Pakdel v. City and County of San Francisco

P R E L I M I N A R Y P R I N T
Volume 594 U. S. Part 2
Pages 474–481
OFFICIAL REPORTS
OF
T H E S U P R E M E C O U R T
June 28, 2021
REBECCA A. WOMELDORF
reporter of decisions
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474 OCTOBER
TERM, 2020
Syllabus
PAKDEL et ux. v. CITY AND COUNTY OF SAN
FRANCISCO
, CALIFORNIA, et al.
on petition for writ of certiorari to the united
states court of appeals for the ninth circuit
No. 20–1212. Decided June 28, 2021
Petitioners purchased an interest in a multiunit residential building in San
Francisco and signed a contract with the other owners to take all avail-
able steps to conver t their tenancy-i n-common i nterests i nto a
condominium-style arrangement. The city adopted a new program that
allowed owners to apply for conversion subject to a fling fee and several
conditions, including a requirement that owners who rented their units
had to offer their tenants a lifetime lease. Petitioners applied for con-
version and agreed to offer the renter living in their unit a lifetime
lease. The city approved the conversion. Petitioners later requested
that the city either release them from the lifetime lease requirement
or compensate them for its value. The city refused and threatened an
enforcement action should petitioners fail to execute the lifetime lease.
Petitioners sued under 42 U. S. C. § 1983, alleging, among other things,
that the lifetime-lease requirement was an unconstitutional regulatory
taking. The District Court rejected petitioners' claims because they
had not frst brought an inverse condemnation proceeding. In so hold-
ing, the District Court relied on this Court's decision in Williamson
County Regional Planning Comm'n v. Hamilton Bank of Johnson
City, 473 U. S. 172, which held that certain takings actions are not “ripe”
for federal resolution until a plaintiff “seek[s] compensation through the
procedures the State has provided for doing so.” Id., at 194. While
an appeal was pending before the Ninth Circuit, this Court repudiated
Williamson County's requirement. See Knick v. Township of Scott,
588 U. S. –––. Rather than remand in light of Knick, the Ninth Circuit
affrmed, reasoning that petitioners' claims remained unripe because
their belated request for an exemption at the end of the administrative
process—as opposed to a timely request through prescribed proce-
dures—prevented the Ninth Circuit from making a truly fnal decision.
Held: The Ninth Circuit's view of fnality is incorrect. When a plaintiff
alleges a regulatory taking in violation of the Fifth Amendment, a fed-
eral court should not consider the claim before the government has
reached a “fnal” decision. Suitum v. Tahoe Regional Planning
Agency, 520 U. S. 725, 737. The fnality requirement is modest: All a
plaintiff must show is that “there [is] no question . . . about how the
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Per Curiam
`regulations at issue apply to the particular land in question.' ” Id., at
739
(brackets omitted). Here, there is no question that the city re-
quires petitioners to execute a lifetime lease or face an enforcement
action, and thus no question that the city's position has inficted an ac-
tual, concrete injury on petitioners. Nothing more than de facto fnal-
ity is necessary. Administrative “exhaustion of state remedies” is not
a prerequisite for a takings claim when the government has reached a
conclusive position. Knick, 588 U. S., at –––.
Certiorari granted; 952 F. 3d 1157, vacated and remanded.
Per Curiam.
When a plaintiff alleges a regulatory taking in violation of
the Fifth Amendment, a federal court should not consider
the claim before the government has reached a “fnal” deci-
sion. Suitum v. Tahoe Regional Planning Agency, 520
U. S. 725, 737 (1997). After all, until the government makes
up its mind, a court will be hard pressed to determine
whether the plaintiff has suffered a constitutional violation.
See id., at 734; Horne v. Department of Agriculture, 569
U. S. 513, 525 (2013). In the decision below, however, the
Ninth Circuit required petitioners to show not only that the
San Francisco Department of Public Works had frmly re-
jected their request for a property-law exemption (which
they did show), but also that they had complied with the
agency's administrative procedures for seeking relief. Be-
cause the latter requirement is at odds with “the settled rule
. . . that exhaustion of state remedies is not a prerequisite to
an action under 42 U. S. C. § 1983,” Knick v. Township of
Scott, 588 U. S. –––, ––– (2019) (brackets and internal quota-
tion marks omitted), we vacate and remand.
I
Petitioners are a married couple who partially own a
multiunit residential building in San Francisco. When peti-
tioners purchased their interest in the property, the building
was organized as a tenancy-in-common. Under that kind of
arrangement, all owners technically have the right to possess
and use the entire property, but in practice often contract
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AKDEL v. CITY AND COUNTY OF
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among themselves to divide the premises into individual resi-
dences.
Owners also frequently seek to convert tenancy-in-
common interests into modern condominium-style arrange-
ments, which allow individual ownership of certain parts of
the building. When petitioners purchased their interest in
the property, for example, they signed a contract with the
other owners to take all available steps to pursue such a
conversion.
Until 2013, the odds of conversion were slim because San
Francisco employed a lottery system that accepted only 200
applications per year. When that approach resulted in a
predictable backlog, however, the city adopted a new pro-
gram that allowed owners to seek conversion subject to a
fling fee and several conditions. One of these was that non-
occupant owners who rented out their units had to offer their
tenants a lifetime lease.
Although petitioners had a renter living in their unit, they
and their co-owners sought conversion. As part of the proc-
ess, they agreed that they would offer a lifetime lease to
their tenant. The city then approved the conversion. But,
a few months later, petitioners requested that the city either
excuse them from executing the lifetime lease or compensate
them for the lease. The city refused both requests, inform-
ing petitioners that “failure to execute the lifetime lease
violated the [program] and could result in an enforcement
action.” Brief in Opposition 9.
Petitioners sued in federal court under § 1983. Among
other things, they alleged that the lifetime-lease require-
ment was an unconstitutional regulatory taking. But the
District Court rejected this claim without reaching the mer-
its. 2017 WL 6403074, *2–*4 (ND Cal, Nov. 20, 2017). In-
stead, it relied on this Court's since-disavowed prudential
rule that certain takings actions are not “ripe” for federal
resolution until the plaintiff “seek[s] compensation through
the procedures the State has provided for doing so.” Wil-
liamson County Regional Planning Comm'n v. Hamilton

Cite
as: 594 U. S. 474 (2021)
477
Per Curiam
Bank of Johnson City, 473 U. S. 172, 194 (1985). Because
petiti
oners had not frst brought “a state court inverse con-
demnation proceeding,” the District Court dismissed their
claims. 2017 WL 6403074, *4.
While petitioners' appeal was pending before the Ninth
Circuit, this Court repudiated Williamson County's require-
ment that a plaintiff must seek compensation in state court.
See Knick, 588 U. S., at ––– – –––. We explained that “[t]he
Fifth Amendment right to full compensation arises at the
time of the taking ” and that “[t]he availability of any particu-
lar compensation remedy, such as an inverse condemnation
claim under state law, cannot infringe or restrict the prop-
erty owner's federal constitutional claim.” Id., at ––– – –––.
Any other approach, we reasoned, would confict with “[t]he
general rule . . . that plaintiffs may bring constitutional
claims under § 1983 without frst bringing any sort of state
lawsuit.” Id., at ––– (internal quotation marks omitted).
Rather than remand petitioners' claims in light of Knick,
a divided panel of the Ninth Circuit simply affrmed. Not-
ing that Knick left untouched Williamson County's al-
ternative holding that plaintiffs may challenge only “fnal”
government decisions, Knick, 588 U. S., at –––, the panel con-
cluded that petitioners' regulatory “takings claim remain[ed]
unripe because they never obtained a fnal decision regard-
ing the application of the Lifetime Lease Requirement to
their Unit.” 952 F. 3d 1157, 1163 (2020).* Although the
city had twice denied their requests for the exemption—and
in fact the “relevant agency c[ould] no longer grant” relief—
the panel reasoned that this decision was not truly “fnal”
because petitioners had made a belated request for an ex-
*The Ninth Circuit rejected several of petitioners' alternative theories
on the merits. See, e. g., 952 F. 3d 1157, 1162, n. 4 (2020) (considering
whether “the Lifetime Lease Requirement effects an exaction, a physical
taking, [or] a private taking ”). On remand, the Ninth Circuit may give
further consideration to these claims in light of our recent decision in
Cedar Point Nursery v. Hassid, 594 U. S. 139 (2021).
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emption at the end of the administrative process instead of
ti
mely seeking one “through the prescribed procedures.”
Id., at 1166–1167 (explaining that petitioners waited “six
months after [they] had obtained fnal approval of their con-
version . . . and seven months after they had committed to
offering a lifetime lease”). In other words, a conclusive de-
cision is not really “fnal” if the plaintiff did not give the
agency the “opportunity to exercise its `fexibility or discre-
tion' ” in reaching the decision. Id., at 1167–1168.
Judge Bea dissented, explaining that the “ `fnality' ” re-
quirement looks only to whether “ `the initial decisionmaker
has arrived at a defnitive position on the issue.' ” Id., at
1170. In his view, an additional demand that plaintiffs “fol-
lo[w] the decisionmaker's administrative procedures” would
“ris[k] `establish[ing] an exhaustion requirement for § 1983
takings claims,' something the law does not allow.” Ibid.
And when the Ninth Circuit declined to rehear the case en
banc, Judge Collins dissented along the same lines. He ex-
pressed concern that “the panel's unprecedented decision
sharply depart[ed] from settled law and directly contra-
vene[d] . . . Knick” by “impos[ing] an impermissible exhaus-
tion requirement.” 977 F. 3d 928, 929, 934 (2020).
II
We, too, think that the Ninth Circuit's view of fnality is
incorrect. The fnality requirement is relatively modest.
All a plaintiff must show is that “there [is] no question . . .
about how the `regulations at issue apply to the particular
land in question.' ” Suitum, 520 U. S., at 739 (brackets
omitted).
In this case, there is no question about the city's position:
Petitioners must “execute the lifetime lease” or face an
“enforcement action.” Brief in Opposition 9. And there is
no question that the government's “defnitive position on the
issue [has] infict[ed] an actual, concrete injury” of requiring
petitioners to choose between surrendering possession of
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their property or facing the wrath of the government.
Wi
lliamson County, 473 U. S., at 193.
The rationales for the fnality requirement underscore that
nothing more than de facto fnality is necessary. This re-
quirement ensures that a plaintiff has actually “been injured
by the Government's action” and is not prematurely suing
over a hypothetical harm. Horne, 569 U. S., at 525. Along
the same lines, because a plaintiff who asserts a regulatory
taking must prove that the government “regulation has gone
`too far,' ” the court must frst “kno[w] how far the regulation
goes.” MacDonald, Sommer & Frates v. Yolo County, 477
U. S. 340, 348 (1986). Once the government is committed to
a position, however, these potential ambiguities evaporate
and the dispute is ripe for judicial resolution.
The Ninth Circuit's contrary approach—that a conclusive
decision is not “fnal” unless the plaintiff also complied with
administrative processes in obtaining that decision—is incon-
sistent with the ordinary operation of civil-rights suits.
Petitioners brought their takings claim under § 1983, which
“guarantees `a federal forum for claims of unconstitutional
treatment at the hands of state offcials.' ” Knick, 588 U. S.,
at –––. That guarantee includes “the settled rule” that “ex-
haustion of state remedies is not a prerequisite to an action
under . . . § 1983.” Ibid. (internal quotation marks omitted).
In fact, one of the reasons Knick gave for rejecting William-
son County's state-compensation requirement is that this
rule had “effectively established an exhaustion requirement
for § 1983 takings claims.” Knick, 588 U. S., at –––.
The Ninth Circuit's demand that a plaintiff seek “an ex-
emption through the prescribed [state] procedures,” 952
F. 3d, at 1167, plainly requires exhaustion. In fact, this rule
mirrors our administrative-exhaustion doctrine, which “pro-
vides that no one is entitled to judicial relief for a supposed
or threatened injury until the prescribed administrative
remedy has been exhausted. ” Wo od fo rd v. Ngo, 548
U. S. 81, 88–89 (2006) (internal quotation marks omitted).
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As we have often explained, this doctrine requires “proper
exhausti
on”—that is, “compliance with an agency's deadlines
and other critical procedural rules.” Id., at 90 (emphasis
added). Otherwise, parties who would “prefer to proceed
directly to federal court” might fail to raise their grievances
in a timely fashion and thus deprive “the agency [of] a fair
and full opportunity to adjudicate their claims.” Id., at 89–
90. Or, in the words of the Ninth Circuit below, parties
might “make an end run . . . by sitting on their hands until
every applicable deadline has expired before lodging a token
exemption request that they know the relevant agency can
no longer grant.” 952 F. 3d, at 1166.
Whatever policy virtues this doctrine might have, adminis-
trative “exhaustion of state remedies” is not a prerequisite
for a takings claim when the government has reached a con-
clusive position. Knick, 588 U. S., at –––. To be sure, we
have indicated that a plaintiff 's failure to properly pursue
administrative procedures may render a claim unripe if ave-
nues still remain for the government to clarify or change its
decision. See, e. g., Williamson County, 473 U. S., at 192–
194 (“The Commission's refusal to approve the preliminary
plat . . . leaves open the possibility that [the plaintiff] may
develop the subdivision according to its plat after obtaining
the variances”); Knick, 588 U. S., at ––– (“[T]he developer [in
Williamson County] still had an opportunity to seek a vari-
ance from the appeals board”); cf. Palazzolo v. Rhode Island,
533 U. S. 606, 624–625 (2001) (dismissing accusations that the
plaintiff was “employing a hide the ball strategy” when “sub-
mission of [a] proposal would not have clarifed the extent of
development permitted . . . , which is the inquiry required
under our ripeness decisions”). But, contrary to the Ninth
Circuit's view, administrative missteps do not defeat ripeness
once the government has adopted its fnal position. See
Williamson County, 473 U. S., at 192–193 (distinguishing its
“fnality requirement” from traditional administrative “ex-
haust[ion]”). It may very well be, as Judge Bea observed,
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that misconduct during the administrative process is rele-
vant
to “evaluating the merits of the . . . clai[m]” or the
measure of damages. 952 F. 3d, at 1170, n. 2 (dissenting
opinion); cf. Palazzolo, 533 U. S., at 625. For the limited
purpose of ripeness, however, ordinary fnality is suffcient.
Of course, Congress always has the option of imposing a
strict administrative-exhaustion requirement—just as it has
done for certain civil-rights claims fled by prisoners. See
42 U. S. C. § 1997e(a); Ngo, 548 U. S., at 84–85 (“Before 1980,
prisoners asserting constitutional claims had no obligation to
exhaust administrative remedies”). But it has not done so
for takings plaintiffs. Given that the Fifth Amendment
enjoys “full-fedged constitutional status,” the Ninth Circuit
had no basis to relegate petitioners' claim “ `to the status of
a poor relation' among the provisions of the Bill of Rights.”
Knick, 588 U. S., at –––.
***
For the foregoing reasons, we grant the petition for a writ
of certiorari, vacate the judgment of the Ninth Circuit, and
remand the case for proceedings consistent with this opinion.
It is so ordered.
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