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Piece of Cake: What’s Behind Supreme Court Opinions?
On June 4, 2018 the United States Supreme Court issued a decision in the controversial case, Masterpiece Cakeshop, Ltd. v. Colorado Civil Rights Commission. The case concerned a baker, Mr. Jack Phillips, a devout Christian, who in 2012 declined to create a wedding cake for a same-sex wedding on the basis that doing so would require him to express himself artistically in a way that was inconsistent with his religious beliefs. At the time, gay marriage was not legally recognized in Colorado. However, the state had an anti-discrimination act regarding goods and services available to the public. See C.R.S. 24-34-601. The Commission determined that Mr. Phillips violated the anti-discrimination act. On review, the Supreme Court held that the Commission violated the First Amendment’s Free Exercise Clause by egregiously treating Mr. Phillips’ case with hostility towards his religious beliefs. The Free Exercise Clause requires that states not base regulations and laws on hostility towards a religious belief, but that they remain neutral. The Supreme Court reversed the lower court’s decision stating that Mr. Phillips had been “entitled to a neutral decisionmaker who would give full and fair consideration to his religious objection as he sought to assert it . . . ” Masterpiece Cakeshop, Ltd. v. Colo. Civil Rights Comm’n, 201 L. Ed. 2d 35, 46 (U.S. 2018).
Critical to the effect of this decision on similar future cases is that the Court did not decide for the states the limits and boundaries between anti-discrimination and freedom of speech. Rather, the Court narrowly held that these disputes “must be resolved with tolerance, without undue disrespect to sincere religious beliefs . . . ” while avoiding “subjecting gay persons to indignities when they seek goods and services in an open market.” Id at 50. In other words, the Supreme Court simply held that state courts must be neutral decisionmakers who faithfully uphold the entire Constitution.
Nevertheless, the case was not decided without much disagreement among the nine Supreme Court Justices, despite the final 7-2 decision. With three concurring opinions (one such written and joined by two of the four liberal Justices) and one dissenting opinion, it is no wonder why the case has caused such controversy. What might cause even more shock is that Justice Kennedy, who wrote the majority opinion, also wrote the 2015 landmark decision which legalized gay marriage nationwide. Because of the different opinions, this case becomes an effective model for answering the following questions. How do Supreme Court Justices decide who writes each opinion? Why do they write concurring and dissenting opinions? What precedential value do concurring and dissenting opinions have?
The Majority Opinion is Assigned by the Chief Justice
After oral arguments, the Justices convene in a conference to express how each of them would decide the case; the conference is followed by a vote. Once the votes have been counted, the Chief Justice assigns a Justice in the majority to write the opinion of the Court or does so himself. However, if the Chief Justice is not in the majority, the most senior Justice in the majority has the authority to assign writing the opinion of the court. In Masterpiece Cakeshop, Chief Justice Roberts was a part of the majority and assigned writing the opinion of the court to Justice Kennedy. They were joined by Justices Breyer, Alito, Kagan, and Gorsuch. Often, a Justice in the majority will agree with the outcome of the case, but not with the majority’s reasoning for it. That Justice may write a concurring opinion, which can be joined by other Justices. Here, Justice Kagan filed a concurring opinion in which Justice Breyer joined. Justice Gorsuch filed another concurring opinion, joined by Justice Alito. Justice Thomas wrote an opinion concurring in the judgment, but only concurring in part as to the majority’s rationale. Any Justice who disagrees with the majority judgment can write a separate dissenting opinion. Here Justice Ginsberg, who was joined by Justice Sotomayor, filed a dissenting opinion.
Often, the opinions reference each other, each Justice arguing their reasoning in comparison to another’s. The following sections briefly describe the main points of each opinion and illustrate how the Justices agree and disagree with each other.
Written by J. Kennedy; Joined by JJ. Roberts, Breyer, Alito, Kagan, Gorsuch
“While it is unexceptional that Colorado law can protect gay persons in acquiring products and services on the same terms and conditions as are offered to other members of the public, the law must be applied in a manner that is neutral toward religion.” Id at 37. The commissioners made hostile comments about Mr. Phillips’ faith, casting doubt on the fairness and impartiality of the Commission’s adjudication of the case. Justice Kennedy compared this case to another where other bakers prevailed before the Commission despite refusing to create a cake for a client (because it depicted anti-gay messages, which the bakers opposed) while being willing to sell other products with a different message to the same customers. The cases are all too similar, he argues, and yet the Commission reached opposite decisions.
Written by J. Kagan; Joined by J. Breyer
“[A] proper basis for distinguishing the cases was available—in fact, it was obvious.” Id. at 50. The three bakers, Justice Kagan argues, would have denied making the anti-gay cake for any customer, regardless of his religious beliefs. However, Mr. Phillips would have created a wedding cake for an opposite-sex couple, but refused to create one for the same-sex couple. Nevertheless the commission made their decision with hostility and bias.
Written by J. Gorsuch; Joined by J. Alito
Pushing back against the Kagan and Ginsberg opinions, Justice Gorsuch argues that the different bakers’ cases were legally almost identical and should have resulted in the same determinations. He argues that the Commission treated them differently because they deemed Mr. Phillips’ beliefs offensive. The courts should not be deciding what is offensive. “[T]he place of secular officials isn’t to sit in judgment of religious beliefs, but only to protect their free exercise. Just as it is the ‘proudest boast of our free speech jurisprudence’ that we protect speech that we hate, it must be the proudest boast of our free exercise jurisprudence that we protect religious beliefs that we find offensive.” Id. at 55.
Written by J. Thomas; Joined by J. Gorsuch
Justice Thomas addresses the freedom of speech argument that Mr. Phillips made. He believes creating a custom wedding cake for a couple is “expressive conduct” and should therefore be protected by the First Amendment. “States cannot punish protected speech because some group finds it offensive, hurtful, stigmatic, unreasonable, or undignified.” Id at 65.
Written by J. Ginsberg; Joined by J. Sotomayor
Justice Ginsberg argues that neither the commissioners’ statements about religion nor the commission’s prior treatment of other bakers amounts to hostility towards religion. The Court’s decision is therefore unjustified. She argues that the other bakers refused to make an offensive cake because of the cake itself, but that Mr. Phillips refused to bake the wedding cake because of their sexual orientation.
Precedential Value of Concurring and Dissenting Opinions
While lower courts must follow the Supreme Court’s majority opinion (under stare decisis), there are times when a concurring opinion, and even a dissenting opinion, can influence future decisions and the development of law. Overtime, the view of the courts might therefore shift drastically.
As for the Masterpiece Cakeshop case, it will take careful consideration by lower courts of the decision as they apply it to similar cases. Courts will need to balance applying the law in a manner that is neutral towards religion while protecting people from discrimination.
The Supreme Court’s recent decision in TransUnion v. Ramirez has narrowed Article III standing by making it more difficult for plaintiffs to initiate class action lawsuits against corporate defendants who violate federal statutes. Here, the Court found that violation of a federal statute alone does not give rise to the level of a “concrete injury” for a plaintiff’s Article III standing. The plaintiff must have suffered a “concrete injury” to have Article III standing in order to seek relief in a court of law. This decision has serious consequences for tort class action lawsuits and corporate activities in general.
TransUnion is a credit reporting agency that compiles personal and financial information about individual consumers and creates a consumer report that is sent to third party companies to determine the consumer’s creditworthiness. TransUnion had an add-on to their product called the OFAC Name Screen Alert that was available for third party businesses to order. This add-on would compare the name of the consumer against a list maintained by the United States Treasury Department’s Office of Foreign Assets Control (OFAC).1 This list denotes known terrorists, drug traffickers, and other serious criminals.2 If a consumer’s first and last name appeared on the OFAC list, TransUnion would place an alert on the credit report, stating that the person is a potential match. Unfortunately, this product generated many false positives, as many consumers shared names with those on the OFAC list.3 Plaintiff Sergio Ramirez was one such consumer, as he discovered at a Nissan Dealership in California.4 The dealership refused to sell him the car because the credit report they ran on Ramirez falsely indicated that he was a suspected terrorist.5
Ramirez brought suit against TransUnion, alleging that it violated the Fair Credit Reporting Act by failing to follow reasonable procedures to ensure the accuracy of the credit report information.6 Ramirez obtained a class action for his suit, with a class of 8,185 people all suffering from same or similar harms by TransUnion’s alleged violation of the statute. Only 1,853 of the class, including Ramirez, had their false reports containing OFAC alerts provided to the third-party companies.7 The other 6,332 did not have their reports sent to the third-party companies.
Writing for the majority in a split 5-4 decision, Justice Kavanaugh found that while the 1,853 class members whose reports were sent did suffer a harm, the same was not true for the remaining 6,332.8 In his reasoning, Justice Kavanaugh stated that to have a claim for tort damages, a plaintiff must have standing by the standards set in Article III of the Constitution.9 The plaintiff must have a “personal stake” in their case.10 The plaintiff must show a “concrete” harm that was caused by the defendant and can be redressed by judicial relief.11 In defining “concrete harm”, the Court cited its decision in Spokeo v. Robins, 578 U.S. ____ (2016), stating that the harm must have a close relationship to a harm traditionally recognized in American courts.12 However, a mere violation of a federal statute does not give a plaintiff a cause of action against a defendant.13 The plaintiff must have suffered a concrete harm as well.14
Reputational harms, as in this case, bear a close relationship to the traditional tort of defamation. This was the case for the 1,853 class members whose reports were sent to third-party companies.15 A misleading statement that deems a consumer a terrorist bears a close relationship to defamation, especially when it is made available to a third-party company. Statements like these had an adverse effect on these 1,853 class members.16 However, the remaining 6,332 class members suffered no harm by TransUnion’s violation of the statute, as their false reports were never sent to any third-party company.17 he inaccuracy of the statements themselves, nor the violation of the statute, were not enough to give these 6,332 class members a cause of action.18
Justice Kavanaugh justified his reasoning by highlighting the separation of powers between Congress and the judiciary. Justice Kavanaugh mused that without Article III’s concrete harm requirement, Congress could hypothetically allow plaintiff to sue a corporate defendant over a statutory violation without that plaintiff having any personal stake in the case.19
In reality, this ruling could eliminate a potential check that corporations had against them from corporate malfeasance. Such a ruling will surely impact future class action suits against corporate defendants, as every individual class member must now have suffered a harm by the defendant’s actions. This will make attorneys who handle class actions much more careful with who they add into a class when suing in federal court.20 Furthermore, corporations could now have more freedom to violate statutes that do not necessarily harm plaintiffs directly in a “concrete way”, like the FDCPA, or the TCPA.21 Rulings like this reflect the U.S. Supreme Court’s continuing conservative shift since former President Trump’s appointment of three conservative justices on the bench during his presidency.
In his dissent, however, Justice Thomas noted that this might be a pyrrhic victory for TransUnion, as state courts are not bound by the limitations set by Article III as stated by Justice Kavanaugh.22 States like Illinois and New York have more lenient standing requirements than federal courts, and include more liberal judges who are friendlier to “no-injury” class action lawsuits.23 Furthermore, half of the states have adopted measures that recognize statutory violations as a harm that can give rise to a cause of action.24 This could encourage plaintiff attorneys to go “jurisdiction shopping”, as they can pick out plaintiffs who reside in more liberal states and bring suit there, maybe even in multiple states. This could provide an incentive to credit reporting agencies like TransUnion to maintain accurate reporting, lest they deal with multiple lawsuits in multiple forums. However, this would also clog up the courts even more, with multiple lawsuits being filed over the same cause of action.
1 TransUnion LLC v. Ramirez, 594 U.S. . ____, 1 (2021).
3 Id. at 8.
7 Id. at 9.
8 Id. at 20.
9 Id. at 11.
10 Id. (citing Reins v. Byrd, 521 U.S. 811 (1997)).
12 Id. at 12.
13 Id. at 14.
15 Id. at 20.
17 Id. at 22.
18 Id. at 26.
19 Id. at 17.
20 John Ryan, Barbara Fernandez & David Schultz, TRANSUNION V. RAMIREZ: WHAT DOES IT MEAN? ACA INTERNATIONAL (2021), https://www.acainternational.org/news/transunion-v-ramirez-what-does-it-mean (last visited Jul 1, 2021).
21 TransUnion v. Ramirez: The Supreme Court Further Narrows Article III Standing And Rejects “No Injury” Class Actions, JD SUPRA (2021), https://www.jdsupra.com/legalnews/transunion-v-ramirez-the-supreme-court-1255306/ (last visited Jul 1, 2021).
22 TransUnion 594 U.S. at 49.
23 TransUnion v. Ramirez: The Supreme Court Further Narrows Article III Standing And Rejects “No Injury” Class Actions, JD SUPRA (2021), https://www.jdsupra.com/legalnews/transunion-v-ramirez-the-supreme-court-1255306/ (last visited Jul 1, 2021).
24 Thomas R. Bennett, The Paradox of Exclusive State-Court Jurisdiction Over Federal Claims, 105 Minn. Law Review, 121, 1233. (2021).
On June 15, 2021, a food startup named Rise Brewing filed suit against PepsiCo in the U.S. District Court for the Northern District of Illinois. The startup has begun to make a name for itself by selling canned cold-brew coffee. Rise Brewing has alleged that the well-known company PepsiCo has infringed on their trademark with their recent launch of a Mountain Dew-branded energy drink called Rise.1
According to Forbes, the notorious food, snack, and soda company, PepsiCo, is valued at an astounding $18.2 billion.2 PepsiCo has had its fair share of trademark infringement cases in the past, where they have been sued by brands such as VitaminWater, Polar seltzer, and Simply Orange Juice.
A more recent lawsuit was filed in the United States District Court for the Southern District of Texas, where a temporary nationwide restraining order had halted PepsiCo’s release of a Gatorade product called Gatorlyte. The order had been issued due to a sports beverage named Electrolit made by a Mexican company.
According to Laboratorios Pisa S.A. de C.V. v. PepsiCo, Inc., PepsiCo allegedly copied the Mexican companies’ product packaging. Before the issuance of the restraining order, PepsiCo shipped roughly $1.7 million worth of Gatorlyte after spending $1.3 million on media and $18 million of product development. 3 The Court considered three facts in determining whether recall of the product, which was already rolled out nationwide, was justified. These three factors were “(1) the willful or intentional infringement by the defendant; (2) whether the risk of confusion to the public and injury to the trademark owner is greater than the burden of the recall to the defendant; and (3) substantial risk of danger to the public due to the defendant’s infringing activity.”4
The Court reasoned that “recall is an extreme remedy” and “therefore they did not find sufficient indicia of willful infringement, confusion to the public that outweighs the onerousness of a recall, or a sufficient risk of danger to the public to justify a full recall of GATORLYTE” at the time of the case.5
The Court then turned to the balancing of the parties’ hardships. The Court stated that although PepsiCo’s investments were significant, the Court did not find that a temporary restraining order would affect the investments to such a degree that would be problematic. Additionally, PepsiCo decided to release their product line despite the initial issuance of a Temporary Restraining Order and the then-pending hearing on another Temporary Restraining Order. The Court turned to the Mexican companies’ argument that PepsiCo was aware of the rights in the Electrolit trade dress, so PepsiCo, therefore, accepted all risks of infringement. Trade dress is the look or feel of the product, in this case, Electrolit’s trade dress was their companies protected product packaging.
The two companies reached a confidential settlement earlier this spring, ending the case permanently and, therefore, lifting the temporary restraining order.
On June 15, 2021, Rise Brewing Company (hereinafter “Rise Brewing”) filed a trademark infringement lawsuit against PepsiCo, alleging that PepsiCo has infringed on their trademark with their recent launch of a Mountain Dew-branded energy drink called Rise.6 The issue in the complaint arose out of the energy drinks use of the word “Rise,” written horizontally across the top of the can, in a fashion almost identical to Rise Brewing.
Rise Brewing created a canned caffeine drink that lacks the chemicals, dairy, fat, and sugar commonly associated with traditional energy and coffee drinks. The brand features the words RISE horizontally across the can, with Brewing Co. located just underneath. Shortly before the complaint was filed, PepsiCo released its own RISE-branded caffeine drink. Rise Brewing alleged the PepsiCo brand marketed itself as a morning caffeinated beverage to replace ready-to-drink coffee drinks such as RISE.
Rise Brewing alleges that PepsiCo’s actions are causing “reverse confusion” in violation of the Lanham Act. Traditionally, in a trademark infringement case, the defendant is the “junior user” of the mark, and the plaintiff is the “senior user.” This type of trademark infringement causes consumers to believe the defendant or its products are associated with the plaintiff or its products. Here, Rise Brewing alleges that it is the opposite. In a reverse confusion case, the consumer confusion for association goes the other way. Meaning, due to PepsiCo’s size, reputation, and power, consumers are confused into thinking that Rise Brewing’s RISE drinks are associated with PepsiCo.
The concept of reverse confusion was established in Big O Tire Dealers, Inc. v. Goodyear Tire & Rubber Co.7 In that case, the Court stated that it was essential to recognize something other than traditional confusion to prevent “anyone with adequate size and resources [from] adopt[ing] any trademark and develop[ing] a new meaning for that trademark as identification of the second user’s products.”8 Rise Brewing alleges this case is a classic case of reverse confusion, demonstrating what the Big O court was trying to prevent.
Rise Brewing owns multiple valid registered trademarks with the United States Patent and Trademark Office (“USPTO”), as shown below.
Chart demonstrating Rise Brewing’s registered trademarks
Rise Brewing’s trademark registrations are valid and in full force and effect. It claims to use its RISE Marks through extensive advertising, marketing, and sale of goods bearing the marks. Because of this, Rise Brewing claims that the RISE Marks have become invaluable assets of the Rise Brewing Company, serving as a symbol of their high-quality product.
Rise Brewing would like the court to enter preliminary and permanent injunctions restraining PepsiCo and all of its affiliates from the continued use of its trademark, to recover its costs and reasonable attorneys’ fees, in an amount to be determined, and various amounts of awards for damages and profits.
Following the guidance of previous cases involving PepsiCo’s trademark infringement, Rise Brewing will likely be granted a preliminary injunction and/or grant damages sought. Rise Brewing has built its company from the ground up, creating and protecting their ideas through the use of registered trademarks. PepsiCo’s power in the market is far greater than Rise Brewing’s. The ability for large companies to prey on the hard work of smaller companies should be carefully monitored and regulated by the courts. This fact pattern is remarkably similar to previous cases filed by smaller companies, like Gatorlyte, against PepsiCo, where the smaller company has almost regularly been granted an injunction. The timing of this case makes it quite difficult for Rise Brewing because of the sheer amount of money that was put into the launch by PepsiCo. Because of this, it is more likely that the court will grant damages from this case, or in the chance PepsiCo would like to settle, Rise Brewing could possibility recover at least a small portion of the money PepsiCo will have made from their product launch. In the event of a settlement, like previous cases, the terms will likely remain confidential. If PepsiCo would like to continue to use the word Rise, Rise Brewing could also offer license to PepsiCo. This case is another example that reverse confusion is still present, despite the Big O court’s precedent.
As the case continues, it is essential to remember how valuable intellectual property (patents, trademarks, copyrights, trade secrets) is. Intellectual property, and its protections, foster growth and discovery, allowing for expanding new technology and resources worldwide.
1 See RiseandShine Corp. v. PepsiCo Inc., Case No. 1:21-cv-03198.
2 FORBES (Jun. 29, 2021), https://www.forbes.com/companies/pepsi/?sh=24c9d6a2bc31.
3 CASETEXT (Jun. 29, 2021), https://casetext.com/case/laboratorios-pisa-sa-de-cv-v-pepsico-inc/?PHONE_NUMBER_GROUP=C.
6 See RiseandShine Corp. v. PepsiCo Inc., Case No. 1:21-cv-03198.
7 Big O Tire Dealers, Inc. v. Goodyear Tire & Rubber Co., 561 F.2d 1365 (10th Cir. 1977).
8 Id. at 1372.
The electronic sports industry (“eSports”) has skyrocketed since the early 2000s thanks in part to gaming dominant streaming services like Twitch. It is estimated that the number of US digital gamers will jump by around five percent in 2020 to 174.7 million. 1It is also estimated that eSports will garner an audience of 495 million viewers in 2020 and reach over $1 billion in revenue for the first time ever. 2This unprecedented increase in popularity has given rise to professional gamers, gaming personalities, and content creators (“professional gamers”). With professional gamers being paid from as low as $1,000 a month to as high as $6 million a year, one has to examine how eSports contracts are managed. 3eSports contracts are a complicated issue because of the relative newness and unpredictability of the eSports market.
Since eSports is a fairly new market, it functions in a largely unregulated space where “there is a lack of standardized contracts, no collective bargaining, and unestablished standard working conditions.”4 In addition, there is a general imbalance in the levels of commercial sophistication of contracting parties. Many times, eSports contracts are agreed upon between unrepresented young gamers with little commercial experience and large media companies with large amounts of resources. As a result, eSports contracts may end up being unfair and unethical. Back in December 2019, an anonymous professional gamer (“Player 1”) leaked a contract that illustrates the unfair and unethical working conditions that gamers may be subjected to.5 The contract in question stated that if Player 1 was transitioned to a substitute player then he or she must live stream games for 120 hours per month without receiving any salary for his or her efforts6.
Perhaps more alarmingly, an exclusivity clause in the contract prevents the player in question from working elsewhere – despite being an independent contractor, not an employee – and they only receive income that’s earned from solo live streams. If streaming in collaboration with the organisation or a sponsor, then the organisation retains 100 percent of the revenue generated by the player. There’s nothing stopping the organisation from forcing a sponsored stream upon the player, creating a potentially turbulent and unpredictable schedule in which they’re unable to earn any sort of income7.
Although it is impossible to know for sure, it is highly possible that other professional gamers may be locked into similar unfair contracts.8
Recently, Turner Tenney, popularly known online as “Tfue” found himself in a contract dispute with Faze Clan, his former eSports team. On May of 2019, Tfue filed a lawsuit against Faze Clan in California State Court arguing that the contract (“Gamer Agreement”) that he signed with the team back in 2018 was “oppressive, onerous, and one-sided in favor of Faze Clan.9” They claimed that the Gamer Agreement allowed Faze Clan to collect up to 80 percent of what he earned from third parties.10 Tfue also claimed that the Gamer Agreement hindered his ability to obtain his own sponsorship deals without the prior written consent of Faze Clan.11 Faze Clan denied all allegations made by Tfue, and released a Twitter statement claiming that it has not collected any of Tfue’s tournament winnings, Twitch revenue, YouTube revenue, or revenue from any special platforms. Faze Clan added that it has only received $60,000 in relation to the Gamer Agreement, while Tfue has experienced an “incredible growth” in popularity from his affiliation with Faze.12To make things even more complicated, Tfue classified himself as an “artist” and also alleged that Faze Clan violated California’s Talent Agency Act (“TAA”) because it was not a licensed talent agency. The TAA protects artists and prevents unlicensed talent agencies from making “binding promises on behalf of a performer.” As a result, artists’ contracts with unlicensed talent agencies are non-binding and the artists can recover all fees earned by an unlicensed talent agency.13
Based on a “forum selection clause” in the Gamer Agreement, Faze Clan brought a countersuit in New York Federal Court alleging that Tfue disparaged the team in violation of his contract, stole its confidential information, and interfered with business contracts and relationships in order to start his own rival eSports team. As a result of the New York case, the California court offered to either dismiss its case and let the case move forward in New York with California’s TAA applied or stay its case until the New York case is completed.14 After summary motions were rejected, Faze Clan and Tfue decided to settle and Tfue was released from the Gamer Agreement. Although, Tfue’s lawsuit was never settled in court, it sheds light on some eSports contract issues that have to be resolved.
The first issue it sheds light on is what constitutes an “oppressive, onerous, and one-sided” contract? A court may find a contract unconscionable and refuse to enforce it if is “unfair or oppressive to one party in a way that suggests abuses during its formation.15
A contract is most likely unconscionable if it is substantively unfair and unfairly bargained for. “An absence of meaningful choice by the disadvantaged party is often used to prove unfair bargaining.16” In Tfue’s case, he already had an established brand and most likely had options to sign with other companies. Additionally, Faze Clan argued that he was an adult when he agreed to the contract and that they took a risk by signing him. It could be argued that the terms of the Gamer Agreement were fair when it was first signed and Tfue simply wanted to get out of the contract once his popularity skyrocketed. Allowing Tfue out of his contract creates a slippery slope. It opens up the door to other professional gamers who may want out of their contracts once they are no longer favorable to them. This will likely result in eSports companies not wanting to take risks on less established gamers. For example, companies will not want to spend time, money, and resources to help popularize professional gamers if said gamers can easily dishonor their contracts. Since eSports is a relatively new field there are no standards for what constitutes a fair eSports contract. Only time will tell when such standards will be set.
The next issue that needs to be tackled is if professional gamers should fall under the scope of “artists” in the TAA. Under California’s labor code, “artists” include actors, actresses, radio artists, musical artists, musical organizations, directors, writers, cinematographers, composers, lyricists, arrangers, models, and “other artists and persons rendering professional services in motion picture, theatrical, radio, television and other entertainment enterprises.17” It could be argued that professional gamers fall under this category because many of them write, direct, and act in their own videos on social media platforms. Additionally, what is considered to be “rendering professional services . . . in other entertainment enterprises” is vague and could be stretched to encompass playing video games for the entertainment of others. If professional gamers gain recognition as artists somewhere down the line, eSports companies will then have to register as talent agencies in order to properly conduct business within California.
As time goes on, more eSports contract disputes will probably arise. Because of this, the eSports world must find a way to deal with or prevent these disputes. The World Esports Association (WESA), an eSporting organization created by different eSports companies, tried to tackle this issue by creating an arbitration court for eSports matters.18 Although this is a step in the right direction, the arbitration court has its issues. Unlike normal courts of law, the arbitration courts set up right now do not have a way to enforce their verdicts.19 Additionally, all arbitration decisions are final and cannot be appealed.20 These factors combined with the fact that the arbitration court was created by eSports companies will likely turn some players away due to fear of impartiality.21 Esports contracts will no doubt be a hot button issue in the near future. Before contract disputes become a crisis, the eSports community as a whole must set standards and guidelines for eSports contracts and disputes. Additionally, eSports companies need to protect themselves from lawsuits when drafting new contracts and professional gamers need to protect themselves from signing bad contracts.
1 eMarketer Editors, US Twitch Usage Accelerates amid Lockdowns eMarketer adds 4 million US users to 2020 forecast, EMARKETER (September 3, 2020), https://www.emarketer.com/content/us-twitch-usage-accelerates-amid-lockdowns.
2 NEWZOO, Newzoo Global Esports Market Report 2020 | Light Version (2020), https://resources.newzoo.com/hubfs/Reports/Newzoo_Free_2020_Global_Esports_Market_Report.pdf?utm_campaign=Esports%20Market%20Report&utm_medium=email&_hsmi=83771038&_hsenc=p2ANqtz-_yaR_311hJhLBRa7l_ZAcE1cKQ4dZB330x0N8I9YU7_4BdnEHwjMgVRHk6tjsT94qhIVesmoLYXmRuMwv0bEeNNwF8jA&utm_content=83771038&utm_source=hs_automation
3 Alexander Lee, When work is play: A look at the financial lives of professional gamers, POLICYGENIUS (September 11, 2019), https://www.policygenius.com/blog/esports-athlete-finances/; ESPORTS EARNINGS, Top 100 Highest Overall Earnings (Accessed September 13, 2020), https://www.esportsearnings.com/players.
4 Josh Hunt, Esports contract dispute: Seeking to set an industry standard, LEXOLOGY (July 3, 2019), https://www.lexology.com/library/detail.aspx?g=d2b658ba-9ef8-4599-9626-1e0ac85cc348.
5 Adam Fitch, Player contract illustrates unfair and unethical conditions, https://esportsinsider.com/2019/12/unfair-player-contract.
9 Christina Settimi, Fortnite Star Tfue Settles Dispute With FaZe Clan, Ending Esports’ First Major Employment Lawsuit, FORBES (August 26, 2020), https://www.forbes.com/sites/christinasettimi/2020/08/26/fortnite-star-tfue-settles-dispute-with-faze-clan-ending-esports-first-major-employment-lawsuit/#2a36d27222d8
11 Jordan Crook, Pro gamer Tfue files lawsuit against esports org over ‘grossly oppressive’ contract, TECH CRUNCH (May 21, 2019), https://techcrunch.com/2019/05/21/pro-gamer-tfue-files-lawsuit-against-esports-org-over-grossly-oppressive-contract/
13 Anthony Zaller, Tfue v. Faze Clan – Esports lawsuit raises many California employment legal issues, CALIFORNIA UNEMPLOYMENT LAW REPORT (May 24, 2019), https://www.californiaemploymentlawreport.com/2019/05/tfue-v-faze-clan-esports-lawsuit-raises-many-california-employment-legal-issues/
14 Jordan Benson, Op Ed: Tfue v. FaZe – a dip into the case and its impact on esports, EFUSE (March 23, 2020), https://efuse.gg/learning/efuse/tfue-faze-legal-jbens0n.
15 Cornell Law School, Unconscionability, LEGAL INFORMATION INSTITUTE (Accessed September 13, 2020), https://www.law.cornell.edu/wex/unconscionability.
17 Cal. Lab. Code § 1700.4 (West)
18 Hans Oelschlägel, Announcing the founding of WESA – the World Esports Association, ESL (May 13, 2016), https://www.eslgaming.com/article/announcing-founding-wesa-world-esports-association-2856; Sam Cooke, WESA announces esports’ first arbitration court, ESPORTS INSIDER (November 3, 2016),
19 Ryan Boonstra, Player 3 Has Entered the Game: Arbitration Comes to the eSports Industry, 10, 1 ARB. LAW REV. 102, 115 (2018). https://elibrary.law.psu.edu/cgi/viewcontent.cgi?article=1245&context=arbitrationlawreview
Tattoos are permanent, often complex, creative, and original pieces of work created by a tattoo artist. Recently, litigation has come up regarding tattoos on famous athletes. While most issues involving tattoos on athletes are more easily handled — such as J.R. Smith’s tattoo of the brand Supreme on his leg1 — there are questions of whether a tattoo is subject to copyright protection when it is prominently displayed and reproduced on a famous athlete in a video game. This question is at the center of a lawsuit filed by Solid Oak Sketches against Take Two Interactive Software as well as two other producers of the popular NBA 2K video games based on the video games’ reproductions of players’ tattoos, including LeBron James.2
A similar issue arose in 2011, in which tattoo artist S. Victor Whitmill claimed to have copyright ownership of Mike Tyson’s face tattoo, with the tattoo in question given to Tyson in 20033. Whitmill sued Warner Bros., claiming that the popular film Hangover 2 infringed on his work when they reproduced Tyson’s tattoo on a main character’s face4. While Whitmill’s complaint failed to temporarily enjoin the studio from releasing the film in theaters, the case was settled out of court and now leaves an underwhelming amount of case law on the subject.5
The Copyright Act of 1976 gives protection to artists that establish that: (1) their creation is the type of work that is protectable; (2) their creation is an original and creative work; and (3) the creation is affixed to a tangible medium for expression.6 Further, § 202 of the Copyright Act states that “ownership of a copyright… is distinct from ownership of any material object in which the work is embodied.”7 This means that a tattoo artist does in fact have copyright ownership over original and creative tattoos that they give, even when those tattoos are on another person’s body. However, there is an implied license that allows people to freely and publicly display their tattoos — for example, on television, film, and magazines — so for most people, this is not a problem. 8However, this issue has arisen because LeBron’s tattoos are not only being displayed, but they are being digitally reproduced in a video game, causing an issue for copyright infringement issue.9
The company Solid Oak Sketches obtained the copyrights for two of LeBron James’ four tattoos in question — the portrait of his child and the area code — before suing in 2016 because they were used in the NBA 2K series.10 Take Two argues a fair use defense, stating that the tattoos are covered under fair use and are not a critical component of the video games, seen only fleetingly or rarely.11 However, that argument may not hold water due to the time and energy put into recreating both the athletes and tattoos with incredible accuracy.12 Further, this argument did not survive the motion to dismiss, with Judge Laura Taylor Swain finding that the defenses presented by Take Two are fact-intensive and will require more evidence.13
New York University intellectual property law professor Christopher Jon Sprigman says to the New York Times that Solid Oak’s lawsuit “amounts to a shakedown and copyright trolling,” stating further that “[t]hey shouldn’t be allowed to tell LeBron James that he can’t take deals to license his likeness… the ability of the celebrity, or really anyone, to do that is an element of their personal freedom.”14 LeBron James states that his tattoos are a part of his “persona and identity,” saying that if he is not shown with his tattoos, it would not be an accurate depiction of himself.15 In a Declaration of Support for the defendants from LeBron James, he states that the four tattoos in question were “inked in Akron, Ohio,” and in each case, he had a conversation with the tattooist about what he wanted inked on his body. 16
The outcome of this case will set an important precedent on whether or not tattoo artists can demand monetary compensation every time a celebrity’s likeness has been reproduced. Since the rise of litigation, players’ unions and sports agents have been advising athletes to secure licensing agreements before they get tattooed, in order to protect their future interests.17 This way, the athletes have secured their rights while giving artists have an incentive to sign rather than pass up a celebrity client who could be a walking advertisement for their art18.
The reworked “fair use” defense has provoked debate because it provides excessively broad immunity to certain types of parodies and other expressive uses of trademarks.1 This Article will explore whether the Trademark Dilution Revision Act (TDRA) promotes a flawed treatment of parodies with regard to sub-clauses that provide selective shelter, and exonerating some parodies from liability while impugning others.2 The principal flaw that is discussed in this Article relates to the parody provision and its application of the trademark use test for determining whether a parody is fair. The provision is pliable in that it can be both lenient and strict on parodies.
I. Trademark Dilution Revision Act
The language of the TDRA appears to implicitly divide parodies into two distinct groups: source denoting parodies and non-source denoting parodies. Non-source denoting parodies are artistic parodies- that are not used as trademarks and are treated with leniency, whereas source-identifying parodies generally receive strict treatment3. A plain reading of the provision appears to confer blanket immunity to all parodies as long as they are not being utilized as indicators of source(s) for goods or services4. On the other hand, it imposes liability on parodies that function as trademarks without suitable inquiry into the nature or impact of the parody in question.5,6 This parody approach fails to adequately assess forms of harm since it focuses exclusively on the classification of the parody’s status, rather than the effect.
The focus of inquiry should be on the effect of the parody in relation to the original trademark’s distinctive quality or reputation, with consideration regarding the investment to establish such distinctiveness, and not just on the status and presence of commercial or trademark use. However, this is not the case because the TDRA’s fair use provision fails to appropriately distinguish parodies that convey an artistic or social message from those that tarnish a senior mark.7 The broad language of the exception allows tarnishing use to be exempt from liability so long as the parody in question is not utilized as a source indicator.8 The “fair use” provision appears to provide automatic immunity to non-source denoting parodies, as it stipulates that only these types of parodies that do not function as designators of source, are eligible for exemption under the provision.9 The exemption is justified by the First Amendment.
II. Exploring the TDRA Flaw
Parodies are expressive by nature.10 For this reason, some parodist choose to present their parodies as “works of art” to the public; such representations can be made without any connection to goods or services, and occasionally, without the expectation of commercial gains.11
Still, these parodies can be harmful to the original trademark owner when free-riding occurs, or some harm to the goodwill of the mark because of confusion or false misrepresentation. Free-riding occurs when the parodist receives a benefit from the association between their mark and the well-known mark12. Although some have argued these actions are permissible because they align with the First Amendment justification, and ensure that the original owner shall not be able to monopolize the famous creation, this view fails to consider the investment the original owner sacrificed to establish the identity of being “well-known” or “famous.” As a result, parodists can reap where they have not sown.
Courts have confirmed that the TDRA applies different treatments to parodies based on their categorial status. The TDRA enactment amended the fair use defense by adding an expressed defense for noncommercial use; this plain language of the provision explicitly excluded source denoting parodies. Therefore, courts relied on the main dilution factors provided by the Act, instead of the fair use exception, to immunize source denoting parodies from liability. 13
In Louis Vuitton Malletier S.A. v. Haute Diggity Dog, LLC, the court confirmed that the parody clause in the fair use provision is not exhaustive in its coverage of non-dilutive parodies.14 This case set a precedent which allows parodies that are being used as a trademark to sell goods in commerce to be exempted from liability for dilution, in certain circumstances.15 The court’s analysis indicates that a parody does not necessarily need to satisfy the fair use provision in order to be exonerated from liability.16
The courts affirmations justify the concerns with the TDRA’s fair use parody clause, as it demonstrates that the provision is both too broad in some respects, but also too narrow in others.17 The provision is broad as it largely immunizes all non-source denoting parodies from liability without assessing the message communicated by the parody and its effect on the reputation of the mark. If the message promotes a negative impact on the goodwill of the original trademark owner or free-riding occurs, the original owner will have no claim against the parodist, and the First Amendment justification trumps the original owner’s interest or disfavored effects. On the other hand, the provision is too narrow because it excludes certain source-denoting parodies that may not be deserving of protections because of the extraordinary investments original owners take to establish a specialized distinction for the mark.
Allowing protection under these circumstances, permits the parodist to take advantage of trademark owners marketing investments and efforts they may have taken years to establish. Further, the treatment permits free riding. Consequently, the approach to the treatment of parodies effectively ‘dilutes’ trademark owners of the right to obtain an appropriate remedy against parodist who have tarnished their marks by engaging in an unfair or offensive comparison, and parodist who has benefited from the original owner’s investments.
An example of these effects is demonstrated in Mattel, Inc. v. Walking Mountain Productions. In this case, the parodist is an artist who posed nude Barbie dolls in photographs that displayed Barbie getting attacked by vintage household appliances.18 Although the artist failed to use the term “Barbie,” the art itself irrefutably involved the trademarked doll and the titles reflected that fact.19 The message of the parody meant to diminish the Barbie persona that was established by Mattel through successful marketing.20 Mattel had purportedly established Barbie as “the ideal American woman” and a symbol of “American girlhood.”21 Is it unfair for a parodist to attempt to destroy the goodwill or reputation of the mark? The law certainly does not think so because such actions are viewed as an exercise of the First Amendment right.
But what if the only reason the parodist receives an audience or attention is because of “Barbie.” Is the original owner now entitled to a claim? Had it not been for the original owner, the parody would likely have never been created, nor would the parody have received the level of attention attained. But for the original owner’s investments toward establishing the mark’s goodwill, it is likely the parody would be non-existent, or at the very least would not have obtained the level of attention it received. If these photos only receive attention because of “Barbie,” does that mean the parodist is permitted to free-ride off of the famous mark owner’s marketing efforts and investments that may have taken the owner years to establish? Trademark law is permitting parodist to reap what the original owners have taken years to sow! It could take a trademark-owner years to establish a distinct attractiveness in the marketplace. However, a parodist need only use the famous mark under the guise of a parody and receive the same benefits of attractiveness through association, at a fraction of the time and monetary investment that was devoted by the original owner.
Under these protections lays the question of fairness, which arises when there is harm from the parodist belittling the reputation of the mark that is being ridiculed.22 Still, the current parody provision does not possess sufficient nuance to assess the type or extent of damage inflicted on the senior mark, caused by the tarnishing effects of the parody.23 Particularly, it fails to provide guidance on the level and quality of ridicule that is considered “acceptable” for a parody.24 This raises some concerns; virtually many cases of non-trademark expressive use would receive protection under the Act. The TDRA arguably tilts the balance too far in favor of non-trademark use parodies.
Video games have grown in realism since the days of pong on an Atari console. As technology allows for higher resolutions and graphics, so does the need for attention to detail. In certain cases, video game developers try to depict the real world. There are legal implications when this real-world depiction goal includes trademark protected items, such as Humvees.
The federal Lanham Act governs trademarks at the federal level. There are two basic requirements: (1) that a mark be definable and (2) used in commerce. 1 You need to be able to know what the mark symbolizes when you see it and use it in business to get the Lanham Act’s protections. However, these protections are not all-encompassing.
The Call of Duty video game franchise remains one of the most popular entertainment products in the world, with millions of copies sold. The “Modern Warfare” subset of that franchise depicts modern militaries in action. These games try to immerse a player in combat. The game attempts to do this through the depiction of actual military equipment, including Humvees. Activision, the company making the games, was sued by the Humvee’s manufacturer (AM General) for their unauthorized depiction of the Humvee in the games. 2
The Humvee is a registered trademark of AM General. Trademarks are an important component of business practices around the world. Think the Nike swoosh, and how the swoosh is so identifiable and important to Nike as a business. One might think that copying the symbol or mark would be a violation of the law. AM General certainly thought so and sued. The reality of trademark law is more nuanced than one may believe. Having a Trademark does not necessarily mean that no one else can use it for any reason, as we can see from the results of A.M. General v. Activision.
It is a reasonable assumption that using someone’s mark in a profit-making enterprise would be a violation of the law. Courts will weigh more than the commercial interest of the trademark holder when making decisions. In A.M. General v. Activision, the court applied a legal test that allows for use of a Trademark so long as the origin of the trademark is not mistakenly identified. In the video games in question, this misleading behavior does not occur. In fact, the use of the Humvee is important to the experience of the game, even though the actual maker of the vehicle is not specifically identified in the game.
In their decision, a federal district court found that the use of the Humvee in the game did not violate the Lanham Act, and thus Activision was not liable to A.M. General.3 If A.M. General appeals to the Supreme Court, and the Supreme Court upholds the decision, there are significant implications for trademark law. Artists, if they could prove that depiction of a trademark is essential to the artistic experience, and does not misrepresent that trademark too much, would be able to depict that trademark without fear of legal consequences.
In October 2018, Paisley Park Enterprises filed an application with the USPTO (U.S. Patent and Trademark Office) for the registration of a color mark for music, live performance, and museum-related uses . Paisley Park Enterprises is known for being decedent Prince Rogers Nelson’s company. In August 2017, the Prince Estate and Pantone created a purple color called “Love Symbol #2” to represent Prince . The Pantone Matching system is useful to define particular shades of color, and to ensure a consistent use of the same color for one company .
In 1985, U.S. courts held that colors could be protected under trademark law . Owens-Corning was the first company in the U.S. to hold a color mark. The fact that colors can be protected by a trademark is a natural expansion of trademark law since trademark may protect words, logos, sounds, designs, smells, and other designations .
To be protectible under trademark law, a mark has to be distinctive. A mark can be inherently distinctive if that mark is fanciful (an example would be a made-up or invented word, such as Exxon), arbitrary (a mark having no relationship with the goods or services being sold, for example Apple for computers), or suggestive (it requires imagination from the consumer to reach a conclusion as to the nature of the goods or services, for example Mustang for cars). If a mark is descriptive, it is not inherently distinctive and a showing of secondary meaning is required in order to be protectible. In the Qualitex case, the U.S. Supreme Court held that colors could be distinctive and protected under trademark law, but the court specified that a color can never be inherently distinctive. Since a color cannot be inherently distinctive, the applicant for a color mark is always required to show secondary meaning . To establish secondary meaning, an applicant must show that the consumers associate the mark to the source of the product or services, and not to the products or services themselves . In other words, the applicant must show that the mark is a source identifier.
The secondary meaning requirement may be justified by the argument that the number of possible colors to be used by competitors could be greatly diminished if the courts and the USPTO were to give trademark rights too easily on trademark applications for color marks. A requirement of secondary meaning limits that possible depletion of the possible colors to be used. Courts may be reluctant to give trademark protection for color marks too lightly, since in some instances there might be underlying reasons behind the use of certain colors. An example is the color orange for safety-related companies and products. Another possible issue is the idea of shade confusion, courts may have difficulties in determining which colors are similar enough to constitute a trademark infringement, and which are not.
Functionality is a bar to trademark protection. If a mark is functional, it can not be protected under trademark law, even if the mark holder would have been able to show secondary meaning. The courts use two tests in order to determine whether a mark is functional or not. A mark is functional under the first test (known as the Qualitex test) if the exclusive use of the mark would put competitors at a significant non-reputation-related disadvantage . Under the second test (the Inwood test), a feature is functional if it is essential to the use or purpose of the article, or if it affects the article’s cost or quality . To be non-functional, a mark has to be non-functional under both tests. The concept of aesthetic functionality, absent from the statutes but recognized by virtually every court in the U.S., is also a possible barrier to the registration of a color mark. This concept applies in the case of features which have no functional utility, but that consumers want, often for aesthetic reasons. In most cases relating to aesthetic functionality, the first test of functionality is satisfied as an exclusive use would put competitors at a significant non-reputation-related disadvantage, and the mark is then deemed functional. A color mark may be functional in some instances according to this aesthetic functionality concept.
In a case opposing Christian Louboutin to Yves Saint Laurent, courts held the trademark protection on Christian Louboutin’s red sole to be enforceable, but that this protection only covered shoes when the red sole contrasted with the upper of the shoe . That protection is thus limited and does not extend to the manufacture and sale of monochrome red shoes with a red sole, such as the red Yves Saint Laurent’s shoe at issue. This decision allowed Louboutin to benefit from trademark protection on its red sole without putting its competitors at a significant non-reputation-related disadvantage.
The USPTO refused to register Paisley Park Enterprises’ “Love Symbol #2” mark because consumers do not perceive this color as a source identifier according to the USPTO. The USPTO noted that album covers from other artists such as Cam’ron and Kanye West also included the use of the color purple, and that the purple color was not distinctive of Paisley Park Enterprises’ products and services as it is a commonly used color in the sale of products and services in the same class. 
Color is often used as a source identifier by companies. Tiffany’s Robin’s Egg blue color, which is used on their boxes, is protected by a trademark, the Tiffany Blue hue has been held to be distinctive through an acquired secondary meaning. UPS also registered its brown color as a trademark . Paisley Park Enterprises may try to show that the particular purple color they are trying to register serves as a source identifier, and they may argue that consumers associate this purple color to Prince. If Paisley Park Enterprises manages to show secondary meaning, the USPTO will be likely to accept the registration of the “Love Symbol #2” color mark.
 In re Owens-Corning Fiberglas Corp., 774 F.2d 1116 (Fed. Cir. 1985)
 Restatement of the Law (Third), Unfair Competition : §9 Definitions of TM and service mark
 Qualitex Co. v. Jacobson Products Co. Inc., 514 U.S. 159 (1995)
 Qualitex Co. v. Jacobson Products Co. Inc., 514 U.S. 159 (1995)
 Inwood Laboratories Inc. v. Ives Laboratories, Inc., 456 U.S. 844 (1982)
 Christian Louboutin, SA v. Yves St. Laurent America Holding, Inc, 709 F.3d 140 (2d Cir 2013)
Takings by the government have long been a murky area. The Fifth Amendment of the U.S. Constitution does not proffer a great deal of insight into how takings were to be effected. Recent case law adds some clarity to the murky sediment, but it remains a complex topic. The Takings Clause of the Fifth Amendment exists to recompense private citizens in the event that government effects a taking of private property. It states, “nor shall private property be taken for public use, without just compensation.” The intent behind this was to limit government in its task of maintaining public interest rather than empower it, but it also serves also to give the private citizen recourse when government (local, State or Federal) takes physical possession of land for public use. Over the years, use of the Takings Clause has evolved to include instances where the government regulates in a manner that reduces the value of private property or regulates such that it renders use of the land null. These are the two types of per se taking: physical and regulatory.
Two recent cases have served to clarify previously muddy areas of takings actions: the 2017 U.S. Supreme Court case of Murr v. Wisconsin and the later 2017 New York Second Department Appeals Division case of Matter of New Creek Bluebelt, Phase 3 (Baycrest Manor Inc.).
Murr v. Wisconsin and the Denominator Problem
Murr v. Wisconsin concerned the children of the Murr family who had been devised two separate, but abutting, lots along the St. Croix River by their parents. One lot was improved by a cabin while the other was undeveloped and smaller than 1 acre. The children wished to sell the smaller lot to fund repairs of the cabin on the larger lot, but state ordinances prohibited the development or sale of adjacent plots under common ownership if they are substandard, i.e. smaller than 1 acre. The Murrs sued the state and county claiming that they had been subjected to an uncompensated taking as the ordinance had deprived them of “all, or practically all, of the use of Lot E because the lot cannot be sold or developed as a separate lot.” The case made its way to the Supreme Court which found for the State, that the two lots were to be treated as one lot. The Court outlined a new three-pronged test for the “denominator question”, the question of what property or portion of the property has been taken, which has commonly been a difficult and fact-intensive analysis for the courts to make.
The seminal case of Penn Central Transportation Co. v. New York City gave the previous test which provided the courts broad discretion by considering the “parcel as a whole”, however, while it gave broad discretion, it did not offer much guidance in delineating the property for the purposes of analyzing a taking. The Murr Court outlined the following considerations in determining what constituted the denominator: “(1) the treatment of the land under state and local law; (2) the physical characteristics of the land; and (3) the prospective value of the regulated land.” Chief Justice Roberts gave a dissent that criticized the majority’s three-pronged test as one that would almost punish the private citizen as the test would perform a “clear double counting” of the government’s interest – in both considering the denominator and then the ultimate takings inquiry.
The third factor of this new test requires an analysis of the concept of reciprocity of advantage which states that, despite the unequal givings and takings, a thing may benefit despite being burdened. In this instance, the Murrs’ substandard lot was unequivocally burdened; it could not be developed or sold as a single unit, but it also benefited from the development restriction that protected the natural vista of the St. Croix River as it increased the value of the surrounding area. Indeed, the value of the two lots together far exceeded their combined worth singly. Murr is the first SCOTUS case to include this concept in its denominator inquiry, and it adds fairness and balance to the outcome by allowing the courts to consider the equitable benefit that the regulation in question has given to the property as opposed to considering only the burden. Takings law is not a vehicle for compensation against every decrease in property value caused by regulations, it is a method of providing compensation when a regulation has gone too far. So, even though Murr seems like a decision that favors the government over the aggrieved citizen, in actuality, it favors fairness and balance once all benefits and burdens have been considered.
While Murr serves to clarify the initial takings inquiry, in New York, the case of Matter of New Blue Creek, Phase 3 (Baycrest Manor Inc.) (“Baycrest Manor”), serves to clarify parts of the final inquiry. It provides that subsequent purchasers with knowledge of stringent regulations on the purchased land are permitted to bring takings claims as it would be unfair for successors to title to be precluded from challenging unreasonably onerous regulations. This ruling follows the Supreme Court case of Palazzolo v. Rhode Island and overturned four previous cases known as the Kim Quartet wherein the New York Court of Appeals, in a single day, held that a purchaser with knowledge of restrictions cannot maintain a claim for a regulatory taking.
Baycrest Manor concerned an area of land that was condemned by New York State as 100% wetlands and therefore lacking any economic use. Baycrest Manor, Inc. brought an action seeking just compensation and argued in the first that the land was unjustly deprived of all use due to the strict wetlands regulations, that the economic value of the land was decreased as a result, and also that a hypothetical future purchaser would pay more than the restricted-use price based on New York’s reasonable probability incremental increase rule. New York, however, is a strange beast and wetlands areas do hold some non-economic value as was the case here where the owner was awarded higher compensation than the value of the land under a typical regulatory takings claim. The New York Court of Appeals upheld this decision and outlined instances where departure from the Penn Central ad-hoc test for determining a taking would be considered. The Penn Central test requires a court to analyze the economic impact of the regulation, the regulation’s interference with reasonable investment-backed expectations and the character of the governmental action, but the Court in Baycrest Manor realized that there are instances, such as here, when non-economic factors play a more important role. This causes issues for the economic elements of the Penn Central test. Instead, the Court found that there was a reasonable probability that a takings claim would succeed as the value of the property was reduced by 88% and the wetlands regulations prohibited practically all development of the land, thus removing all economically beneficial use of the property.
After determining that a takings claim could be sustained, the Court moved on to consider whether the reasonable probability incremental increase rule could still apply. The Court held that the rule applies when the Court finds there is a reasonable probability that the condemned land will be rezoned or the use restriction will be deemed invalid. Then, the Court performed a calculation to determine the hypothetical value that a hypothetical future purchaser might pay given the continuing right to bring a claim and reasonable probability of success of that claim. This figure is the just compensation awarded to the property owner.
Baycrest ManorThis notice is much fairer than before where challenges to unreasonable regulations that cause a taking could only be brought by those who had purchased land before the enactment of the regulation. It is wholly unfair that a subsequent purchaser not be able to challenge such a regulation merely because he had notice of it when he purchased the land, as it remains unreasonable no matter when a challenge is brought.
While both cases focus on different elements of a takings inquiry, both add to the fairness of the outcome. Murr ensures that the benefits provided by the regulation to commonly owned lots are fairly considered in determining the denominator, while Baycrest Manor ensures that, in New York, subsequent purchasers of restricted land are able to bring takings challenges and also that calculations for just compensation consider the price that a hypothetical purchaser might pay due to the maintenance of a takings claim and the reasonable probability of its success. It can be argued that one case favors the government and the other favors the claimant, but both cases favor fairness overall, however, the complexity of takings law is only deepened.
 Murr v. Wisconsin, 582 US _ (2017)
 Matter of New Creek Bluebelt, Phase 3 (Baycrest Manor Inc.), ___ A.D.3d ____, 2017 N.Y. App. Div.
 Penn Central Transportation Co. v. New York City, 438 U.S. 104 (1978)
 Palazzolo v. Rhode Island, 533 U.S. 606 (2001)
 Kim v. City of New York, 90 N.Y.2d 1 (1997); Gazza v. Dep’t of Envir. Conserv., 89 N.Y.2d 603 (1997); Basile v. Town of Southampton, 89 N.Y.2d 974 (1997); and Anello v. Zoning Board of Appeals, 89 N.Y. 2d 535 (1997)