NO.

21-_____

In the
Supreme Court of the United States

TAYLOR & SONS, ET AL.,

Petitioners,

v.

UNITED STATES OF AMERICA,

Respondent.
__________________________
On Petition for a Writ of Certiorari to the
United States Court of Appeals for the Federal Circuit

PETITION FOR A WRIT OF CERTIORARI

ROGER J. MARZULLA
COUNSEL OF RECORD
NANCIE G. MARZULLA
MARZULLA LAW, LLC
1150 CONNECTICUT AVENUE, NW
SUITE 1050
WASHINGTON, DC 20036
(202) 822-6760
ROGER@MARZULLA.COM
NANCIE@MARZULLA.COM

AUGUST 13, 2021 COUNSEL FOR PETITIONERS

SUPREME COURT PRESS ♦ (888) 958-5705 ♦ BOSTON, MASSACHUSETTS
 i

QUESTIONS PRESENTED
At the time the Government required Petitioners
to cease doing business under their Chrysler dealer
franchises, which are compensable property interests
under the Fifth Amendment, each was profitable. But
the courts below held that the government-caused
shutoff of Petitioners’ streams of income did not
satisfy Penn Central ’s economic impact element—and
thus did not constitute a Fifth Amendment taking for
which just compensation was due.
THE QUESTIONS PRESENTED ARE:
1. Does the fact that the property is generating
profits on the date of taking satisfy the economic
impact requirement to find a regulatory taking under
Penn Central ?
2. Does Penn Central provide an adequate rule
of law to guide federal and state courts in determining
whether a compensable Fifth Amendment regulatory
taking has occurred?
 ii

PARTIES TO THE PROCEEDINGS

Petitioners and Appellants, Model Plaintiffs Below

● Taylor & Sons, Inc.
● Cedric Theel, Inc.
● Whitey’s, Inc.
● RFJS Company, LLC
● Jim Marsh American Corp.
● Livonia Chrysler Jeep, Inc.
● Barry Dodge, Inc.

Respondent and Appellee, Defendant Below

● United States

Other Appellants, Model Plaintiffs Below

● Mike Finnin Motors, Inc.
● Guetterman Motors, Inc.
 iii

CORPORATE DISCLOSURE STATEMENT

Petitioners — Taylor & Sons, Inc., Cedric Theel,
Inc., Whitey’s, Inc., RFJS Company, LLC, Jim Marsh
American Corp., Livonia Chrysler Jeep, Inc., or Barry
Dodge, Inc. — are not publicly traded, and no publicly
held company holds 10% or more of their stock or
the stock of a parent company.
 iv

LIST OF PROCEEDINGS
Petitioners are seven Model Plaintiffs selected
from a total of 170 Chrysler dealers who filed suit in
Alley’s of Kingsport, Inc. et al. v. United States, Case
No. 11-100C. The United States Court of Federal
Claims consolidated Petitioners’ case with two others,
Case Nos. 10-647C and 12-900C, under the caption
Colonial Chevrolet Co. v United States, Case Nos. 10-
647C, 11-100C, and 12-900C. On November 2, 2020,
the Court of Federal Claims issued a single opinion
and entered judgment in the Model Plaintiffs’ cases.
In the U.S. Court of Appeals for the Federal
Circuit, the consolidated cases were docketed as No.
20-1185, Taylor & Sons, Inc., et al., and No. 20-1205,
Mike Finnin Motors, Inc. et al. v. United States. The
Federal Circuit issued its decision on December 29,
2020 and denied the combined petition for rehearing
and rehearing en banc on March 17, 2021.
Petitioners are informed that the two other Model
Plaintiffs and Appellants, Mike Finnin Motors, Inc.
and Guetterman Motors, Inc., will be filing a separate
petition for writ of certiorari. All Petitioners will rely
on a single appendix. The Non-Model Plaintiffs’ consoli-
dated cases are stayed in Colonial Chevrolet Co. v
United States, Case No. 10-647C, pending the reso-
lution of these claims.
 v

TABLE OF CONTENTS
Page
QUESTIONS PRESENTED ........................................ i
PARTIES TO THE PROCEEDINGS ......................... ii
CORPORATE DISCLOSURE STATEMENT ........... iii
LIST OF PROCEEDINGS ......................................... iv
TABLE OF AUTHORITIES .................................... viii
PETITION FOR A WRIT OF CERTIORARI ............. 1
OPINIONS BELOW ................................................... 1
JURISDICTION.......................................................... 2
CONSTITUTIONAL PROVISION INVOLVED ........ 2
STATEMENT OF THE CASE .................................... 3
A. Factual background ......................................... 4
B. Procedural background .................................... 8
1. The Court of Federal Claims .................... 10
2. The Federal Circuit’s Opinion .................. 10
REASONS FOR GRANTING THE PETITION ....... 13
I. T HE C OURT S HOULD G RANT C ERTIORARI
TO R ESOLVE THE F EDERAL C IRCUIT ’ S
I NTRA -CIRCUIT CONFLICT ON THE PROPER
TEST FOR ECONOMIC IMPACT IN REGULA-
TORY TAKING CASES INVOLVING PROFIT-
GENERATING PROPERTY .................................. 13
 vi

TABLE OF CONTENTS – Continued

Page
II. THE COURT SHOULD GRANT CERTIORARI TO
REVIEW WHETHER PENN CENTRAL PROVIDES
AN ADEQUATE TEST FOR D ETERMINING
WHEN GOVERNMENTAL ACTION AMOUNTS TO
A FIFTH AMENDMENT TAKING .......................... 20

CONCLUSION.......................................................... 26
 vii

TABLE OF CONTENTS – Continued

Page
APPENDIX TABLE OF CONTENTS
OPINIONS AND ORDERS
Opinion of the United States Court of Appeals for
the Federal Circuit (December 29, 2020) .......... 1a
Trial Opinion of the United States Court of
Federal Claims (October 12, 2019) .................. 12a
Opinion of the United States Court of Appeals for
the Federal Circuit (April 7, 2014) ................ 218a
REHEARING ORDER
Order of the United States Court of Appeals for
the Federal Circuit Denying Petitions for
Rehearing En Banc (March 17, 2021) ........... 251a
OTHER DOCUMENT
Federal Circuit Disposition of CFC Trial
Verdicts, 2001-20 ............................................ 254a
Federal Circuit Takings Analysis: Awards of
Money to Property Owners Were Affirmed
Only in Caquelin (Rtt) and Lost Tree , the
Other 79 Being Reversed or Remanded ........ 256a
Select Document Excerpts .................................... 263a
Indicative Summary of Terms for Secured Term
Loan Facility (December 19, 2008) ................ 267a
 viii

TABLE OF AUTHORITIES
Page
TABLE OF AUTHORITIES

CASES
Anaheim Gardens, L.P. v. United States,
953 F.3d 1344 (Fed. Cir. 2020) ...... 11, 16, 17, 18
Bridge Aina Le’a, LLC v. Hawaii Land Use
Comm’n, 141 S. Ct. 731 (2021).......................... 24
Florida Rock Industries v. United States,
791 F.2d 893 (Fed. Cir. 2004) ..................... 16, 17
Love Terminal Partners, L.P. v. United States,
889 F.3d 1331 (Fed. Cir. 2018) ................... 11, 18
Lucas v. South Carolina Coastal Commission,
505 U.S. 1003 (1992) ......................................... 24
Murr v. Wisconsin,
137 S. Ct. 1933 (2017) ....................................... 25
Nollan v. Cal. Coastal Comm’n,
483 U.S. 825 (1987) ........................................... 23
Palazzolo v. Rhode Island,
533 U.S. 606 (2001) ........................................... 23
Penn Central Transportation Co. v.
City of New York, 438 U.S. 104 (1978) ...... passim
Pennsylvania Coal Co. v. Mahon,
260 U.S. 393 (1922) ............................................ 15
Rose Acre Farms, Inc. v. United States,
373 F.3d 1177 (Fed. Cir. 2004) ......................... 17
Yancey v. United States,
915 F.2d 1534 (Fed. Cir. 1990) ......................... 21

CONSTITUTIONAL PROVISION
U.S. Const. amend. V ........................................ passim
 ix

TABLE OF AUTHORITIES – Continued

Page
STATUTES
28 U.S.C. § 1254(1) ..................................................... 2
28 U.S.C. § 1295 ........................................................ 16
28 U.S.C. § 1295(a)(3) ................................................. 2
28 U.S.C. § 1491 ........................................................ 16
28 U.S.C. § 1491(a)(1).................................................. 2

OTHER AUTHORITIES
Adam R. Pomeroy,
Penn Central After 35 Years: A Three
Part Balancing Test Or A One Strike
Rule?, 22 FED. CIRCUIT B.J. 677 (2013) ............ 24
Carol Necole Brown & Dwight H. Merriam,
On the Twenty-Fifth Anniversary of
Lucas: Making or Breaking the Takings
Claim, 102 IOWA L. REV. 1847 (2017) ............... 24
F. Patrick Hubbard et al.,
Do Owners Have a Fair Chance of
Prevailing Under the Ad Hoc Regulatory
Takings Test of Penn Central
Transportation Company?,
14 DUKE ENVTL. L. & POL’Y F. 121 (2003) ......... 24
Gideon Kanner,
Making Laws and Sausages: A Quarter-
Century Retrospective On Penn Central
Transportation Co. v. City of New York,
13 WM. & MARY BILL RTS. J. 679 (2005) ............ 23
 x

TABLE OF AUTHORITIES – Continued

Page
John D. Echeverria,
Is the Penn Central Three-Factor Test
Ready for History’s Dustbin?,
52 LAND USE L. & ZON. DIG. 3 (2000) ................ 23
Joseph L. Sax,
The Property Rights Sweepstakes: Has
Anyone Held the Winning Ticket?,
34 VT. L. REV. 157 (2009) .................................. 22
Steven J. Eagle,
“Economic Impact” In Regulatory Takings
Law, 19 HASTINGS W.-N.W. J. ENVTL. L. &
POL’Y 407 (2013) ................................................ 22
 1

PETITION FOR A WRIT OF CERTIORARI

Petitioners, Taylor & Sons, Inc., Cedric Theel,
Inc., Whitey’s, Inc., RFJS Company, LLC, Jim Marsh
American Corp., Livonia Chrysler Jeep, Inc., and Barry
Dodge, Inc. hereby petition for a writ of certiorari to
review the judgment of the United States Court of
Appeals for the Federal Circuit.

OPINIONS BELOW
The Court of Federal Claims’ opinion is reported
at Colonial Chevrolet Co. v. United States, 145 Fed. Cl.
243 (2019), and reproduced at App.44a. The Federal
Circuit’s opinion is reported at Taylor & Sons, Inc. v.
United States, 841 Fed. Appx. 205 (Fed. Cir. 2020), and
reproduced at App.1a. The Federal Circuit’s opinion
denying the rehearing and rehearing en banc is unre-
ported and reproduced at App.250a. The interlocutory
appeal decision is reported at A&D Auto Sales, Inc.
v. United States, 748 F.3d 1142 (Fed. Cir. 2014), and
reproduced at App.12a.
 2

JURISDICTION
The Court of Federal Claims’ jurisdiction was
based on 28 U.S.C. § 1491(a)(1). The Federal Circuit’s
jurisdiction was based on 28 U.S.C. § 1295(a)(3). The
Federal Circuit issued its opinion on December 29,
2020 and denied a combined petition for rehearing
and rehearing en banc on March 17, 2021. This
Court’s July 19, 2021 Order extended the deadline to
file petitions for writs of certiorari in all cases to 150
days from the date of the order denying a timely
petition for rehearing. This Court has jurisdiction
under 28 U.S.C. § 1254(1).

CONSTITUTIONAL PROVISION INVOLVED

U.S. Const. amend. V
The Just Compensation Clause of the Fifth Amend-
ment provides:
“[N]or shall private property be taken for public
use, without just compensation.”
 3

STATEMENT OF THE CASE

Although the Great Recession severely impacted
the American auto industry, each of the Petitioners
remained profitable up to the date they were required
by the Government to cease doing business as fran-
chised Chrysler auto dealers. As an auto manufacturer,
Chrysler LLC was forbidden by most state dealer
franchise laws from owning its distribution network.
Instead, like other U.S. auto makers, Chrysler LLC
entered into comprehensive franchise agreements with
local dealers, including Petitioners, who bought vehicles
and branded parts from Chrysler, then sold them at
retail to the public because state dealer franchise laws
also require that new vehicles be sold at retail only
by licensed dealers.1
Unlike its dealers, who derive most of their profits
from servicing autos and selling Chrysler-certified
used cars, Chrysler LLC was on the verge of collapse.
President Obama’s Auto Team did not appreciate that
dealers are the only means a manufacturer, Chrysler
LLC, had to sell its parts and vehicles and improvi-
dently decided that there were too many Chrysler
dealers. So, as a condition of receiving Troubled Asset
Recovery Program (TARP) bailout money, the Govern-
ment required Chrysler to terminate 25% of its dealers
—including Petitioners—utilizing bankruptcy to avoid
triggering federal and state law auto franchise protec-
tions.

1 See, e.g., App.59a (Taylor & Sons, Inc. Agreement).

 4

Holding that these terminated dealerships had

no economic value on the date their franchise agree-
ments were rejected in bankruptcy, despite the fact
that all of these dealerships were generating positive
cashflows (in one case income was up 420% over the
previous year), the Court of Federal Claims found no
taking, which the Federal Circuit affirmed. Although
the Court of Federal Claims also based its decision
on its conclusion that the Government had not coerced
Chrysler to terminate 25% of its dealership network,
the Federal Circuit’s ruling is based solely on its eco-
nomic impact analysis under Penn Central Transpor-
tation Co. v. City of New York.2

A. Factual background
Between 2007 and 2009, the country suffered a
deep economic recession, caused in part by the Govern-
ment’s economic policies, which devastated the big
three auto manufacturers: Chrysler LLC, General
Motors, and Ford Motor Company. To help pull the
country out of recession, the Government established
the Auto Industry Finance Program and agreed in
December 2008 to loan $4.7 billion to the former
Chrysler LLC to keep the company temporarily in
business.3 One term of the loan agreement required
Chrysler to rationalize (reduce the number of) its
dealer network.4

2 438 U.S. 104, 124 (1978).

3 App.100a-App.101a. Fiat Chrysler Automobiles NV is an Italian-
American multinational corporation, established in October 2014,
created by transferring all the assets of Chrysler into the newly-
established company.
4 App.276a.
 5

Shortly afterward the Government’s Auto Team,

headed by Steven Rattner (known as the “Car Czar”),
took over and completed Chrysler LLC’s merger nego-
tiations with Italian carmaker, Fiat, the United Auto
Workers, and Chrysler LLC’s creditors. The Auto Team
put together a deal to transfer nearly all Chrysler LLC’s
valuable assets to a newly formed corporation, Fiat-
Chrysler—a deal that required corporate restructuring
in bankruptcy.5
In bankruptcy court, the Government insisted that
Chrysler LLC terminate hundreds of dealer franchises
because, in the opinion of the Auto Team, “it would
have been a ‘waste of taxpayer resources’ for auto
manufacturers to exit bankruptcy when they knew the
networks would still have to be reduced.”6 Bankruptcy
procedures allowed the franchises to be rejected with-
out triggering state and federal laws requiring com-
pensation.7 Although Chrysler LLC fought the Task
Force’s plan until the last minute, ultimately the Board
of Managers had no alternative but to accept the
Government’s plan and file for bankruptcy.8
Simultaneously with Chrysler LLC’s bankruptcy
filing, on April 30, 2009, President Obama announced
in a nationally televised speech that the Government
had agreed to loan $6 billion to a new company to be
formed in accordance with the term sheet the Auto
Team had negotiated with Fiat, an Italian corporation.9
5 App.106a-App.104a.
6 App.265a.
7 App.106a.

8 App.107a.
9 App.181a.
 6

Title to virtually all of Chrysler LLC’s valuable assets

were transferred to Fiat-Chrysler clear of creditors’
claims.10 Chrysler LLC, which retained virtually all
of the debts, ceased doing business.11
On June 9, 2009, the bankruptcy court issued an
order rejecting the terminated dealers’ franchise con-
tracts, prohibiting them from continuing in business as
Chrysler dealers.12 By June 10, 2009, 789 franchised
dealerships had been shuttered.13
Despite the recession, each of the former dealers
were profitable up to the date of termination. Each of
these terminated franchised dealerships had been
profitable throughout 2008 and up to April 30, 2009,
the date of taking, and were generating income on
the day they were shut down by order of the bankruptcy
judge.14 Barry Dodge turned a profit for every year it
was in business and “[i]n 2009, the financial condition
for [the] franchise was going well. . . . Barry’s profits
were up 420 percent[.]”15 Cedric Theel’s net profit was
$776,745 in 2009.16 Jim Marsh’s “Chrysler dealership
was profitable through the recession of 2006, 2007,
2008, and 2009 . . . even though Chrysler never invested

10 App.20a.
11 Id.

12 App.4a.
13 Id.
14 App.68a, App.75a, App.78a, App.82a, App.85a-App.86a, App.
88a, App.90a.
15 Trial Tr. 1217:7-10 (Apr. 11, 2014).

16 Trial Tr. 471:18-20 (Apr. 9, 2014).

 7

any funds in the dealership.”17 Livonia Chrysler Jeep’s

profitability “was [$]916,084 in 2006, [$]793,307 in 2007
and [$]1,164,211 in 2008. . . . [The] dealership was
consistently profitable through the recession[.]” 18 In
2009, RFJS was “profitable up until the termination
of . . . the franchise.”19 Taylor & Sons was profitable
in 2008 and 2009.20 Whitey’s, expanded during the
difficult financial times and “did not anticipate that
the value of [Whitey’s] could potentially be at risk” 21
even though Chrysler was in financial trouble.
After their franchise agreements were rejected in
bankruptcy, and because they were given no time
for orderly wind down, on June 10, 2009, the rejected
dealers—including Petitioners—were forced to sell
their inventory of new Chrysler vehicles and parts at
fire sale prices, terminate their employees, and shut
down their showrooms.22 Fiat-Chrysler also sent letters
to the rejected dealers’ former customers telling them
who their new government-favored local dealer would
be.23 Many of the rejected dealers’ competitors bought
the inventories that the rejected dealers were forced

17 Trial Tr. 371:8-19 (Apr. 9, 2014).

18 Trial Tr. 1358:23-1359:4 (Apr. 15, 2014).

19 Trial Tr. 968:20-21 (Apr. 10, 2014).

20 Trial Tr. 343:10-12 (Apr. 8, 2014).

21 Trial Tr. 824:7-14 (Apr. 10, 2014).

22 Trial Tr. 587:22-588:1 (Apr. 9, 2014).

23 Trial Tr. 541:14-17 (Apr. 9, 2014).

 8

to liquidate and hired many of the rejected dealers’

best terminated employees.24

B. Procedural background
Following the 2009 restructuring of Chrysler LLC,
170 dealers whose franchise agreements had been
terminated in bankruptcy sued for a taking of their
dealer franchises in the U.S. Court of Federal Claims
on February 17, 2011, in Alleys of Kingsport, Inc. v.
United States, Case No. 11-100C.25 Petitioners are
seven Model Plaintiffs selected from a total of 170
Chrysler dealers who filed suit in Alley’s of Kingsport,
Inc. et al. v. United States , Case No. 11-100C. Their
claims were consolidated with two other cases, Colonial
Chevrolet Co. v. United States , Case No. 10-647C
(lead), and Spitzer v. United States, Case No. 12-900C.
Denying the Government’s motion to dismiss these
three cases, the trial court agreed to certify an inter-
locutory appeal to the Federal Circuit.26 On appeal,
under the name of A&D Auto Sales, Inc. v. United
States, the Federal Circuit affirmed the trial court’s
decision denying the Government’s motion to dismiss
on April 7, 2014, but required the terminated dealer-
ships to amend their complaint to allege economic
impact resulting from the Government’s action. 27
Citing Penn Central, the Federal Circuit held:
[B]y necessity, proving economic loss requires
a plaintiff to show what use or value its

24 Id.
25 App.45a.
26 App.46a.

27 App.16a.
 9

property would have but for the government

action. We have often rejected takings claims
where plaintiffs failed to make such a
showing. Absent an allegation that GM and
Chrysler would have avoided bankruptcy but
for the government’s intervention and that
the franchises would have had value in that
scenario, or that such bankruptcies would
have preserved some value for the plaintiffs’
franchises, the terminations actually had no
net negative economic impact on the plaintiffs
because their franchises would have lost all
value regardless of the government action.
Having failed to include such allegations, the
dealers fail to satisfy the pleading standards
necessary to survive a motion to dismiss.28
On remand, the terminated dealerships amended
their complaint to allege economic impact under the
standards articulated by the Federal Circuit, and the
trial court denied the Government’s second motion to
dismiss.29 On December 4, 2015, the trial court consoli-
dated this case with another pending case, Colonial
Chevrolet Co. v. United States, No. 10-647C, severing
from Colonial the claims of former General Motors
franchisees so as to move forward with discovery and
trial on only the claims of the terminated Chrysler deal-
ers. 30 The trial court then ordered that the claims
of nine Model Plaintiffs (including these seven ter-
minated dealerships: Barry Dodge, Inc., Cedric Theel,

28 App.38a-App.40a.
29 App.48a.

30 App.49a.
 10

Inc., Jim Marsh American Corp., Livonia Chrysler

Jeep, Inc., RFJS Company, Taylor & Sons, Inc., and
Whitey’s, Inc.) be tried, staying the claims of the
remaining Plaintiffs.31

1. The Court of Federal Claims

Trial of the Model Plaintiffs’ claims commenced
on April 8, 2019 and ended May 8, 2019.32 The two
main issues at trial were whether the Government
coerced Chrysler LLC to terminate 25% of its dealership
network and whether the Former Dealers suffered any
economic impact from losing their franchises. 33 On
October 2, 2019, the trial court issued its decision,
holding that the Model Plaintiffs failed to establish
that the Government coerced Chrysler to reject any
of the Plaintiffs’ franchise agreements in bankruptcy
and failed to establish their franchise agreements
would have had value without government financial
assistance to Chrysler.34 On October 2, 2019, judgment
was entered, and the rejected dealers appealed to
the U.S. Court of Appeals for the Federal Circuit on
November 15, 2019.

2. The Federal Circuit’s Opinion

On December 29, 2020, the Federal Circuit
affirmed the trial court’s denial of just compensation
on the sole ground that the rejected dealers had failed
to prove that their dealerships would have had value

31 Id.
32 Id.
33 Id.

34 App.55a.
 11

in the absence of governmental financial assistance

to Chrysler LLC—despite the fact that each of these
dealers was profitable and was generating income on
the day they were shut down by Government action.35
To reach its counterintuitive decision, the Federal
Circuit ignored its ruling in Love Terminal Partners
v. United States 36 issued just two years earlier that
found no economic impact because the property in
that case was not turning a profit at the time of
taking.37 Instead, the Federal Circuit applied a
decline-in-market value test to be determined after
the date of taking to conclude that cancellation of the
dealers’ franchises, although they were generating
significant profits at the time of the taking, inflicted
no economic impact as Penn Central requires.38
The Federal Circuit would have reversed the trial
court had it simply followed its own recent precedent,
namely Anaheim Gardens, L.P. v. United States ,39
where the court held just the opposite of its ruling in
this case—reversing the trial court’s finding of insuffi-
cient economic impact for failure to consider lost profits
attributable to the governmental action:
[T]he properties at issue were income-produ-
cing properties. The value of each property
to its respective owner derived, not from any
inherent objective “fair market value” of the

35 App.6a-App.11a.

36 889 F.3d 1331 (Fed. Cir. 2018).

37 Id. at 1344.
38 App.6a-App.11a.

39 953 F.3d 1344 (Fed. Cir. 2020).

 12

land or the fixtures on the property, but

rather from the property’s ability to generate
a future stream of rental income as of
the prepayment date . . . lost future rental
income, rather than fair market value, is
the appropriate measure of economic impact
because that is what the government actually
took from them.40
Because the Federal Circuit failed to apply its own
precedents in determining economic impact in this case,
the court reached the jarring result that government
can order the destruction of thriving, family-owned
businesses for a governmental purpose, without any
constitutional consequences.

40 Id. at 1353 (quoting Cienega Gardens v. United States

(Cienega X), 503 F.3d 1266, 1282 (Fed. Cir. 2007)).
 13

REASONS FOR GRANTING THE PETITION

I. THE COURT SHOULD GRANT CERTIORARI TO RESOLVE

THE FEDERAL CIRCUIT’S INTRA-CIRCUIT CONFLICT
ON THE PROPER TEST FOR ECONOMIC IMPACT IN
REGULATORY TAKING CASES INVOLVING PROFIT-
GENERATING PROPERTY
1. As the Federal Circuit held, the dealers’ fran-
chises are property within the meaning of the Fifth
Amendment. 41 And, as the uncontested evidence
showed, each of the dealers was turning a profit from
their franchise right up to June 9, 2009—when govern-
mental action required them to cease business as
franchised Chrysler dealers. Barry Dodge turned a
profit for every year it was in business and “[i]n 2009,
the financial condition for [the] franchise was going
well . . . Barry’s profits were up 420 percent[.]”42 Cedric
Theel’s net profit was $776,745 in 2009.43 Jim Marsh
American Corp.’s “Chrysler dealership was profitable
through the recession of 2006, 2007, 2008, and 2009
. . . even though Chrysler never invested any funds in
[the] dealership.”44 Livonia Chrysler Jeep’s profitabil-
ity “was [$]916,084 in 2006, [$]793,307 in 2007 and
[$]1,164,211 in 2008 . . . [The] dealership was consis-
tently profitable through the recession[.]”45 In 2009,

41 App.27a.

42 Trial Tr. 1217:7-10 (Apr. 11, 2014).

43 Trial Tr. 471:18-20 (Apr. 9, 2014).

44 Trial Tr. 371:8-19 (Apr. 9, 2014).

45 Trial Tr. 1358:23-1359:4 (Apr. 15, 2014).

 14

RFJS was “profitable up until the termination of . . .

the franchise.”46 Taylor & Sons was profitable in 2008
and 2009. 47 Whitey’s expanded during the difficult
financial times and “did not anticipate that the value
of [Whitey’s] could potentially be at risk”48 even though
Chrysler was in financial trouble.
Even in the face of Chrysler LLC’s economic woes
that it had previously encountered, the dealerships’
owners had reasonably invested in their dealerships,
planned for and managed their dealerships to suc-
ceed.49 Each of the terminated dealerships’ owners
testified that they anticipated to continue making
money, sell new and used cars, and service new and
used Chrysler vehicles on the date of taking, June 9,
2009, in the but-for world in which they were not
terminated and would have continued to be profitable,
some for many months after June 9, 2009.
But, under the Federal Circuit’s economic impact
rule announced in this case, the Government can
destroy profitable automobile franchises without com-
pensation if it provides financial assistance to a third
party, here the newly formed Fiat-Chrysler. While the
$6 billion loan to Fiat-Chrysler may have facilitated the
corporate restructuring and improved the businesses
of the manufacturers (Fiat and Chrysler) and dealers
who were not terminated, the Government sacrificed
Petitioners’ dealerships as the price of achieving this
public benefit. While it can be debated whether gov-

46 Trial Tr. 968:20-21 (Apr. 10, 2014).

47 Trial Tr. 343:10-12 (Apr. 8, 2014).

48 Trial Tr. 824:7-14 (Apr. 10, 2014).

49 Penn Cent. Transp. Co., 438 U.S. at 152.

 15

ernmental intervention in the auto marketplace during

a deep recession benefits the American economy, here
there is no question that the Government foisted a
heavy burden on these dealers, many of whom lost
family-owned businesses that they had built up over
a lifetime and, in some cases, over several generations.
Under the Federal Circuit’s rule in this case, the
Government could also have appropriated, without com-
pensation, the businesses of the lenders, suppliers,
and Chrysler itself on the argument that their com-
panies were worthless without the federal financial
assistance given to Fiat-Chrysler. The Federal Circuit’s
rationale that the property interests of all participants
in the automobile industry were worthless without
Government intervention would also extend to adver-
tisers, auto transporters (trucks and railroads), steel
companies, electronics companies, and software pro-
ducers (since modern cars now contain numerous
computer parts).
The Federal Circuit’s economic impact analysis
also directly implicates the trillions of dollars in fin-
ancial assistance that the Government has and is
currently providing in response to the COVID-19 pan-
demic. As such, this decision amply underscores the
wisdom of Justice Holmes’s warning in Pennsylvania
Coal Co. v. Mahon,50 that “[w]e are in danger of forget-
ting that a strong public desire to improve the public
condition is not enough to warrant achieving the desire
by a shorter cut than the constitutional way of paying
for the change.”51

50 260 U.S. 393 (1922).

51 Id. at 416.
 16

2. This case reveals the deep intra-circuit split on

how to analyze the economic impact standards. The
court below simply ignored the lost-profits economic
impact test for the taking of income-generating property
in Anaheim Gardens and other Federal Circuit deci-
sions and instead applied a forward-looking economic
impact standard that ignores the income-producing,
profitability of the property on the actual date of taking.
The Federal Circuit’s holding that governmental
expropriation of profitable auto dealerships does not
meet the economic impact standard of Penn Central
directly conflicts with several decisions of the same
court. This intra-circuit conflict on how to analyze
the economic impact in a claim for the taking of
income-producing property can only be resolved by
this Court, since the Court of Federal Claims has
exclusive jurisdiction over all taking claims against
the federal government.52 Unless this Court accepts
a petition for review, for all taking claims against the
United States, the Federal Circuit is the court of last
resort and the final arbiter of federal takings law.53
Prior rulings by the Federal Circuit, in which the
court found a taking based on its economic impact
analysis, are irreconcilable with the court’s ruling in
this case. In Florida Rock Industries v. United States,54
the Federal Circuit held that, in analyzing the economic
impact of the federal wetlands regulations on develop-
ment property, “the owner’s opportunity to recoup its
investment or better, subject to the regulation, cannot

52 28 U.S.C. § 1491.
53 28 U.S.C. § 1295.

54 791 F.2d 893 (Fed. Cir. 2004).

 17

be ignored.” 55 In Rose Acre Farms, Inc. v. United

States,56 the Federal Circuit noted that “there are a
number of different ways to measure the severity of
the impact of the restrictions.”57 In Cienega Gardens
v. United States,58 the Federal Circuit identified both
lost profits and decrease-in-fair-market-value as appro-
priate ways of measuring economic impact in a
regulatory taking case:
There appear to be at least two ways to com-
pare the value of the restriction to the value of
the property as a whole so as to determine if
there has been severe economic loss . . . First,
a comparison could be made between the
market value of the property with and with-
out the restrictions on the date that the
restriction began (the change in value
approach). The other approach is to compare
the lost net income due to the restriction
. . . Neither approach appears to be inherent-
ly better than the other . . . ”59
The Federal Circuit’s holding here is also directly
at odds with its ruling in Anaheim Gardens, L.P. v.
United States,60 issued only a few months earlier,
which reversed the trial court for limiting its economic
impact analysis to a fair market value comparison

55 Id. at 1986.
56 373 F.3d (Fed. Cir. 2004).

57 Id. at 1188.
58 503 F.3d 1266 (Fed. Cir. 2007).
59 Id. at 1283.

60 953 F.3d 1344 (Fed. Cir. 2020).

 18

while ignoring the loss of income from the plaintiffs’

income-producing apartments:
[L]ost future rental income, rather than fair
market value, is the appropriate measure of
economic impact because that is what the
government actually took from them . . . a
change in fair market value approach would
not accurately account for the fact that the
governmental action targeted their going bus-
iness concerns.61
Equally at odds with its ruling in this case is the
Federal Circuit’s ruling in Love Terminal Partners,62
where the court concluded that the property interest—
an airport leasehold—had zero value on exactly the
opposite rationale—that the property had not produced
a profit because at no time “did revenue exceed plain-
tiffs’ carrying costs so as to meet plaintiffs’ expert’s
definition for an ‘economically beneficial use.’ Since
there was no adverse economic impact, there can be
no taking.”63
3. By virtue of its ruling in this case, the Federal
Circuit creates a heads-I-win-tails-you-lose analysis
in which there can be no taking if the property does
not produce profit, but if the property is profitable
the Court can still ignore that profitability and find
no economic impact as a predicate for a taking.
But it is bedrock taking law that in a taking case
courts evaluate the economic impact of governmental

61 Id. at 1355.
62 889 F.3d 1331 (Fed. Cir. 2018).

63 Id. at 1344.
 19

action by looking at the value of the property before

and after the date of taking.64 This requires the court
to first identify the date of taking, value the property
on that date, and then compare that value after the
taking occurs.65 Another way of stating the same test
is that the economic impact of the government action
must be evaluated in a but-for analysis (which the
Federal Circuit purported to be doing in this case)—
what would have been the value of the property but-for,
or without regard to, the governmental action that
caused the taking: “Thus, by necessity, proving eco-
nomic loss requires a plaintiff to show what use or
value its property would have but for the government
action.”66
Applying that legal test here, the questions that
the Federal Circuit should have asked were whether
the franchised dealerships had any value before (or
but for) the government’s action requiring termination,
and whether franchised dealerships’ streams of income
from sale and servicing of the existing stock of
340,000 existing, unsold new cars, and over 31 million
Chrysler vehicles already on the road would have
had value absent government-caused termination.67
But the courts below instead valued the franchised
dealerships at zero on the assumption they would
eventually in the future have ceased doing business
and generating income—and would at that point have
no value.

64 App.37a.
65 App.37a-App.39a.
66 App.38a.

67 Trial Tr. 533:12-21 (Apr. 9, 2019).

 20

The problem with the Federal Circuit’s economic

impact analysis is that it values the franchises as
though they had already been terminated (that is,
after the government action) rather than before the
government action that caused that termination.
The panel ignored the economic impact of the
Government’s requirement that these dealers, which
were profitable up to the date they were shut down,
immediately cease doing business as Chrysler fran-
chisees. Because the record amply shows that these
franchised dealerships would have continued to gener-
ate income streams even after rejection, as the dealers
sold off the existing backlog of 397,600 unsold new
Chrysler automobiles and continued to service the 31
million Chrysler vehicles still on the road, the Federal
Circuit’s economic impact standard was not factually
supported even in this case.

II. THE COURT SHOULD GRANT CERTIORARI TO REVIEW

WHETHER PENN CENTRAL PROVIDES AN ADEQUATE
TEST FOR DETERMINING WHEN GOVERNMENTAL
ACTION AMOUNTS TO A FIFTH AMENDMENT TAKING
1. Although consistently cited as the polestar of
this Court’s regulatory taking jurisprudence, Penn
Central Transportation Co. v. City of New York 68
provides no direction on how regulatory taking cases
should be decided. Penn Central is rooted in indecision
itself:
The question of what constitutes a taking for
purposes of the Fifth Amendment has proved
to be a problem of considerable difficulty, that
this Court, quite simply, has been unable to

68 438 U.S. 104 (1978).

 21

develop any set formula for determining when

justice and fairness require that economic
injuries caused by public action be compen-
sated by the government,” and that whether a
particular restriction will be rendered invalid
by the government’s failure to pay for any
losses proximately caused by it depends large-
ly upon the particular circumstances [in that]
case.69
Characterizing its takings jurisprudence as “essen-
tially ad hoc, factual inquiries,”70 the Court went on
to state that its “decisions have identified several
factors that have particular significance,”71 including
“[t]he economic impact of the regulation on the claimant
and, particularly, the extent to which the regulation
has interfered with distinct investment-backed expec-
tations . . . ”72 and the “character of the governmental
action.”73
The Federal Circuit, and other state and federal
courts, have variously interpreted Penn Central as
either a balancing test (in which a single element
could prove liability) or a three-element test (in which
the plaintiff must prevail on each element). 74 The

69 Id. at 123-24 (internal quotations omitted).

70 Id. at 124.

71 Id.

72 Id.
73 Id.

74 Compare Cienega Gardens v. United States, 331 F.3d 1319,

1337 (Fed. Cir. 2003) (“Under Penn Central, courts use a three-
factor analysis to assess claimed regulatory takings”), with
Yancey v. United States, 915 F.2d 1534 (Fed. Cir. 1990) (“When
 22

result has been disarray and inconsistency in Fifth

Amendment inverse condemnation law within the
Federal Circuit and among state and other federal
courts. Quite simply, Penn Central fails to provide
a discernable rule of law, leading to subjectivity and
inconsistency in the application of Fifth Amendment
protections of private property across the land.
A slew of thoughtful law review articles have
decried the lack of sound legal guidance provided by
Penn Central. Professor Sax describes Penn Central
as an “open-ended, I-(hope)-I-know-it-when-I-see-it
approach”75 to deciding regulatory taking cases.76
Professor Eagle writes that Penn Central “started
with a concept of explaining the regulatory taking that
was explicitly ad hoc, and has, over time, become a
fossilized branching of tests and subtests,” 77 demon-
strating “the need for a fresh examination of Penn
Central and the need for a vibrant and coherent law
of takings.”78 Professor Echeverria states that “the
Penn Central test . . . is so vague and indeterminate

adverse economic impact and unanticipated deprivation of an

investment backed interest are suffered . . . compensation under
the Fifth Amendment is appropriate” and the character of the
Government’s action did not matter).
75 Joseph L. Sax, The Property Rights Sweepstakes: Has Anyone
Held the Winning Ticket?, 34 VT. L. REV. 157, 157 (2009).
76 Id.

77 Steven J. Eagle, “Economic Impact” In Regulatory Takings

Law, 19 HASTINGS W.-N.W. J. ENVTL. L. & POL’Y 407 (2013).
78 Id. at 441.
 23

that it invites unprincipled, subjective decision making

by the courts.”79 And Loyola Professor Kanner writes:
The fundamental flaw in the U.S. Supreme
Court’s Penn Central opinion, which tran-
scended the opinion’s other lacunae, was the
Court’s explicit refusal to articulate the
elements of a regulatory taking cause of
action, pleading judicial inability to do so,
and claiming to make its decisions in this
field by making ad hoc, factual, case-by-case
inquiries.80
This Court itself has admitted: “[W]e have given
some, but not too specific, guidance to courts confronted
with deciding whether a particular government action
goes too far and effects a regulatory taking.”81 Thirty
years ago, Justice Stevens stated that “[e]ven the wisest
of lawyers would have to acknowledge great uncer-
tainty about the scope of this Court’s takings juris-
prudence.” 82 In a recent dissent from denial of
certiorari, Justice Thomas aptly described the Penn
Central test as one that “nobody—not States, not
property owners, not courts, nor juries—has any idea
how to apply this standardless standard. . . . If there
is no such thing as a regulatory taking, we should

79 John D. Echeverria, Is the Penn Central Three-Factor Test

Ready for History’s Dustbin?, 52 LAND USE L. & ZON. DIG. 3, 7
(2000).
80 Gideon Kanner, Making Laws and Sausages: A Quarter-
Century Retrospective On Penn Central Transportation Co. v.
City of New York, 13 WM. & MARY BILL RTS. J. 679, 687 (2005).
81 Palazzolo v. Rhode Island, 533 U.S. 606, 617 (2001).

82 Nollan v. Cal. Coastal Comm’n, 483 U.S. 825, 866 (1987)

(Stevens, J., dissenting).
 24

say so. And if there is, we should make clear when

one occurs.”83
Several statistical studies demonstrate that courts
attempting to apply Penn Central rarely find that a
taking has occurred. One study finds that plaintiffs
prevail in only 9.5% of Penn Central cases decided by
the Federal Circuit, 12.5% in the First Circuit, and
6.25% in the Ninth Circuit.84 Another study of 133
taking cases shows plaintiffs prevailing 9.8% of the
time.85 A third study of 1,700 taking cases citing
Lucas v. South Carolina Coastal Commission,86 most
of which also cite Penn Central , found plaintiffs
prevailing in only 27 federal and state cases—a 1.6%-
win rate.87
2. This case offers the Court an excellent oppor-
tunity to review Penn Central to determine whether
it provides adequate guidance for determining when a
Fifth Amendment violation has occurred and, if not,
to provide more precise guidance on the nature and
extent of just compensation guarantees under the Fifth

83 Bridge Aina Le’a, LLC v. Hawaii Land Use Comm’n, 141 S. Ct.
731 (2021) (Thomas, J., dissenting).
84 Adam R. Pomeroy, Penn Central After 35 Years: A Three
Part Balancing Test Or A One Strike Rule?, 22 FED. CIRCUIT
B.J. 677 (2013).
85 F. Patrick Hubbard et al., Do Owners Have a Fair Chance of
Prevailing Under the Ad Hoc Regulatory Takings Test of Penn
Central Transportation Company?, 14 DUKE ENVTL. L. & POL’Y
F. 121, 121-22 (2003).
86 505 U.S. 1003 (1992).

87 Carol Necole Brown & Dwight H. Merriam, On the Twenty-

Fifth Anniversary of Lucas: Making or Breaking the Takings
Claim, 102 IOWA L. REV. 1847, 1850 (2017).
 25

Amendment. The franchise each dealer held was (as the

Federal Circuit conceded) a Fifth Amendment compen-
sable property interest which, on the date of taking,
provided a stream of profits that was abruptly cut off
by the Government’s action. Yet, relying on this Court’s
decision in Penn Central, the Federal Circuit found no
Fifth Amendment regulatory taking, illustrating the
failure of Penn Central to support the text and purpose
of Fifth Amendment regulatory taking compensation,
which is to weigh “the effect of a regulation on specific
property rights as they are established at state law.”88

88 Murr v. Wisconsin, 137 S. Ct. 1933, 1955 (2017) (Thomas, J.,

dissenting).
 26

CONCLUSION
For the foregoing reasons, this Court should
grant the petition.

Respectfully submitted,

ROGER J. MARZULLA
COUNSEL OF RECORD
NANCIE G. MARZULLA
MARZULLA LAW, LLC
1150 CONNECTICUT AVENUE, NW
SUITE 1050
WASHINGTON, DC 20036
(202) 822-6760
ROGER@MARZULLA.COM
NANCIE@MARZULLA.COM

COUNSEL FOR PETITIONERS

AUGUST 13, 2021