When Gov. Michelle Lujan’s lawyer spoke to the state Supreme Court earlier this month, he made it clear that he expected to be in front of the justices to argue the merits of almost a dozen lawsuits against the state.
In his opening argument, Matt Garcia, the governor’s legal counsel, reminded justices that he has been in and out of their courtroom numerous times since the COVID-19 pandemic hit New Mexico.
“The COVID-19 pandemic has given rise to a number of nominal and significant legal issues for this court’s consideration, ranging from everything to elections to prison conditions,” Garcia said.
On that specific day though, Garcia was arguing the state’s case for issuing fines and misdemeanor charges against businesses that do not comply with the state’s public health order. Just as they had in nearly every case related to COVID-19 before, the justices sided with the governor’s office.
But several times during the hearing, justices asked Garcia about the idea that the state may owe businesses money for ordering them to shut down.
Justice Judith Nakamura asked Garcia about a request in his petition that the high court make a ruling on whether or not the state has to pay businesses that were forced to close.
Garcia said he asked the justices to consider the issue as a way to save time and resources and referenced the ten cases pending in district court, all filed by Albuquerque-based attorney Blair Dunn.
“Undoubtedly, the court will have to address this issue again, at some point, and so it makes sense now to do it when it’s been presented directly to the court,” Garcia said.
The justices ultimately decided not to weigh-in on the issue, but there is little doubt that the issue of compensation for closed businesses will eventually end up back at the state Supreme Court.
The main question justices will likely have to answer is whether businesses that were ordered to close are due compensation from the state for the impact of the closures.
Garcia argued briefly in court that the difference between a categorical taking and a regulatory taking is key.
The state’s Public Health Emergency Response Act (PHERA) contains a provision that outlines compensation for businesses that were taken over by the state.
In the case of the state’s public health order, Garcia said, the directive to close businesses should be considered regulatory. Garcia added that previous case law holds that ordering businesses to close does not constitute a regulatory taking and that the provision in PHERA specifically addresses categorical taking. But Dunn, who is representing about a dozen business owners in various judicial districts, said he thinks it could be considered both.
“Our argument is that any of those where it required 100 percent shutdown, was the government taking 100 percent control of the business and is therefore 100 percent of the taking, which goes both to this idea of a regulatory taking versus categorical taking,” Dunn said.
Former state Senator Dede Feldman helped draft the bill in 2003 that would ultimately become PHERA. She said the impetus for the bill was the anthrax scare that was happening at the time and that she and other lawmakers intended the compensation section of PHERA for hospitals or medical companies.
“What we talked about were hospitals that were taken over and used for quarantine,” Feldman said.