LANSING, Mich. (Legal Newsline) - A Michigan fitness studio isn’t entitled to compensation for the time it was shut down under Gov. Gretchen Whitmer’s emergency Covid-19 regulations, an appeals court ruled, reversing a lower-court decision that kept the lawsuit alive. The fact the Michigan Supreme Court later ruled the governor exceeded her authority didn’t affect the outcome of the case.
The Gym 24/7 Fitness sued Michigan in the Court of Claims on behalf of itself and other gyms in 2020, claiming the Covid shutdown rules deprived them of revenue and represented an unconstitutional regulatory taking of private property.
In September 2020, the Court of Claims denied the state’s motion for summary judgment, ruling that dismissal wasn’t appropriate at that stage because the state didn’t provide enough documentary evidence that its regulations were reasonable.
The state appealed, arguing the complaint should be dismissed for failure to state a legal claim. The gym filed a cross-appeal, saying whether the state’s actions were reasonable or well-supported didn’t matter; the question was whether the state owed the gym compensation.
The Michigan Court of Appeals, in a March 31 decision, agreed with Michigan.
The appeals court said the gym was correct in that the district court wrongly focused on whether the regulations were arbitrary and capricious. The gym didn’t challenge the regulations on that basis in its complaint. But citing U.S. Supreme Court decisions, the appeals court said 24/7 still had no case.
The power of governments to use their police powers to control a pandemic was established with Jacobsen v. Massachusetts authorizing mandatory vaccinations in 1905, the court noted. Since then, the Supreme Court has also defined the taking of private property to include temporary seizures, periodic flooding, and even, in last year’s Cedar Point Nursery v. Hassid, requiring a business to allow union representatives on its property.
The pandemic shutdown wasn’t a physical occupation of the property, and it wasn’t permanent, the appeals court said, however. While the economic impact of a regulation and how it interferes with reasonable investment expectations are factors for judging whether a taking has occurred, the court concluded, “we do not give those factors all that much weight because the economic impact and the interference with business expectations arising from the closure orders were short lived.”