Four cases being argued next month at the Federal Circuit attracted amicus briefs. One of these cases is Dinh v. United States. In it, the Federal Circuit will review a dismissal of a takings claim by the Court of Federal Claims. That court held that, because Congressional action did not explicitly devalue certain bonds or require transferring funds to repay the bonds to the Puerto Rican government, there was no taking. This is our argument preview.
In its opening brief, Dinh, on behalf of himself and other similarly situated bondholders, argued that “[t]he trial court erred as a matter of law” because “dismissal was based on its mistaken conclusion that actions taken under a federal statute authorizing those actions cannot constitute a per se taking.” Dinh noted that precedent has repeatedly “rejected that argument in other cases.”
Dinh highlighted that, “absent Congress’ enactment of the Puerto Rico Oversight, Management, and Economic Stability Act (‘PROMESA’) . . . there would be no case pending before this Court to review.” Dinh argued that, by enacting PROMESA, Congress “intentionally authorized the creation of the Oversight Board and authorized the actions that abrogated Puerto Rican law that otherwise flatly prohibited the destruction of the value of the Bondholders’ securities.” Dinh explained that, “[a]s a direct and intended result of Congress’s enactment of the Act, COFINA Bondholders lost a significant portion of the principal and interest each COFINA Bondholder was entitled to and the fair market value of the pledged revenues, their security interests and liens on COFINA funds, as well as other compensable property rights.” Dinh contended that Congress knew “its actions could lead to this taking lawsuit and that the federal Government could be held liable for an unconstitutional taking of the Bondholders’ property rights.”
In its response brief, the United States presented several arguments in favor of affirmance. First, the government argued, “the trial court lacked jurisdiction over plaintiffs’ complaint because Congress explicitly directed that all cases arising under PROMESA” were to “be pursued in the District of Puerto Rico.” According to the government, moreover, “the trial court correctly held that plaintiffs failed to identify sufficient Government action to support a takings claim based on the mere enactment of PROMESA.” It explained that “a myriad of discretionary actions of a non-Federal entity, the Oversight Board . . . cannot be attributed to the Federal Government for takings purposes.” In addition, the government suggested, all three factors identified by precedent would weigh against a taking. Finally, the government argued, the “trial court did not abuse its discretion in denying plaintiffs’ request to amend their complaint.”
In his reply brief, Dinh maintained “the Government’s argument that the United States is not liable for the Oversight Board’s uncompensated taking of Dinh’s property,” as Congress authorized it to do, “is at odds with the established Fifth Amendment.” Dinh argued that, “but for the . . . enactment of PROMESA, Dinh’s funds (property) would not and could not have been transferred to Puerto Rico because Puerto Rican law forbade the transfer.” Dinh emphasized that “PROMESA’s passage constituted a legislative, per se taking of Dinh’s property rights.” According to Dinh, the “Government incorrectly argues that the categorical, per se taking test does not apply here.”
Arthur Samodovitz, a pro se individual, filed an amicus brief in support of reversal.
Oral argument is scheduled to be heard on Tuesday, January 7. We will keep track of this case and report on any developments.