them the Michigan Department of Health and Human Services, or MDHHS, passed parallel but independent orders that were never overturned by a court.
"When you're facing down an emergency," Ping said, "you don't want the state to be sitting back and waiting. You want to act swiftly."
The state's attorney reiterated the Sixth Circuit's decision in Ladd gave the panel all the precedent necessary to affirm the lower court's dismissal on the basis of sovereign immunity.
"Ladd v. Marchbanks is pretty much on all fours [to this case] and binds this court," Ping said, and also pointed out that a reversal would require a "sea change" in immunity law.
In his rebuttal, Kallman admitted he and his clients focused on Whitmer's orders and not those passed by MDHHS because the order from the state supreme court forms the basis of their takings claim.
"The big distinguishing factor in this case is a Michigan Supreme Court order that struck down the executive orders," he said. "These regulations went too far, and Skatemore was completely shut down and had no other option."
U.S. Circuit Judge Eric Clay, a Bill Clinton appointee, asked about the temporary nature of the taking, given that the businesses were eventually able to reopen.
Ping responded that such takings are still compensable, and underscored the businesses did not merely lose a "vacant lot," but lost their facilities, equipment, and only source of income.
U.S. Circuit Judge Helene White, another George W. Bush appointee, rounded out the panel.
No timetable has been set for the court's decision.
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