No.

_________

In the
Supreme Court of the United States
__________________________________________

335-7 LLC, ET AL.,

Petitioners,
v.
CITY OF NEW YORK, ET AL.,
Respondents.
__________________________________________

On Petition for a Writ of Certiorari to the

United States Court of Appeals
for the Second Circuit
__________________________________________

PETITION FOR A WRIT OF CERTIORARI

__________________________________________

TODD A. ROSE CHARLES J. COOPER

PAUL COPPE Counsel of Record
ROSE & ROSE DAVID H. THOMPSON
291 BROADWAY PETER A. PATTERSON
13TH FLOOR BRIAN W. BARNES
NEW YORK, NY 10007 JOHN W. TIENKEN
(212) 349-3366 COOPER & KIRK, PLLC
1523 New Hampshire
Avenue, N.W.
Washington, D.C. 20036
(202) 220-9600
[email protected]

Counsel for Petitioners

May 30, 2023
 i

QUESTIONS PRESENTED
New York has implemented the most sweeping
and onerous rent control provisions the United States
has ever seen in its Rent Stabilization Laws and
accompanying regulations (“the RSL”). As recently
amended, the RSL makes New York’s once
“temporary” rent stabilization regime permanent for
over one million apartments. Petitioners are owners
of apartment buildings regulated by the RSL. The
RSL expropriates a definitional feature of Petitioners’
real property—the right to exclude—by granting their
tenants a perpetual right to renew their leases. The
RSL closes off all viable exit options for Petitioners to
change the use of their property and thus avoid RSL
regulation. These provisions, when combined with the
RSL’s ceiling on the rents that landlords can collect,
have ensured that Petitioners cannot earn a just and
reasonable rate of return. The RSL has dramatically
reduced the economic value of Petitioners’ property
beyond any reasonable expectation. Nevertheless, the
Second Circuit held the RSL did not effect any taking
of Petitioners’ property without just compensation.
The questions presented are:
(1) Does the RSL effect a per se physical taking by
expropriating Petitioners’ right to exclude?
(2) Does the RSL effect a confiscatory taking by
depriving Petitioners of a just and reasonable
return?
(3) Does the RSL effect a regulatory taking as an
unconstitutional use restriction of Petitioners’
property?
 ii

PARTIES TO THE PROCEEDING

Petitioners are 335-7 LLC, FGP 309 LLC, 226
LLC, 431 Holding LLC, and 699 Venture Corp.
Petitioners were the plaintiffs in the United States
District Court for the Southern District of New York
and the plaintiffs-appellants in the United States
Court of Appeals for the Second Circuit.
The City of New York, the New York City Rent
Guidelines Board, RuthAnne Visnauskas, in her
official capacity as Commissioner of the New York
State Division of Homes and Community Renewal are
Respondents. They were defendants in the United
States District Court for the Southern District of New
York and the defendants-appellees in the United
States Court of Appeals for the Second Circuit.
Community Voices Heard (CVH) and N.Y.
Tenants & Neighbors (T&N) are Respondents. They
were intervenors-defendants in the United States
District Court for the Southern District of New York
and intervenors-defendants-appellees in the United
States Court of Appeals for the Second Circuit.
 iii

RULE 29.6 DISCLOSURE STATEMENT

No Petitioner has a parent corporation, and no
publicly held corporation owns 10% or more of any of
Petitioners’ stock.
 iv

STATEMENT OF RELATED PROCEEDINGS

This case arises from the following proceedings:
• 335-7 LLC, et al. v. City of New York, et al., No.
21-823 (2d. Cir.) (opinion issued and judgment
entered March 1, 2023).
• 335-7 LLC, et al. v. City of New York, et al., 1:20-
cv-01053 (S.D.N.Y.) (opinion issued and judgment
entered March 8, 2021).
In its decision below, the Second Circuit relied, in
part, on its near-contemporaneous decisions
regarding other challenges to the RSL in Community
Housing Improvement Program, et al., v. City of New
York, et al., No. 20-3366 (2d Cir.) and 74 Pinehurst
LLC v. New York, et al., Nos. 21-467(L), 21-558(Con)
(2d Cir.).
 v

TABLE OF CONTENTS
Page
QUESTIONS PRESENTED ........................................ i
PARTIES TO THE PROCEEDING ........................... ii
RULE 29.6 DISCLOSURE STATEMENT ............... iii
STATEMENT OF RELATED PROCEEDINGS........ iv
TABLE OF AUTHORITIES......................................vii
PETITION FOR A WRIT OF CERTIORARI ............. 1
OPINIONS BELOW .................................................... 1
JURISDICTION .......................................................... 1
CONSTITUTIONAL PROVISION INVOLVED ........ 1
INTRODUCTION ........................................................ 2
STATEMENT .............................................................. 7
REASONS FOR GRANTING THE PETITION ....... 16
I. The Second Circuit’s Decision Leaves
Landlords with No Meaningful Protection
under the Takings Clause. ............................. 16
A. The Second Circuit’s “Open Door”
Theory of Per Se Physical Takings
Conflicts with the Eighth Circuit and
Cannot Be Squared with this Court’s
Precedents. ........................................... 17
1. The decision below splits with
the Eighth Circuit. .................... 17
2. The RSL effects a per se
physical taking. ......................... 20
 vi

B. The Second Circuit’s Confiscatory

Takings Analysis Is Contrary to this
Court’s Precedents and Creates a
Division of Authority............................ 22
1. Both this Court and State
Supreme Courts Recognize
that the Confiscatory Takings
Doctrine Applies to Rent
Regulation. ................................ 23
2. Petitioners Have Pleaded a
Plausible Claim that the RSL
Is Confiscatory........................... 27
C. The Second Circuit’s Decision
Demonstrates that Penn Central
Needs Clarification. ............................. 30
II. This Court Needs To Address Increasingly
Common and Aggressive Regulation of
Landlord-Tenant Relationships. .................... 34
CONCLUSION .......................................................... 37
APPENDIX
Appendix A Summary Order in the United States
Court of Appeals for the Second Circuit
(March 1, 2023) ............................. App. 1
Appendix B Opinion and Order in the United States
District Court for the Southern District
of New York (March 8, 2021) ...... App. 14
Appendix C Judgment in the United States District
Court for the Southern District of
New York (March 8, 2021) .......... App. 54
 vii

TABLE OF AUTHORITIES

CASES Page
74 Pinehurst LLC v. New York,
59 F.4th 557 (2d Cir. 2023) .................................. 15
Arizona v. Mayorkas,
143 S. Ct. 1312 (2023) .......................................... 35
Armstrong v. United States,
364 U.S. 40 (1960) ................................................ 35
Birkenfeld v. City of Berkeley,
550 P.2d 1001 (Cal. 1976) .......................... 5, 26, 28
Block v. Hirsch,
256 U.S. 135 (1921) .......................... 5, 6, 24, 29, 35
Bowles v. Willingham,
321 U.S. 503 (1944) .............................................. 27
Bridge Aina Le’a, LLC v. Hawaii Land Use
Comm’n, 141 S. Ct. 731 (2021) .................. 6, 31, 34
Cedar Point Nursery v. Hassid,
141 S. Ct. 2063 (2021) .. 4, 15, 17, 19, 20, 21, 22, 36
Cmty. Housing Improvement Program v.
City of New York,
59 F.4th 540 (2d Cir. 2023) .................................. 10
Dist. Intown Props. Ltd. P’ship v. District of
Columbia,
198 F.3d 874 (D.C. Cir. 1999) .............................. 34
Duquesne Light Co. v. Barasch,
488 U.S. 299 (1989) .................. 4, 16, 22, 23, 27, 29
Edgar A. Levy Leasing Co. v. Siegel,
258 U.S. 242 (1922) ................................................ 6
 viii

Fed. Power Comm’n v. Hope Nat. Gas Co.,

320 U.S. 591 (1944) ........................................ 23, 24
Fresh Pond Shopping Ctr. v. Callahan,
464 U.S. 875 (1983) .............................................. 21
Garelick v. Sullivan, 987 F.2d 913 (1993) .......... 27, 28
Heights Apartments, LLC v. Walz,
30 F.4th 720 (8th Cir. 2022) ............................ 4, 19
Hutton Park Gardens v. Town
Council of Town of West Orange,
350 A.2d 1 (N.J. 1975).................... 5, 25, 26, 27, 28
In re Santiago-Monteverde,
22 N.E.3d 1012 (N.Y. 2014) ....................... 8, 32, 33
Jeffery v. McCullough,
652 P.2d 9 (Wash. 1982) .................................. 5, 26
Kennedy v. Seattle,
617 P.2d 713 (Wash. 1980) ............................ 26, 28
Loretto v. Teleprompter Manhattan CATV Corp.,
458 U.S. 419 (1982) .............................................. 20
Lucas v. South Carolina Coastal Council,
505 U.S. 1003 (1992) ............................................ 32
Manocherian v. Lenox Hill Hosp.,
643 N.E.2d 479 (N.Y. 1994) ................................. 21
Marcus Brown Holding Co. v. Feldman,
256 U.S. 170 (1921) ................................................ 6
Nekrilov v. City of Jersey City,
45 F.4th 662 (3d Cir. 2022) ........................ 6, 31, 32
Pakdel v. City & Cnty. of San Francisco,
141 S. Ct. 2226 (2021) .......................................... 30
 ix

Penn Central Transportation Co. v. City of

New York,
438 U.S. 104 (1978) .................................... 5, 31, 32
Pennell v. San Jose,
485 U.S. 1 (1988) ...................................... 32, 35, 36
Pennsylvania Coal Co. v. Mahon,
260 U.S. 393 (1922) ........................ 6, 25, 30, 31, 35
Pruneyard Shopping Center v. Robins,
447 U.S. 74 (1980) ................................................ 22
Roberts v. Tishman Speyer Properties, L.P.,
918 N.E.2d 900 (2009).......................................... 10
Tyler v. Hennepin Cnty., No. 22-166, 2023 WL
3632754 (U.S. May 25, 2023)............................... 28
Verizon Commc’ns, Inc. v. FCC,
535 U.S. 467 (2002) .............................................. 29
Yee v. City of Escondido,
503 U.S. 519 (1992) .............................. 4, 18, 19, 22
STATUTORY PROVISIONS
U.S. CONST. amend IV................................................. 1
A08281, Tenant Protection Act,
https://bit.ly/3WBv8HX.................................. 10, 13
N.Y. COMP. CODES R. & REGS, TIT. 9,
§ 2523.5(a) .............................................................. 8
§ 2104.5(a)(2) ........................................................ 11
§ 2520.6(o)(2) .......................................................... 9
§ 2523.5(b) ........................................................ 9, 11
§ 2524.5(a)(2) ........................................................ 11
§ 2524.5(b) ............................................................ 11
 x

N.Y. GEN. BUS. LAW

§ 352-eeee (2018) .................................................. 10
§ 352-eeee (2023) ............................................ 10, 11
N.Y. UNCONSOL. LAW TIT. 23,
§ 26-510(b) ............................................................ 12
§ 26-510(h) ............................................................ 12
§ 8623(a) ................................................................. 7
§ 8624 ..................................................................... 7
N.Y.C. ADMIN. CODE
§ 26-511(C)(9) .......................................................... 9
§ 2104.5(A)(2) .......................................................... 9
L.A. MUN. CODE
§ 151.25 ................................................................ 36
§ 151.26(A)............................................................ 36
S.F. SUBDIVISION CODE § 1396.4 ............................... 36

OTHER AUTHORITIES
2022 RGB Housing Supply Report, N.Y.C. RENT
GUIDELINES BD. (May 26, 2022),
https://bit.ly/43sOBNd ......................................... 11
2023 Income and Affordability Study, N.Y.C.
RENT GUIDELINES BD. (Apr. 13, 2023)
https://bit.ly/3WRojm1 ......................................... 12
Adam R. Pomeroy, Penn Central After 35 Years:
A Three Part Balancing Test or a One Strike
Rule?, 22 FED. CIR. BAR J. 677 (2013),
https://bit.ly/42aP1a9 ........................................... 34
A08281 Memo, N.Y. ASSEMBLY (last visited May 26,
2023), https://bit.ly/3MEgvPt ................................ 8
 xi

James E. Krier & Stewart E. Sterk, An Empirical

Study of Implicit Takings, 58 WM. & MARY L.
REV. 35 (2016) .................................................. 5, 34
Katie Galioto, What you need to know about St.
Paul’s rent control law, STAR TRIBUNE
(Jan. 21, 2023), https://bit.ly/42OuHfu ............... 36
Lauren Dake, As inflation hits, Oregon lawmakers
consider more state rent control limits, OREGON
PUBLIC BROADCASTING (Mar. 27, 2023),
https://bit.ly/454Hexk .......................................... 36
Morgan Baskin, Prince George’s County Passes
Temporary Rent Stabilization, Capping New
Increases at 3%, DCIST (Feb. 28, 2023),
https://bit.ly/3BG76Sz .......................................... 36
NYC Condominium and Cooperative Conversion:
Historical Trends and Impacts of the Law
Changes, THE STEVEN L. NEWMAN REAL ESTATE
INST. AT BARUCH COLLEGE, CUNY
(May 5, 2021), https://bit.ly/3kvMAMA............... 11
Richard A. Epstein, From Penn Central to Lingle:
The Long Backwards Road, 40 JOHN MARSHALL L.
REV. 593 (2007) .............................................. 21, 33
Richard A. Epstein, Rent Control and the Theory of
Efficient Regulation, 54 BROOKLYN L. REV.
741 (1988) ................................................... 5, 24, 25
RESTATEMENT (SECOND) OF PROPERTY, LAND.
& TEN. § 12.2, cmt. C (1977) ................................ 21
Sam Rabiyah, NYC Had 88,830 Vacant Rent-
Stabilized Apartments Last Year, City Housing
Agency Estimates, THE CITY (Oct. 20, 2022),
https://bit.ly/3WEdPpC ........................................ 35
 xii

Thomas W. Merrill, The Character of Governmental

Action, 36 VT. L. REV. 649 (2012) .................. 33, 34
Thomas W. Merrill, The Compensation Constraint
and the Takings Clause, 96 NOTRE DAME L.
REV. 1421 (2021) ............................ 5, 23, 24, 27, 29
Thomas W. Merrill, Constitutional Limits on
Physician Price Controls, 21 HASTINGS CONST. L.
Q. 635 (1994), https://bit.ly/3C1GawR .......... 28, 29
Walter Pond, The Law Governing the Fixing of
Public Utility Rates: A Response to Recent
Judicial and Academic Misconceptions,
41 ADMIN. L. REV. 1 (1989) ............................ 27, 28
Will Parker, Eviction Bans Remain in California
More Than 3 Years Into the Pandemic,
WALL ST. J. (May 8, 2023),
https://on.wsj.com/3ot0mVk................................. 36
 1

PETITION FOR A WRIT OF CERTIORARI

Petitioners respectfully seek a writ of certiorari to
review the judgment of the United States Court of
Appeals for the Second Circuit.
OPINIONS BELOW
The opinion of the Court of Appeals is reported at
2023 WL 2291511 and is reproduced at Pet.App.1. The
opinion of the United States District Court for the
Southern District of New York is reported at 524
F.Supp.3d 316 and is reproduced at Pet.App.14.
JURISDICTION
The Court of Appeals issued its judgment on
March 1, 2023. Pet.App.1. This Court has jurisdiction
under 28 U.S.C. § 1254(1).
CONSTITUTIONAL PROVISION INVOLVED
The Fifth Amendment to the U.S. Constitution
provides, in relevant part, “nor shall private property
be taken for public use, without just compensation.”
U.S. CONST. amend. V.
 2

INTRODUCTION
Petitioners are the owners of small and midsize
apartment buildings in New York City. But their
property is no longer their own. New York has
expropriated it through amendments to the State’s
Rent Stabilization Laws and accompanying
regulations (the “RSL”). The provisions of the RSL
amount to the most onerous rent control provisions
the United States has ever seen. And the RSL effects
an unconstitutional taking without just
compensation.
Like many jurisdictions, New York regulates
aspects of the landlord-tenant relationship. Unlike
most, however, the regulatory apparatus of the RSL
goes far beyond mere regulation. If real property
rights are understood to cover a particular space for a
particular time period for a particular use, the RSL
has expropriated Petitioners’ rights in all dimensions.
Because of the RSL, third parties are occupying
Petitioners’ property for a time the RSL sets for a use
the RSL requires—and there is no feasible exit. By the
RSL’s mandates, Petitioners have been deprived of
their right to exclude and are forced to rent their units
at confiscatory rates.
Several features of the RSL make plain the
uncompensated and effectively permanent requisition
of Petitioners’ property. In the usual course,
residential leases are for a defined length of time, such
as one or two years. At the end of the lease, both
renewal and rate are matters of mutual consent
between landlord and tenant. But the RSL generally
forbids Petitioners from refusing to renew leases;
 3

instead, the RSL grants tenants a perpetual option to

renew their leases—transforming term leases into
government-mandated life estates. Not content with a
single generation of beneficiaries, the RSL even
grants tenants the option for “family members” who
live with them to be their successors to the use of
Petitioners’ property. All the while, the RSL caps the
rent that Petitioners may collect in a manner that, by
design, does not keep up with their costs, thereby
putting Petitioners on an inexorable path to
insolvency.
Recognizing that many landlords would not
choose to remain subject to the RSL’s strictures, the
RSL blocks Petitioners from changing the use of their
property. For instance, should Petitioners seek to
convert their buildings to condominiums, the RSL
mandates that the existing tenants must approve
such conversion by buying the majority of the units.
In essence, not only must Petitioners rent to their
tenants, the RSL also mandates that they may sell
their units only to their tenants. And Petitioners are
generally forbidden, even when individual units
become vacant, to use the units for any use other than
RSL tenancies.
In a decision that cannot be squared with the
Constitution, this Court’s precedents, or other lower
courts, the Second Circuit held that the RSL’s
appropriation of Petitioners’ property was not an
unconstitutional taking. The decision merits this
Court’s review.
The Second Circuit based its rejection of
Petitioners’ physical taking claim on a gross
 4

(over)reading of a few lines of this Court’s decisions in

Cedar Point Nursery v. Hassid, 141 S. Ct. 2063 (2021),
and Yee v. City of Escondido, 503 U.S. 519 (1992). On
the Second Circuit’s reading, the Takings Clause has
what amounts to an “open door” exception: because
Petitioners or their predecessors in interest initially
opened their units for rent, there can be no per se
physical taking by the government ever after.
Pet.App.5. Not only does that stretch this Court’s
takings precedents beyond recognition, it diverges
from the Eighth Circuit’s recent analysis in Heights
Apartments, LLC v. Walz, 30 F.4th 720 (8th Cir.
2022). There, the Eighth Circuit correctly recognized
that a law “turn[ing] every lease … into an indefinite
lease, terminable only at the option of the tenant”
effects a per se physical taking. 30 F.4th at 733. The
Second Circuit’s open-door theory is irreconcilable
with the Eighth Circuit’s decision.
The Second Circuit also rejected Petitioners’
takings challenge to the confiscatory limits on the
rents they are allowed to charge. A “confiscatory
taking” is shorthand for the analysis that applies
when the government mandates a regulated entity to
provide a service to the public and charge a certain
price for that service. In such price control situations,
the Takings Clause requires the government to set
rates that permit, at a minimum, “[a] just and
reasonable return” for the private entity. Duquesne
Light Co. v. Barasch, 488 U.S. 299, 305 (1989). Instead
of analyzing the RSL and whether it provided the
constitutional minimum of just and reasonable rents,
the Second Circuit simply dismissed Petitioners’
confiscatory takings claim because such a claim
 5

would, in the appellate court’s estimation, require

“expand[ing]” the confiscatory takings doctrine.
Pet.App.12.
Yet this Court’s very first rent control decision,
Block v. Hirsch, 256 U.S. 135 (1921), applied such a
confiscatory takings analysis, id. at 157; see also
Richard A. Epstein, Rent Control and the Theory of
Efficient Regulation, 54 BROOKLYN L. REV. 741, 751
(1988). State supreme courts have also applied the
confiscatory takings doctrine to rent control laws. See,
e.g., Hutton Park Gardens v. Town Council of Town of
West Orange, 350 A.2d 1 (N.J. 1975); Jeffery v.
McCullough, 652 P.2d 9 (Wash. 1982); Birkenfeld v.
City of Berkeley, 550 P.2d 1001 (Cal. 1976). Far from
expanding the Takings Clause, applying a
confiscatory takings framework to the RSL would
vindicate it. See Thomas W. Merrill, The
Compensation Constraint and the Takings Clause, 96
NOTRE DAME L. REV. 1421, 1437 (2021) (noting
confiscatory takings’ applicability to “draconian rent
control regimes”). The Second Circuit’s perfunctory
rejection of the confiscatory takings framework merits
this Court’s review.
The Second Circuit additionally rejected
Petitioners’ claim that the RSL was an
unconstitutional use restriction under Penn Central
Transportation Co. v. City of New York, 438 U.S. 104
(1978). The Second Circuit’s holding is hardly a
surprise given that the Penn Central standard has
become “an almost categorical rule” that the
government wins. James E. Krier & Stewart E. Sterk,
An Empirical Study of Implicit Takings, 58 WM. &
MARY L. REV. 35, 62 (2016). As applied in the lower
 6

courts, Penn Central is not fit for its purpose. Cf.

Nekrilov v. City of Jersey City, 45 F.4th 662, 682 (3d
Cir. 2022) (Bibas, J., concurring) (explaining Penn
Central is “hard to define” and “hard to meet”). This
branch of takings law needs this Court’s clarification.
Bridge Aina Le’a, LLC v. Hawaii Land Use Comm’n,
141 S. Ct. 731, 732 (2021) (Thomas, J., dissenting from
the denial of certiorari).
For decades, the Second Circuit has been
reviewing and upholding, erroneously, rent
regulations in New York without this Court’s effective
supervision. In fact, it has been over one hundred
years since this Court last assessed whether state and
city rent regulations in New York were constitutional.
See Edgar A. Levy Leasing Co. v. Siegel, 258 U.S. 242
(1922); Marcus Brown Holding Co. v. Feldman, 256
U.S. 170 (1921). At that time, this Court embraced the
view that such rent regulations were “temporary
measure[s],” with Justice Holmes explaining for the
Court that “[a] limit in time, to tide over a passing
trouble, well may justify a law that could not be
upheld as a permanent change.” Block, 256 U.S. at
157; see also Pennsylvania Coal Co. v. Mahon, 260
U.S. 393, 416 (1922). But New York’s RSL has proven
anything but temporary. Petitioners’ property will
remain appropriated for New York’s social policy goals
permanently—unless and until this Court provides
the meaningful constitutional scrutiny that the
Takings Clause requires.
 7

STATEMENT
Rent Regulation in New York.
New York enacted the initial iteration of the Rent
Stabilization Law in 1969 to address a “temporary”
post-World War II housing emergency. As a general
matter, the RSL currently limits the rent that owners
can charge to residential tenants living in apartments
that were constructed before January 1, 1974, in
buildings that contain six or more units. The RSL
created a Rent Guidelines Board, which is empowered
to determine whether and how much rents for rent-
stabilized units may be raised on an annual basis. See
N.Y. UNCONSOL. LAW TIT. 23, § 8624. Petitioners’
units are among the roughly 1,006,000 units in New
York City that the RSL covers.
Initially, the RSL was seen as a milder form of
rent regulation because it was premised on
facilitating a transition from the earlier Rent Control
system to a free market system. The original RSL
provided mechanisms for owners of apartment
buildings to either convert their buildings to other
uses or to obtain additional rent increases based on
making improvements to their buildings or when an
apartment became vacant. Additionally, subsequent
state legislation contained a renewal provision for the
RSL. This renewal provision required periodic
determinations by local authorities that there, in fact,
existed a “public emergency requiring the regulation
of residential rents” such that temporary rent
stabilization should continue. N.Y. UNCONSOL. LAW
TIT. 23, § 8623(a).
 8

Despite being a purported solution for a

“temporary” emergency, New York City continued for
the next fifty years to find—as a matter of course—
that a housing “emergency” persisted. Through the
decades, the New York State Legislature amended
and refined the RSL, ostensibly with the goal of
eventually transitioning away from “temporary”
emergency regulation.
In 2019, however, the New York State Legislature
enacted sweeping amendments to the RSL in the
Housing Stability and Tenant Protection Act.
According to the sponsor’s memo, the purpose of the
2019 amendments was to “[p]rovide permanent rent
regulation protections to covered buildings.” A08281
Memo, N.Y. ASSEMBLY, https://bit.ly/3MEgvPt
(emphasis added). New York thus no longer maintains
even the pretense that the RSL is a temporary
measure.
The Amended RSL. With the 2019 amendments
to the RSL, New York (1) eliminated Petitioners’
ability to exit the regulated market, and (2) ensured
Petitioners’ allowable rents would be well below any
just and reasonable rate.
1. The foundation of the amended RSL is ensuring
that tenants can stay in units and that units stay
under the RSL. On the unit level, the RSL
accomplishes this by generally granting tenants a
unilateral right to renew their tenancies in
perpetuity. N.Y. COMP. CODES R. & REGS TIT. 9 §
2523.5(a); In re Santiago-Monteverde, 22 N.E.3d 1012,
1016 (N.Y. 2014).
An RSL tenancy does not end, however, even when
 9

the tenant decides to move on because New York has

granted tenants a right of successorship in their
leaseholds. If an individual, who self-identifies as a
“family member” of the existing tenant, “has resided
with the tenant” for at least two years, then that
individual may succeed to the original tenants’
indefinite leasehold. N.Y. COMP. CODES R. & REGS TIT.
9, § 2523.5(b). And “family member” is defined
unconventionally to include “[a]ny other person …
who can prove emotional and financial commitment,
and interdependence” between themselves and the
tenant. Id. § 2520.6(o)(2). Under the RSL, the
landlord cannot turn away tenant-designated
successors who meet the RSL’s minimum occupancy
and relationship requirements. And even if there is no
successor, because there are no viable options for exit,
the RSL compels landlords to rent to another tenant
who will then benefit from all of the RSL’s protections.
The RSL does not permit Petitioners, as corporate
entities, to remove units for their own purposes, such
as retail use, office space, or storage. The RSL only
permits natural persons, who are owners of rent-
stabilized units, to recover a single unit for “his or her
own personal use and occupancy” if, and only if, he or
she demonstrates “immediate and compelling
necessity for the unit’s use.” NYC ADMIN. CODE § 26-
511(C)(9). If the existing tenant is over 62 years old or
has an impairment, then the owner must provide that
individual with another rent-stabilized unit. Id.
§ 2104.5(a)(2).
The RSL does not permit removing a unit from
rent control even when the rent qualifies as “high
rent” or the tenant is “high income.” Prior to 2019,
 10

Petitioners could exit units under so-called “luxury

decontrol” and “high-income decontrol” provisions,
which kicked in “when the rent or tenant’s income
reached a specified level.” Cmty. Housing
Improvement Program v. City of New York, 59 F.4th
540, 546 (2d Cir. 2023) (“CHIP”); Roberts v. Tishman
Speyer Properties, L.P., 918 N.E.2d 900, 902–03 (2009)
(describing decontrol provisions). If the RSL was
predicated on ensuring the affordability of New York’s
housing stock, then it would make little sense to
ensure that high-income tenants or high-rent units
are subject to the RSL. But New York has abandoned
such pretenses. Now, in order to “prevent uncertainty,
potential hardship and dislocation of tenants,” the
RSL simply closes these doors to exit. See A08281,
Tenant Protection Act, Part D,
https://bit.ly/3WBv8HX.
The RSL ensures that Petitioners’ buildings stay
within its grasp. Prior to the 2019 amendments,
landlords could convert their buildings to
condominiums or cooperatives, and thereby exit rent
control. For example, under a “non-eviction
conversion,” landlords previously could sell 15 percent
of their units and then, as tenants gradually vacated
the remaining unsold units, the landlords could sell
those units or rent them out at free market rates. See
N.Y. GEN. BUS. LAW § 352-eeee (2018). Over time, the
buildings would become non-rent controlled co-ops or
condominiums.
Now, the amended RSL does not allow for such
“non-eviction conversions.” Instead, the only means to
convert a rent controlled building is to sell it to the
tenants. Specifically, a building may only exit rent
 11

regulation by conversion if Petitioners sell 51% of the

units to bona fide tenants in occupancy. See N.Y. GEN.
BUS. LAW § 352-eeee (2023). If the landlord falls short
of this 51% threshold, no conversion is possible. Thus,
in addition to granting tenants a perpetual leasehold,
the RSL has granted tenants an exclusive ability to
buy or, as is significantly more common, an option to
block any conversion of the property. Unsurprisingly,
condominium conversions have ground to a virtual
halt since the RSL was amended. 1
What the RSL does permit, at least in theory, is
for Petitioners to demolish their buildings. But, in
order to do so, Petitioners must seek approval from
regulators, “pay all reasonable moving expenses for
tenants,” and relocate tenants to “suitable housing
accommodation.” N.Y. COMP. CODES R. & REGS. TIT. 9,
§ 2524.5(a)(2). The relocation costs can include pre-
paying any difference in rent between the tenants’
RSL apartment and their new housing for a period of
72 months. Id. § 2524.5(b). This often amounts to a
stipend in the six figures for each tenant. Needless to
say, the exaction imposed to actually demolish a
building means it is not financially feasible for most
landlords, including Petitioners, and is rarely taken

1 The year after the RSL amendments, the aggregate value

of condominium conversions was down 99% from $600 million to
$6 million. See NYC Condominium and Cooperative Conversion:
Historical Trends and Impacts of the Law Changes, THE STEVEN
L. NEWMAN REAL ESTATE INST. AT BARUCH COLLEGE, CUNY
(May 5, 2021), https://bit.ly/3kvMAMA. In 2021, there were only
four successful conversions. See 2022 RGB Housing Supply
Report, at 10, N.Y.C. RENT GUIDELINES BD. (May 26, 2022),
https://bit.ly/43sOBNd.
 12

by those who own tenanted buildings.

2. The units that are subject to the RSL’s
indefinite tenancy requirements are also subject to
the RSL’s rent regulations. These rents are, by
definition, below market—and unsurprisingly so, as
the board tasked with setting rents considers, inter
alia, the means of indigent tenants and general
advocacy from the public. N.Y. UNCONSOL. LAW TIT.
23, § 26-510 (b), (h); see 2023 Income and Affordability
Study, N.Y.C. RENT GUIDELINES BD. (Apr. 13, 2023),
https://bit.ly/3WRojm1. For example, between 2014
and 2017, the median monthly contract rent for
market units increased annually 3.22%—a 10%
increase over three years. By contrast, the rent for
stabilized units averaged annual increases of only
0.85%—a 2.6% increase. And these regulated rents, by
Respondents’ own data, do not keep up with costs.
Over the twenty-year period between 1998 and 2018,
landlords’ costs cumulatively increased by 169% but
Respondents permitted landlords to increase RSL
rents by only a cumulative 66%—less than half. For
2023, the RGB found that rents would have to
increase by 8.25% for a one-year lease in order to keep
pace with cost increases—yet the RGB has
preliminarily set a range of just 2–5% for what it will
allow.
The amended RSL depresses contemporary RSL
rents to low and confiscatory levels by removing any
means for owners to compensate for the RGB’s
inadequate annual increases. Prior to the 2019
amendments to the RSL, Petitioners were permitted
to increase rents when a unit became vacant. Now, the
RSL bans adopting adjustments targeted to when an
 13

apartment unit becomes vacant. See A08281, Tenant

Protection Act, Part B §§ 1, 3; Part C. There will be no
more catch up in rents.
The RSL also largely eliminates the ability to pass
along costs for making major capital improvements to
Petitioners’ buildings or improvements to individual
units. For individual units, an owner may recover a
maximum of $15,000 per unit over any given fifteen-
year period—nowhere near the actual cost to
renovate—with the result that tens of thousands of
units now sit vacant because they cannot be
economically renovated. For building-wide
improvements, where the value is added to the
building’s tax base, the rent may be increased by no
more than 1/150th of the cost, limited to a maximum
of 2% per year. And, after thirty years, any
improvement increase must be removed from the rent.
These improvement and renovation limits are simply
inadequate to recoup Petitioners’ costs, even though
improvements are often required to maintain
compliance with the applicable codes.
The amended RSL ensures that rents will remain
permanently below market rates under an artificial
permanent “emergency.” As upkeep and financing
costs increase well beyond allowable rent increases,
landlords, including Petitioners, can expect to find
themselves on an inexorable slide to insolvency.
Proceedings Below.
Petitioners are the landlords of small to midsize
apartment buildings facing a range of hardships
because of the amended RSL. Petitioner 699 Venture
Corp. is the owner of a fully occupied 23-unit building
 14

in the South Bronx. With the growth in expenses and

the RSL’s limits, 699 is threatened with insolvency.
Petitioner FGP 309 LLC previously owned a small
rent controlled building in East Harlem. At the time
the RSL amendments were enacted in 2019, FGP had
an accepted offer to purchase its building for $2.725
million. Upon passage of the 2019 amendments, that
offer immediately dropped by 34% to $1.8 million, the
sum FGP ultimately realized. Petitioners 335-7 LLC,
226 LLC, and 431 Holding LLC own buildings in lower
Manhattan which have a mix of regulated and
unregulated tenants. They all invested substantial
sums in renovations in their respective buildings prior
to enactment of the 2019 amendments. Under the
amended RSL, they will be unable to recoup the cost
of their investments. And unregulated rents in
Petitioners 226 LLC’s and 431 Holding LLC’s
buildings run some two-and-a-half times that of the
allowed RSL rents—an effective yearly windfall
(discount) to individual RSL tenants of $25,000.
Facing the prospect of an accelerating decline in
revenues, an inability to recoup expenses, and an
indefinite inability to exit the RSL, Petitioners filed
suit in the Southern District of New York. Petitioners
alleged that the RSL effected a taking both facially
and as-applied. The District Court had jurisdiction
under 28 U.S.C. § 1331. The District Court dismissed
Petitioners’ complaint, and Petitioners timely
appealed.
The Second Circuit affirmed the dismissal of
Petitioners’ facial and as-applied takings claims. In
doing so, the court divided its legal analysis between
a facial analysis and an as-applied analysis and relied
 15

almost entirely on the decisions it had issued three

weeks prior in CHIP and 74 Pinehurst LLC v. New
York, 59 F.4th 557 (2d Cir. 2023).
For Petitioners’ physical takings claims, the
Court of Appeals relied on language in this Court’s
opinion in Cedar Point to hold that the RSL did not on
its face effect a physical taking because Petitioners
“voluntarily invited third parties to use their
properties” and “regulations concerning such
properties are ‘readily distinguishable’ from those
compelling invasions of properties closed to the
public.” Pet. App.5 (quoting Cedar Point, 141 S. Ct. at
2077). The RSL was not an as-applied physical taking
because it “does not compel the Landlords to ‘refrain
in perpetuity from terminating a tenancy.’” PetApp.7
(quoting Yee, 503 U.S. at 528).
The Court of Appeals also rejected Petitioners’
claims under Penn Central. The court ruled that
Petitioners’ facial Penn Central claims could not
properly be assessed on a “groupwide basis.”
Pet.App.5. With respect to Petitioners’ as-applied
Penn Central claims, the court found them unripe,
and, in any event, wrong as a matter of law.
Petitioners lacked sufficient allegations “about the
economic impact of the law on their buildings,” and
their reasonable expectations should have
“anticipated their rental properties would be subject
to regulations, and that those regulations in the RSL
could change yet again.” Pet.App.11. Moreover, the
RSL’s service as “part of a broader regulatory regime
… weigh[ed] against finding a regulatory taking.”
Pet.App.12.
 16

Finally, the Second Circuit rejected Petitioners’

“confiscatory takings” claims. The court explained
that the “doctrine arises in the context of private
companies that are required to provide public utilities
and ‘creates its own set of questions under the
Takings Clause of the Fifth Amendment.’” Pet.App.12
(quoting Duquesne Light Co., 488 U.S. at 307). And
landlords are not utilities.
REASONS FOR GRANTING THE PETITION
I. The Second Circuit’s Decision Leaves
Landlords with No Meaningful Protection
under the Takings Clause.
The decision below is not only wrong but poses a
triple threat to the protections of the Takings Clause
by undermining not one but three different
frameworks. In its per se physical takings analysis,
the Second Circuit stretched this Court’s precedents
beyond recognition and split with the Eighth Circuit.
The Second Circuit’s cavalier rejection of the
application of the confiscatory takings framework—
an essential constitutional backstop to overreaching
government price-controls—cannot be squared with
this Court’s precedents and creates another division
of authority in the lower courts. And the Second
Circuit’s regulatory takings analysis shows that the
lower courts’ application of Penn Central is an
unworkable heads-government-wins, tails-property-
owners-lose test that requires reexamination.
 17

A. The Second Circuit’s “Open Door”

Theory of Per Se Physical Takings
Conflicts with the Eighth Circuit
and Cannot Be Squared with this
Court’s Precedents.
1. The decision below splits with
the Eighth Circuit.
The Second Circuit put forward what could be
called an “open door” theory of per se physical takings.
According to this theory, once Petitioners (or their
predecessors in interest) decided to offer units for rent
sometime before 1974, they subsequently empowered
New York to requisition their property indefinitely
without effecting a physical taking.
The Second Circuit reached its decision based on
its (over)reading of language in this Court’s decisions
in Cedar Point and Yee. Relying on Cedar Point, the
panel below held that the RSL was not a physical
taking because “regulations concerning” properties
open to the public “are ‘readily distinguishable’ from
those compelling invasions of properties closed to the
public.” Pet.App.5 (quoting Cedar Point). In Cedar
Point, this Court distinguished between a regulation
requiring access to a shopping mall “welcoming some
25,000 patrons a day” and a regulation compelling
access to the property of strawberry and grape
growers. 141 S. Ct. at 2076. The latter was a per se
physical taking, but the former was not. Id. Since
Petitioners’ property is not “closed to the public” in the
same manner as the growers’ property was in Cedar
Point, the Second Circuit reasoned that Petitioners
could not plausibly allege a physical taking.
 18

Pet.App.5. Instead, Petitioners had opened their

residential apartments, like a shopping mall, to
government-compelled occupancy.
The Second Circuit then explained that
Petitioners retained the ability to “exit” because a
landlord may terminate a tenant’s lease “for failing to
pay rent, creating a nuisance, violating the lease, or
using the property for illegal purposes.” Pet.App.7.
According to the Second Circuit, if property owners
may remove disruptive, delinquent, or law-breaking
tenants, then the government may mandate the
perpetual occupancy of non-disruptive, rent-paying,
law-abiding tenants.
The panel asserted that its conclusion was
buttressed by this Court’s decision in Yee v. City of
Escondido. In Yee, this Court evaluated regulations
that capped the rent that owners of mobile home
parks could charge and limited the grounds on which
park owners could evict their tenants. 503 U.S at 527–
28. Yee held that no physical taking had occurred
because mobile park owners were free to exit
regulation by changing the use of their land. Id. (citing
CAL. CIV. CODE § 798.56(g)(1992)). The mobile home
park owners just needed to provide sufficient notice to
their tenants. Id. That the RSL does not provide
Petitioners such an exit option was beside the point,
according to the Second Circuit, because it is “well
settled that limitations on the termination of a
tenancy do not effect a taking so long as there is a
possible route to an eviction.” Pet.App.7. (emphasis
added). Nor did it matter that “even after ‘an eviction,
the tenant is just replaced with another rent-
stabilized tenant at the same rent,’” because
 19

“decid[ing] who their incoming tenants are has

‘nothing to do with whether [a law or regulation]
causes a physical taking.’” Pet.App.7 (quoting Yee, 503
U.S. at 530).
The Eighth Circuit in Heights Apartments, LLC v.
Walz, 30 F.4th 720 (8th Cir. 2022), split sharply with
the Second Circuit’s approach in this case. In Heights
Apartments, the Eighth Circuit evaluated an eviction
moratorium in Minnesota. 30 F.4th at 726. There, as
here, the defendants argued that “no physical taking
has occurred because landlords were not deprived of
their right to evict a tenant.” Id. at 733. There, as
here, the challenged law provided at least some path
to evict unruly tenants. Id. But the Eighth Circuit
rejected that argument. Under Cedar Point and
consistent with Yee, the court explained, Minnesota
had effected a per se physical taking of the landlords’
right to exclude. “Whenever a regulation results in a
physical appropriation of property, a per se taking has
occurred.” Id. (quoting Cedar Point, 141. S. Ct. at
2072) (emphasis added). And the moratorium had
“turned every lease in Minnesota into an indefinite
lease, terminable only at the option of the tenants.”
Id. at 733. That gave rise to a per se takings claim.
Moreover, the Eighth Circuit held that Yee was not to
the contrary, as that decision only controlled when a
state’s regulation “neither deprive[s] landlords of
their right to evict nor compel[s] landlords to continue
leasing the property past the leases’ termination.” Id.
But a moratorium that allows indefinite renewal and
effectively forbids change of use is outside of Yee’s
scope. Under Heights Apartments, had this case been
litigated in the Eighth Circuit, Petitioners’ physical
 20

takings claim would have been allowed to proceed.

2. The RSL effects a per se physical
taking.
If laying a half-inch cable across an apartment
building’s roof is a per se physical taking, it cannot be
seriously doubted that the same is true for filling a
building’s apartments with permanent tenants. See
Loretto v. Teleprompter Manhattan CATV Corp., 458
U.S. 419, 435 (1982). In both instances, a property
owner’s right to exclude—“‘one of the most treasured’
rights of property ownership”—has been
expropriated. Cedar Point, 141 S. Ct. at 2072.
As recognized in Cedar Point, the Takings Clause
establishes a constitutional default rule: “[w]henever
a regulation results in a physical appropriation of
property, a per se taking has occurred.” Id. at 2072.
Generally, the government cannot without
compensation appropriate property owners’ “right to
exclude” by taking the decision of who may “physically
enter and occupy” property away from the owner and
giving it to either itself or a third party. Id.
The RSL imposes a facial per se physical taking.
Under the RSL, tenants have been awarded the right
to determine when and whether they will leave; the
landlord no longer can decide to exclude them. In
other words, by virtue of the RSL, tenants have
“tak[en] as [their] own” the right to exclude
themselves from Petitioners’ property. Cedar Point,
141 S. Ct. at 2077. And under the RSL’s succession
provisions, the tenant has also been awarded the right
to choose the next tenant, creating a government
mandated tenancy in perpetuity or for as long as a
 21

tenant and his or her successors decide. Id. at 2075.

The RSL takes not only Petitioners’ present right
to exclude but also Petitioners’ reversionary right to
possess and use the property after the term of the
lease expires. A condition of a lease is that there will
be an “eventual resumption of possession by the
landlord after the term of the lease is over.”
RESTATEMENT (SECOND) OF PROPERTY, LAND. & TEN.
§ 12.2, cmt. C (1977); Manocherian v. Lenox Hill
Hosp., 643 N.E.2d 479, 485 (N.Y. 1994). But the
tenancy mandated by the RSL effectively transfers
that reversionary interest from Petitioners to their
tenants or the successors the tenants choose. That is
a taking in all but a “topsy-turvy” sense of the
Constitution. Richard A. Epstein, From Penn Central
to Lingle: The Long Backwards Road, 40 JOHN
MARSHALL L. REV. 593, 601 (2007); see also Fresh Pond
Shopping Ctr. v. Callahan, 464 U.S. 875, 878 (1983)
(Rehnquist, J., dissenting). It is of no moment that the
owner will (hopefully) eventually secure its
reversion—a temporary taking is a still a taking.
Cedar Point said that there is an exception to per
se physical takings for “limitations on how a business
generally open to the public may treat individuals on
the premises.” 141 S. Ct. at 2077. Relying on this
exception, as the Second Circuit did, would stretch it
beyond recognition. For one, Petitioners’ apartment
buildings and the individual units are not “generally
open to the public.” Id. Unlike a shopping mall
welcoming some 25,000 patrons a day, id. at 2076, an
apartment building and its units are not open to the
public at large but rather only to staff, tenants, and
their invitees. Moreover, the RSL’s regulation
 22

permitting perpetual tenancies and successorships is

not properly understood as a “[l]imitation” on how
Petitioners “treat individuals on the premises.” Id. at
2077. Instead, the RSL appropriates to the tenant an
actual estate in land. By contrast, a requirement to
open up a shopping mall to allcomers is an equal
access requirement—all are welcome to the property
already open to the public on equal terms. Pruneyard
Shopping Center v. Robins, 447 U.S. 74 (1980). But
the RSL does not impose an equal access requirement
on tenancies; rather, it imposes an extra access
requirement, allowing RSL tenants to stay longer
than tenants are otherwise entitled to stay. For
another, this exception is inapt because Petitioners
are not voluntarily submitting to RSL regulation, as
they are not free to exit by changing the use of their
property. Yee, 503 U.S. at 528. 2
B. The Second Circuit’s Confiscatory
Takings Analysis Is Contrary to this
Court’s Precedents and Creates a
Division of Authority.
When the government obligates a private entity to
serve the public and then imposes price controls on
that service, the government cannot deprive the
regulated entity of a “just and reasonable” return. Or,
to put it another way, the government may not
mandate rates for the services that are so low they are
“confiscatory.” See Duquesne Light Co., 488 U.S. at
307. If the mandated rates are confiscatory, then the

2 To the extent Yee is understood to foreclose Petitioners’

physical takings claims, Petitioners respectfully submit that Yee
should be overruled.
 23

regulated private entity’s property has been taken.

The Second Circuit dismissed out of hand the claim
that New York constitutionally is prohibited from
depriving Petitioners of a just and reasonable return
through confiscatory rents. The decision is patently
wrong, as this Court’s precedents establish that the
confiscatory takings framework applies to rent control
laws, state supreme courts have likewise applied the
analysis to rent regulations, and Petitioners’
complaint establishes a plausible claim that the RSL’s
rents are confiscatory.
1. Both this Court and State
Supreme Courts Recognize that
the Confiscatory Takings
Doctrine Applies to Rent
Regulation.
A confiscatory takings claim arises when the
government has regulated property “in a way that
restricts the freedom of the owner to determine the
price or level of services associated with its use.”
Merrill, supra, 96 NOTRE DAME L. REV at 1435. By
compelling the dedication of private property to a
public service within a defined territory, the
government has “[i]n effect … appropriated the
property to a public use, and therefore has a legal
obligation to provide just compensation.” Id. at 1437.
In determining whether a given rate is
unconstitutionally confiscatory, courts ask whether
the rate “enable[s] the company to operate
successfully, to maintain its financial integrity, to
attract capital, and to compensate its investors for the
risks assumed.” Fed. Power Comm’n v. Hope Nat. Gas
 24

Co., 320 U.S. 591, 605 (1944).

From the dawn of this Court’s analysis of
government efforts to control rent, this Court has
applied the confiscatory takings framework. In Block
v. Hirsch, 256 U.S. 135 (1921), this Court applied the
framework to a federal statute governing rents in the
District of Columbia in the wake of World War I and
“emergencies growing out of the war” in the District’s
“rental conditions.” Id. at 154. That act permitted a
tenant to occupy any rental property
“notwithstanding the expiration of his term [lease] …
so long as he pays the rent” and otherwise complied
with the lease or applicable regulations. Id. at 154.
Justice Holmes explained for the Court that the
“regulation is put and justified only as a temporary
measure” and it was not a taking because “[a] limit in
time, to tide over a passing trouble, well may justify a
law that could not be upheld as a permanent change.”
Id. at 156–57. And, critically, the law provided
“[m]achinery … to secure to the landlord a reasonable
rent” and only went “little if at all farther than the
restriction” imposed by “usury laws.” Id. at 157.
Block stands for the proposition that a “landlord
should be entitled to a ‘just and reasonable return’”
when regulated in a manner akin to “public utilities.”
Epstein, supra, 54 BROOKLYN L. REV. at 751; see also
Merrill, supra, 96 NOTRE DAME L. REV. at 1437 (“Some
property owners may be able to make such a claim; for
example, owners of apartment complexes subject to
rent controls who are not allowed to convert their
apartments to condominiums.”).
This Court held as much in its canonical decision
 25

in Pennsylvania Coal Co. v. Mahon, 260 U.S. 393

(1922). In Pennsylvania Coal, Justice Holmes, again
writing for the Court, set out that government
regulations on property may go “too far” and thereby
constitute a taking. Id. at 416. Holmes contrasted the
statute at issue in Pennsylvania Coal with the rent
control laws in “Washington and New York.” Those
rent control laws were constitutional because they
were “intended to meet a temporary emergency and
provid[ed] for compensation determined to be
reasonable by an impartial board.” Id. at 415
(emphasis added). Since Block, a confiscatory takings
analysis—as a constitutional check on government
price controls—has been “the standard” and “it has
been reiterated in [more] recent cases.” Epstein,
supra, 54 BROOKLYN L. REV. at 751.
The Second Circuit’s rejection of any government
obligation to avoid imposing confiscatory rates on
landlords creates a clear division in authority, as
three state supreme courts have applied the
confiscatory takings framework to rent control. In
Hutton Park Gardens v. Town Council of Town of W.
Orange, A.2d 1, 5 (N.J. 1975), the Supreme Court of
New Jersey assessed municipal rent control
ordinances, explaining that “it is now well-established
that the constitution requires that price regulation be
non-confiscatory in effect and that courts will enforce
that requirement.” 350 A.2d at 13. The municipal
defendants had argued that such a claim had to be
limited to “public utilities.” Id. at 14 n.9. But the court
rejected that argument “as being both unsound in
principle and unsupported by contemporary judicial
authority.” Id. Accordingly, while the New Jersey
 26

Supreme Court found that the rates at issue were not

confiscatory, it recognized that the Constitution
served as a backstop to ensure rates were “just and
reasonable.”
The Supreme Court of Washington has similarly
explained that rental rates “must be reasonable and
not unnecessarily prohibitory or confiscatory.” Jeffery
v. McCullough, 652 P.2d 9, 12 (Wash. 1982); Kennedy
v. Seattle, 617 P.2d 713, 717–18 (Wash. 1980). For
instance, an allegation that “the rates set or the
expenses [incurred] would prohibit them from
continuing as … lessors” may be unconstitutionally
confiscatory. Kennedy, 617 P.2d at 718.
The Supreme Court of California likewise found a
rent control regulation unconstitutional under a
confiscatory takings analysis. Birkenfeld v. City of
Berkeley, 550 P.2d 1001, 1027 (Cal. 1976). In
Birkenfeld, the court assessed a provision that set a
“maximum rent chargeable for each housing unit” by
rolling back rents to the rate at an earlier date. 550
P.2d at 1006, 1027. But, as the court explained,
Berkeley’s ordinance led to an “arbitrary imposition of
unreasonably low rent ceilings” such that “[i]t [was]
clear that if the base rent for all controlled units were
to remain as the maximum rent for an indefinite
period many or most rent ceilings would be or become
confiscatory.” Id. at 1029–30. Accordingly, it was
unconstitutional.
The Second Circuit was simply wrong to hold that
applying a confiscatory takings analysis would
require “expand[ing]” the doctrine. By not even
recognizing that such a claim exists, the Second
 27

Circuit broke with a hundred years of precedent and

created a clear division in authority.
2. Petitioners Have Pleaded a
Plausible Claim that the RSL Is
Confiscatory.
A confiscatory takings inquiry is two-part: (a)
whether the government, in fact, compels the
regulated entity to provide public services for which
the government has established price controls and (b)
whether the allowed prices are set to a confiscatory
level. Petitioners have pleaded a plausible
confiscatory takings claim under this framework.
a. As in other contexts in which this Court and
other courts apply the confiscatory takings
framework, Petitioners are legally compelled to
provide services for which the government has set
rates. Hutton Park Gardens, 350 A.2d at 14 n.9. That
is, the RSL “require[s] that the apartments in
question be used for purposes which bring them under
the Act.” Bowles v. Willingham, 321 U.S. 503, 517
(1944). This analysis turns on whether the property
“owner has invested in specific assets that cannot be
redeployed to alternative,” non-public uses. Merrill,
supra, 96 NOTRE DAME L. REV. at 1437 n.55.
A paradigmatic case of compelled service arises in
public utilities. Duquesne Light, 488 U.S. at 307.
“[P]ublic utilities are under a state statutory duty to
serve the public, and must furnish ‘service on demand
to all applicants’ at government-determined rates.”
Garelick v. Sullivan, 987 F.2d 913, 916 (1993)
(quoting W. Pond, The Law Governing the Fixing of
Public Utility Rates: A Response to Recent Judicial
 28

and Academic Misconceptions, 41 ADMIN. L. REV. 1, 5

(1989)). Moreover, public utilities have invested in
fixed capital—assets like power plants and
transmission lines—which may not be removed from
public service without regulatory approval. Pond,
supra, 41 ADMIN L. REV. at 5. Even when services
prove unprofitable, public utilities may not
“discontinue” them. Id.
The RSL’s compulsion of Petitioners is materially
indistinguishable from the compulsion to serve
required of utilities. As discussed above, the RSL
mandates that Petitioners provide their property to
tenants at government set rates indefinitely. See
Hutton Park Gardens, 350 A.2d at 14 n.9; Birkenfeld,
550 P.2d at 1027. Additionally, like a public utility,
Petitioners have “invest[ed] heavily in fixed … assets
that cannot be moved to an unregulated jurisdiction.”
Thomas W. Merrill, Constitutional Limits on
Physician Price Controls, 21 HASTINGS CONST. L. Q.
635, 640 (1994). A landlord dissatisfied with the RSL
cannot simply uproot its apartment building or excise
individual RSL units and move across the Hudson.
See Hutton Park Gardens, 350 A.2d at 14 n.9; cf.
Kennedy, 617 P.2d at 719. And the potential to divest
from a property does not obviate the takings analysis.
Cf. Tyler v. Hennepin Cnty., No. 22-166, 2023 WL
3632754, at *7 (U.S. May 25, 2023).
Because property owners of both public utilities
and of RSL apartment buildings have heavily invested
in property that “cannot be moved or transferred to an
uncontrolled market,” they are made “especially
vulnerable to expropriation through price controls.”
Merrill, supra, 21 HASTINGS CONST. L. Q. at 640. After
 29

all, “an owner of such assets has little choice but to

submit to the government-imposed price. The only
alternative is to abandon the asset and forgo any
recovery of the investment altogether.” Id. But, as this
court recognized in Block, “[t]he power to go out of
business, when it exists, is an illusory answer to gas
companies and waterworks.” 256 U.S. at 157. The
same is true for landlords regulated by the RSL.
Since Petitioners are captive to the RSL to provide
housing at government-set rates, “[i]n effect, the state
has appropriated the property to a public use, and
therefore has a legal obligation to provide just
compensation.” Merrill, supra, 96 NOTRE DAME L.
REV. at 1437; cf. Block, 256 U.S. at 156–57.
b. Because they are compelled to serve the public,
Petitioners are entitled to recover “the cost of
prudently invested capital used to provide the
service,” Verizon Commc’ns, Inc. v. FCC, 535 U.S. 467,
485–86 (2002), or a return equal to what prudent
investors “expect given the risk of the enterprise,”
Duquesne Light Co., 488 U.S. at 314. Petitioners’
allegations are more than sufficient to state a
plausible claim they are denied constitutionally
required compensation under the RSL.
As alleged, the RSL caps recoverable costs for
improvements at a grossly inadequate rate, even
when such improvements are necessary to meet the
government’s codes. The Rent Guidelines Board’s
decisions on rent increases, based in part on tenants’
ability to pay, have consistently trailed behind
increasing costs by nearly 50% over a twenty-year
period. The gap compounds over the decades such that
 30

the allowed rent falls further and further behind both

costs and market pricing. Apartments equivalent to
those owned by Petitioners but that are not subject to
the RSL generate rents as much as two-and-a-half
times greater than the maximum rents that
Petitioners are permitted to collect. Such allegations
are sufficient to proceed past a motion to dismiss for
discovery and expert testimony on whether the RSL’s
allowed rates are “just and reasonable.”
C. The Second Circuit’s Decision
Demonstrates that Penn Central
Needs Clarification.
The Second Circuit dismissed Petitioners’ claims
that the RSL imposes an unconstitutional use
restriction on their property rights. Pet.App.10–12.3
The decision below demonstrates the need for this
Court’s clarification of the proper standard to apply

3 The Second Circuit held that Petitioners’ as-applied claim

that the RSL imposes an unconstitutional use restriction under

Penn Central was not “ripe” because “the Landlords admit that
they have not attempted to apply for any of the exemptions
allowed by the RSL.” Pet.App.9. Beside the fact that Petitioners
explained at length why they do not qualify for any of those
largely illusory “exemptions,” the court confused ripeness for an
exhaustion requirement. But ripeness, a “relatively modest”
requirement, does not require exhausting all means of partial
relief a government may deign to provide in theory. Pakdel v.
City & Cnty. of San Francisco, 141 S. Ct. 2226, 2229–30 (2021)
(per curiam). Petitioners’ Complaint alleged such procedures are
futile; the four years since passage of the 2019 amendments have
laid bare just how futile the hardship application is as property
owners are opting to leave thousands of apartments vacant,
instead of pursuing them.
 31

when a use restriction “goes too far.” Pennsylvania

Coal, 260 U.S. at 415.
Courts generally apply the three factors identified
in Penn Central: (1) “[t]he economic impact of the
regulation on the claimant,” (2) “the extent to which
the regulation has interfered with distinct
investment-backed expectations,” and (3) “the
character of the governmental action.” 438 U.S. at
124. Yet “nobody—not States, not property owners,
not courts, nor juries—has any idea how to apply this
standardless standard.” Bridge Aina Le’a, LLC v.
Hawaii Land Use Comm’n, 141 S. Ct. 731, 732 (2021)
(Thomas, J., dissenting from the denial of certiorari).
And the standard is inconsistent with the original
public meaning of the Takings Clause. See id.;
Nekrilov v. City of Jersey City, 45 F.4th 662, 683 (3d
Cir. 2022) (Bibas, J., concurring).
Consider the Second Circuit’s review of the
“character of the governmental action” in this case. In
Penn Central, this Court said, “[a] taking may more
readily be found when the interference with property
can be characterized as a physical invasion” as
opposed to when the regulation is a “public program
adjusting the benefits and burdens of economic life to
promote the common good.” Penn Central, 438 U.S. at
124. But the Second Circuit wholly ignored the
physical character of the RSL—tenants are physically
occupying Petitioners’ units. The Court of Appeals
simply relied on the claimed public purpose of the RSL
to find no taking. Pet.App.11–12.
The Second Circuit’s approach is wrong twice over.
First, physical intrusions are at the core of the
 32

Takings Clause’s protections. Well before Penn

Central and Pennsylvania Coal expounded on
“regulatory takings,” this Court held the Takings
Clause reached government actions that were the
“functional equivalent of a ‘practical ouster of [the
owner’s] possession.” Lucas v. S. Carolina Coastal
Council, 505 U.S. 1003, 1014 (1992) (quoting
Transportation Co. v. Chicago, 99 U.S. 635, 642
(1879)). Practical ouster is the purpose and effect of
the RSL. If Penn Central permits courts to ignore the
physical aspect of a regulation, then Penn Central “is
inconsistent with the historical compact recorded in
the Takings Clause” and must be corrected. 505 U.S.
at 1028; see also Nekrilov, 45 F.4th at 685–86 (Bibas,
J., concurring) (noting character factor “aligns closely
with the original meaning of the Takings Clause”).
Second, the court of appeals’ overreliance on the
claimed public purpose of the RSL ignores the fact the
Takings Clause does not permit the government to
“establish a welfare program privately funded by
those landlords who happen to have ‘hardship’
tenants.” Pennell v. San Jose, 485 U.S. 1, 22 (1988)
(Scalia, J., concurring in part, dissenting in part). As
Justice Scalia wrote, “the traditional manner in which
American government has met the problem of those
who cannot pay reasonable prices for privately sold
necessities—a problem caused by the society at
large—has been the distribution to such persons of
funds raised from the public at large through taxes …”
485 U.S. at 21. But the RSL does the opposite—
eschewing taxes or drawing on the public fisc to
instead rely on the property of Petitioners to foot the
bill for “a local public assistance benefit.” In re
 33

Santiago-Monteverde, 22 N.E.3d at 290. Courts

cannot whistle past this central and unconstitutional
aspect of the RSL’s character.
Careful consideration of the character of the
governmental action is essential because that
consideration is most often the key to separating
regulations that take property from those that do not.
Thomas W. Merrill, The Character of Governmental
Action, 36 VT. L. REV. 649, 673 (2012). The other two
are “indeterminate and circular” and thus analytically
unhelpful. Id.
No court seems to know how much economic harm
the government must cause for this factor to weigh in
favor of finding a taking. Pet.App.42 (citing Park Ave.
Tower Assocs. v. City of New York, 746 F.2d 135, 139–
40 (2d Cir. 1984) (collecting cases rejecting taking
claims where property value diminished from 75 to
90%) ”). Nor do the courts seem to know if lack of
severe economic harm is individually dispositive or
simply a factor to weigh. The Second Circuit appeared
to be of two minds. Pet.App.11. (finding allegations of
harm “insufficient” for a taking, but proceeding to
briefly consider other factors). And it is not clear why
the economic effect of a regulation should even be
considered on the front-end analysis of whether a
taking has occurred, instead of on the back-end
analysis as to what level of compensation is owed.
Epstein, supra, 40 JOHN MARSHALL L. REV. at 602.
The investment-backed expectations factor—as
applied by the Second Circuit—is likewise
analytically empty. The Second Circuit simply held
that “any reasonable landlord involved in New York’s
 34

rental market ‘would have anticipated their rental

properties would be subject to regulations, and that
those regulations in the RSL could change yet again.”
Pet.App.11. But the fact that regulations—which are
ubiquitous in the landlord-tenant context—may
change should not be the relevant inquiry, rather it
must be what the change is. Otherwise, “regulation
[simply] begets regulation.” Dist. Intown Props. Ltd.
P’ship v. District of Columbia, 198 F.3d 874, 887 (D.C.
Cir. 1999) (Williams, J., concurring). By the Second
Circuit’s lights, as long as the government has
regulated previously, it has carte blanche to do so
again. That cannot be the standard.
The muddle of Penn Central has led to a “decisional
tool,” Merrill, supra, 36 VT. L. REV. at 671, that leads
almost inevitably to decisions upholding
uncompensated government restrictions on property.
See, e.g., James E. Krier & Stewart E. Sterk, An
Empirical Study of Implicit Takings, 58 WM. & MARY
L. REV. 35, 62 (2016); Adam R. Pomeroy, Penn Central
After 35 Years: A Three Part Balancing Test or a One
Strike Rule?, 22 FED. CIR. BAR J. 677, 692 (2013),
https://bit.ly/42aP1a9). If there is “such a thing as a
regulatory taking,” this Court should ensure that the
framework courts use is actually able to find one.
Bridge Aina Le’a, 141 S. Ct. at 732 (Thomas, J.,
dissenting from the denial of certiorari).
II. This Court Needs To Address Increasingly
Common and Aggressive Regulation of
Landlord-Tenant Relationships.
Rent control regulations are “politically
attractive” because restrictions on evictions and limits
 35

on rents are achieved “off budget”—the costs borne by

property owners, rather than taxpayers. Pennell 485
U.S. at 22 (Scalia, J., concurring in part, dissenting in
part). This is antithetical to the Takings Clause.
Armstrong v. United States, 364 U.S. 40, 49 (1960).
Yet this is exactly what New York has been doing
for decades under the rubber-stamp review of the
Second Circuit. Over the last hundred years, New
York has progressively pushed its rent control regime
“to the verge” of unconstitutionality. Pennsylvania
Coal, 260 U.S. at 416. All under the guise of a
“temporary” emergency, Block, 256 U.S. at 157, that
has led to “rule by indefinite emergency” for decades,
Arizona v. Mayorkas, 143 S. Ct. 1312, 1316 (2023)
(Statement of Gorsuch, J.). Whatever may be said
about the RSL before 2019, it has undoubtedly now
gone “too far” whether assessed as a per se physical
taking, a deprivation of a just and reasonable return,
or an unconstitutional use restriction under Penn
Central. In fact, the situation is so burdensome for
some landlords that they would prefer to leave their
units vacant, instead of entering into new RSL
tenancies (or rather life estates). See Sam Rabiyah,
NYC Had 88,830 Vacant Rent-Stabilized Apartments
Last Year, City Housing Agency Estimates, THE CITY
(Oct. 20, 2022), https://bit.ly/3WEdPpC.
The Takings Clause is a bulwark against
majoritarian excesses. Pennell, 485 U.S. at 21–22
(Scalia, J., concurring in part, dissenting in part).
“The fact that government acts through the landlord-
tenant relationship does not magically transform
general public welfare, which must be supported by
all the public, into mere ‘economic regulation,’ which
 36

can disproportionately burden particular individuals”

or single out politically unpopular entities that own a
particular type of property. Id. at 22. Here the group
“disproportionately burdened” is owners of buildings
of certain size built before 1974. Id. In other
jurisdictions, it may be other groups of property
owners. Whoever it is, the Constitution does not
permit the government to force them and only them to
“privately fund[]” the government’s social welfare
programs. Id.
Throughout the country, governments are
increasingly asserting aggressive authority in the
landlord-tenant context, following a path carved by
New York and blessed by the Second Circuit. See, e.g.,
S.F. SUBDIVISION CODE § 1396.4; L.A. MUN. CODE
§ 151.25, 151.26(A); see also Lauren Dake, As inflation
hits, Oregon lawmakers consider more state rent
control limits, OREGON PUBLIC BROADCASTING (Mar.
27, 2023), https://bit.ly/454Hexk; Will Parker,
Eviction Bans Remain in California More Than 3
Years Into the Pandemic, WALL ST. J. (May 8, 2023),
https://on.wsj.com/3ot0mVk; Katie Galioto, What you
need to know about St. Paul’s rent control law, STAR
TRIBUNE (Jan. 21, 2023), https://bit.ly/42OuHfu;
Morgan Baskin, Prince George’s County Passes
Temporary Rent Stabilization, Capping New Increases
at 3%, DCIST (Feb. 28, 2023), https://bit.ly/3BG76Sz.
“The Constitution … is concerned with means as
well as ends.” Cedar Point, 141 S. Ct. at 2074.
Regardless of whether New York or any other state
could accomplish its housing policy goals in some
other manner (such as using tax revenues to subsidize
renters or tax credits to subsidize landlords), this
 37

Court should provide the necessary guidance to lower

courts to reaffirm that taking property without just
compensation is not one of them.

CONCLUSION
The petition for a writ of certiorari should be
granted.
Respectfully submitted,

May 30, 2023

TODD A. ROSE CHARLES J. COOPER

PAUL COPPE Counsel of Record
ROSE & ROSE DAVID H. THOMPSON
291 BROADWAY PETER A. PATTERSON
13TH FLOOR BRIAN W. BARNES
NEW YORK, NY 10007 JOHN W. TIENKEN
(212) 349-3366 COOPER & KIRK, PLLC
1523 New Hampshire
Avenue, N.W.
Washington, D.C. 20036
(202) 220-9600
[email protected]

Counsel for Petitioners