Who likes paying a lot for prescription medications? Anyone?

Oregon sure didn't like it, and it was going to do something about it. In 2018, it adopted a statute the "Prescription Drug Price Transparency Act," which requires manufacturers to report to the State information about costs, revenues, and prices of certain prescription drugs. The Act also requires the State to disclose, in the public interest, much or all of that information to the public, provided that information is not a trade secret. Oregon has not actually disclosed any trade secrets. 

An industry association (PhARMA) sued, asserting inter alia, a facial takings claim. The District Court granted PhRMA summary judgment, concluding that the publication of trade secrets under the public-interest exception is a taking requiring compensation.   

In Pharmaceutical Research and Manufacturers of America v. Stolfi, No. 24-1570 (Aug. 26, 2025), the U.S. Court of Appeals for the Ninth Circuit reversed. 

The court first held that PhARMA had associational standing because its members were injured in fact by the Act, even though Oregon has not actually invoked the public interest exception and publicly disclosed trade secrets. There's a credible threat of enforcement and the public interest exception (and disclosure) could be triggered by an agency determination that disclosure is nonetheless required. "We conclude that the risk of future injury is sufficiently nonspeculative to establish injury in fact." Slip op. at 58.

Next, the court concluded the takings claim was ripe. The Article III component of ripeness was satisfied by the court's prior determination that PhARMA had standing. Regarding final decision (prudential) ripeness, the court held that because the challenge here is facial ("a declaration stating that every disclosure under the public-interest exception...constitutes an unconstitutional taking"), the ripeness question is "properly addressed as part of the merits," and thus the court was willing to address the issue. 

Next, the court rejected PhARMA's claim that the takings claim should be evaluated under Lucas's economic wipeout theory. Trade secrets are intangible personal property and not land, and the record here is not clear that disclosure of trade secrets would render the trade secret totally useless.

And most importantly, in Ruckelshaus v. Monsanto Co., 467 U.S. 986 (1984), the only case in which the Supreme Court addressed takings of trade secrets, the Court applied the Penn Central standard. Applying Penn Central, the Ninth Circuit concluded that PhARMA's members could not satisfy the "interference with distinct [or reasonable] investment-backed expectations" because this is a highly-regulated environment in which owners of trade secrets have to know that they are entering a field in which trade secrets are not, you know, truly secrets. This has always seemed like a bootstrap rationale to us, where allegedly overregulation of activity is justified on the basis of the overegulation itself. But the court concluded otherwise:

As a starting point, then, manufacturers ought to be aware of the heightened possibility that regulations may be enacted requiring disclosure of the exact type of information that may be commonly claimed as a trade secret under HB 4005.

Slip op. at 66. 

Next, the Ninth Circuit sidestepped Palazzolo's conclusion that an owner does not forfeit a takings claim simply because of the existence of a regulatory scheme. Some form of trade secret restrictions have been in place in Oregon since 1987, so it is your fault, PhARMA members, that you got into this highly regulated field:

Oregon law has precluded trade secret misappropriation claims based on the public disclosure of trade secrets where “the public interest requires disclosure” since the State first adopted the Uniform Trade Secrets Act in 1987. See 1987 Or. Laws Ch. 537 § 8(3) (Oregon Uniform Trade Secrets Act, now codified at Or. Rev. Stat. § 646.473(3)); 1973 Or. Laws Ch. 794 § 11 (Oregon’s Public Records Law, now codified at Or. Rev. Stat. § 192.345(2)). The State’s general practice of disclosing trade secrets in furtherance of the public interest further diminishes manufacturers’ reasonable expectations of strict confidentiality in all cases.

Slip op. at 67. 

Finally, Oregon (unlike the federal government in Monsanto) had provided no assurances of confidentiality. If you want to play in our market, says Oregon, you have to play by our rules. And if you don't like it, go sell your lifesaving drugs somewhere else:

However, just as in Monsanto, the benefit provided to manufacturers is the ability to sell a highly regulated product in a government-regulated market. In Monsanto, the Supreme Court explained that in “those situations where [Monsanto] deems the [trade secret] data to be protected from disclosure more valuable than the right to sell in the United States,” it can “decide to forgo registration in the United States and sell a pesticide only in foreign markets.” 467 U.S. at 1007 n.11. Here, manufacturers have a similar choice. If they decide the value of protecting their trade secrets from potential disclosure to be more valuable than the right to sell in Oregon, they can decide to forego pharmaceutical sales in the state and limit their product sales to other states and foreign markets.

Slip op. at 70-71. 

There's a reason why the "investment-backed expectations" factor is the most criticized by critics of Penn Central. Yeah, it was made up whole cloth by a law review article and sua sponte inserted into the opinion without the benefit of briefing and arguments (as Professor Gideon Kanner explained), but more critically, it is mostly a device which is deployed to allow a court to conclude no taking even where the other two Penn Central factors cut in favor of the owner. After all, what industry or use of property isn't regulated these days? Can't think of any. The investment-backed expectations seems more like a get-out-of-jail free card than a basis for principled analysis. 

For good measure, the Ninth Circuit also held that the other two Penn Central factors favor Oregon. There's no showing that disclosure would wipe out the use or value of every secret disclosed (so shame on you, PhARMA for bringing this as a facial challenge, chided the court), and the character of the government action is more like a readjusting of the ups-and-downs of economic life than an exercise of eminent domain. Slip op. at 75. 

We've written previously on how courts screw up the character factor in particular, and rather than repeat it here, we'll just refer you to history. 

Pharmaceutical Research & Manufacturers of America v. Stolfi, No. 24-1570 (9th Cir. Aug. 26, 2025) 

            

Related Stories

• CA9: Pharma Has No Expectation Of Nondisclosure, So State Disclosing Trade Secrets Is Not A Penn Central Taking
• Registration Open: 22d Brigham-Kanner Property Rights Conference, Oct. 23-24, 2025, Williamsburg
• Cal App: No Fair Return Procedures Required Unless You First Show Lack Of Fair Return

 

Here's the latest in a case we've been following. 

Recall that a couple of months ago, the court of appeals held that the challengers were likely to succeed in their challenge to Dallas's short-term rental ban. The case was up on appeal from a preliminary injunction, so there wasn't a lot in that decision. 

Now, we have a decision after fuller consideration after the city asked for en banc review. In City of Dallas v. Dallas Short-Term Rental Alliance, No. 05-23-01309 (July 18, 2025), the court again concluded that the challenger property owners were likely to succeed on their claim that the city's ban on short-term renting violated the due-course-of-law requirement under the Texas Constitution:

Under the circumstances, we conclude appellees Dallas Short Term-Rental Alliance, Sammy Aflalo, Vera Elkins, and Denise Lowry proved their probable right to relief against the City’s zoning ordinance under their due-course-of-law argument because they alleged they possessed well-established rights to lease their property and presented evidence tending to show that the City would deny them those rights by enforcing the zoning ordinance at issue.

Slip op. at 8. 

The court also held that the trial court did not abuse its discretion when it concluded that the owners have shown a "probable right to relief" because the city has not attacked the trial court's factual findings that the regulation's restrictions on maximum occupancy and related are unreasonably burdensome and oppressive:

Therefore, we cannot conclude the trial court abused its discretion when it concluded appellees are likely to prevail on their request for declaratory relief because the registration ordinance is likely unconstitutionally oppressive in light of the alleged but presently unsupported governmental interest in limiting the maximum occupancy of short-term rentals.

Slip op. at 11. 

Worth checking out. We shall continue to monitor. 

City of Dallas v. Dallas Short-Term Rental Alliance, No. 05-23-01309-CV (Tex. App. July 18, 2025)

            

Related Stories

• Tex App: Like We Said Before, Property Owners Are Likely To Succeed In Challenge To Short-Term Rental Ban
• Houston Says 'Welcome!' - What Happens When Another City Has No Zoning?
• Tex App: Challengers Likely To Succeed

 

Here's one from the U.S. Court of Appeals for the Federal Circuit, involving ERISA (yikes!), which is the comprehensive federal regulatory framework for employer-provided pension plans, and takings.

In King v. United States, No. 23-1956 (Aug. 8, 2025), pensioners challenged Congress's 2014 reduction of benefits as a taking, alleging both physical and regulatory theories. As you might expect, there's a lot going on in this area, and there's enough ERISA goodness in this opinion to satisfy the most committed maven. Check out pages 3-8 for a pension primer. (And here you thought takings is a complex area.)

The short story is that in 2014 after it "became concerned about the fiscal health of many of the nation's multiemployer pension  plans," slip op. at 9, Congress amended ERISA to deal with the actual or threatened insolvency of multiemployer pension funds. What happens if a pension is obligated to pay, but would also "experience financial difficulties that resulted in an inability to pay the promised benefits[?]" Slip op. at 3. The future did not look bright.

The 2014 amendments allowed plan administrators that are deemed to be in danger to amend such plans to temporarily -- or even permanently -- suspend benefits. Congress deemed this necessary to "reallocat[e] the shortfall burden across all plan beneficiaries (with some narrow exceptions, e.g., those over 80 or disabled), while continuing to protect pension benefits to the maximum extent possible." Slip op. at 10. These reductions in benefits cannot be focused on any one group, but must be "equitably distributed," with a maximum reduction allowed. No reductions are effective until a vote by plan participants. 

When Teamsters union plan administrators determined that their plan was in danger of becoming insolvent in less than 14 years, these provisions were invoked and after meeting the standards noted above, a reduction in plan benefits was put into place. Class action lawsuit followed in the Court of Federal Claims, asserting the reduction was a taking of private property. The CFC granted the federal government summary judgment. 

The Federal Circuit affirmed. 

The Federal Circuit first noted that pension benefits are not truly "property," but "more in the nature of a contract." Slip op. at 3. That said, "contracts and the rights they secure" may be property. Slip op. at 16. However, while it may be true that a vested pensioner has a contractual right to receive a certain level of benefits from an employer, it does not follow that the person also has an equitable or property interest in the plan itself such that the government is liable for a taking for any reduction. Id. ("The fact that employees’ rights under a plan are vested simply means that they became vested contract rights, which have been earned by working for a specified number of years, and which the employer cannot eliminate."). 

The bottom line here:  

We assume, without deciding, that the plaintiffs have identified a cognizable contract right under the Plan documents, which constitutes property for purposes of a takings analysis, see A & D, 748 F.3d at 1152, though they do not hold a property interest in the assets of the Plan itself. The Claims Court concluded that the plaintiffs “identified a cognizable property interest in receiving their unreduced and vested pension benefits at a level contractually promised by the Teamsters Fund plan agreement.” King II, 165 Fed. Cl. at 626. While the government disagrees with this holding, it “has not appealed the finding of a cognizable interest.” Appellee’s Br. 17; see also id. at 20–30. In light of our conclusion that there was no taking here, we assume that the Claims Court correctly articulated plaintiffs’ protected property interest.

Slip op. at 16-17.

The court next concluded that this did not result in a physical taking because this is not a physical or intangible personal property, but a contract right. Congress here merely readjusted the rights and obligations under third-party contracts. That's right folks, we're talking that infamous case, Omnia Commercial Co. v. United States, 261 U.S. 502 (1923) which held no taking when the feds "requisitioned" the steel that was allocated by contract to Omnia, and directed the supplier to send all the steel to the government. The Court held that the contract was not taken, but rather merely "ended."

In short, destruction of contract rights by a valid exercise of government power is just one of those commercial risks that the contracting parties have to absorb. The Federal Circuit was not persuaded by cases such as Cedar Point, which the court held "all involved the government's appropriation of specific physical or intangible property for its own use or the use of others, not the modification of contractual obligations owed by third parties." Slip op. at 23 

On the regulatory taking (Penn Central) theory, the Federal Circuit held that the economic loss 29% for five years here was not "severe," that the pensioners should not have relied on a statutory government program that is subject to frequent alteration, and that the character of the government action here is one of "substantial public purpose." Slip op.at 32. The point here was to avoid insolvency.  

King v. United States, No. 23-1956 (Fed. Cir. Aug. 8, 2025)