The issue before the Supreme Court in this case was whether federal courts should create an exception to the full faith and credit statute, 28 U.S.C. § 1738, for regulatory taking claims brought under the Fifth Amendment. This question arose because of the holding in Williamson County Regional Planning Comm’n v. Hamilton Bank of Johnson City, 473 U.S. 172 (1985), that a Fifth Amendment regulatory takings claim is not ripe for federal adjudication until the plaintiff has first sought unsuccessfully to obtain adequate compensation for the taking through all available state procedures, including state court litigation. The San Remo hotel in San Francisco brought a takings claim in federal court contesting a city ordinance that required a $567,000 fee in 1996 to convert from a residential to a tourist hotel. Under Williamson County, the federal case was stayed, while the matter was litigated under state law in the California courts. The California courts, however, did not simply adjudicate San Remo’s claims under California law; they also decided that there was no viable federal constitutional claim. Returning to the federal court, San Remo found its case dismissed under the full faith and credit statute because the matter had been fully adjudicated by the California courts. In the Supreme Court, San Remo argued that, unless full faith and credit is interpreted to allow re-litigation of federal issues in regulatory takings cases, the result of Williamson County will be that plaintiffs in such matters will be forced to litigate their claims in state courts without any realistic possibility of review of a decision on their federal constitutional claims in a federal forum (unless certiorari were to be granted by the Supreme Court to review directly the state court’s decision).
In an amicus brief jointly filed with the Defenders of Property Rights, NELF argued that San Remo provided the Court with an opportunity to reconsider the complex and expensive ripening process mandated under Williamson County. NELF argued that the Fifth Amendment should not require prior, duplicative state court litigation and that the more appropriate ripeness requirement for regulatory takings would permit a federal case to be brought once a state or local government renders a final decision restricting the full use of private property, without contemporaneously providing compensation.
The Supreme Court was not persuaded by San Remo’s arguments and on June 20, 2005 issued a decision unanimously affirming the lower court’s dismissal of the takings claim under the full faith and credit statute. However, in a separate concurrence joined by Justices O’Connor, Kennedy, and Thomas, Chief Justice Rehnquist suggested that Williamson County may not have been correctly decided, referring specifically to NELF’s brief in a footnote. Noting that the courts below had not addressed this issue and that neither party had asked the Court to reconsider Williamson, Justice Rehnquist stated his view that, in an appropriate case, the Court should reconsider Williamson.