February 24, 2021

Volume XI, Number 55

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Sixth Circuit: City Waived Exhaustion Requirement By Removing Takings Claim to Federal Court

Normally, a regulatory-takings plaintiff must seek compensation through “procedures the State has provided,” before suing in federal court. Last week, in a unanimous unpublished opinion, Lilly Investments v. City of Rochester, the Sixth Circuit joined the Second and Fourth Circuits by holding that, by removing the case, a defendant-city waives this exhaustion requirement.  The Court reasoned that, “[w]hen a state or locality removes to federal court, it ‘implicitly agrees’ with the competence of federal courts to decide the plaintiff’s claim.”

The Sixth Circuit noted that Eighth Circuit has taken a different position and “affirmatively declined to waive the exhaustion requirement in removal cases,” but pointed  out that this may be because the Eighth Circuit “is the only circuit that considers [the requirement] jurisdictional,” and called the latter “a conclusion inconsistent with Supreme Court precedent.”

Given its deepening of an existing circuit split, the case has Supreme Court potential.  In the meantime, states and municipalities should carefully consider all the implications when deciding whether to remove similar claims.

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© Copyright 2020 Squire Patton Boggs (US) LLPNational Law Review, Volume VII, Number 9
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About this Author

Larisa Vaysman, Squire Patton Boggs, appellate litigation
Associate

Larisa Vaysman’s practice focuses on general and appellate litigation. She has represented clients before the Sixth, Ninth and DC Circuits, as well as a range of state and federal courts. She has also represented petitioners and amici curiae before the US Supreme Court. Prior to joining Squire Sanders, Larisa clerked for The Honorable R. Guy Cole, Jr. of the United States Court of Appeals for the Sixth Circuit. While in law school, Larisa worked as a summer associate for a Cincinnati law firm.

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