Agricultural Leases, or A Horse is a Horse

A single horse

A horse, a horse! My kingdom has a horse.*

If you have been following the United States Senate hearings on the nomination of Judge Neil Gorsuch for the Supreme Court, you may have heard some discussions about how judges should read statutes and the constitution. Without getting too technical, while at the same time trying to avoid the risk of oversimplification, the Senators have been talking principally about two schools of thought. One is that judges should read the words and apply them, period, whatever the result. The second school is that judges should read the words in the context of the problem the writers were trying to resolve and give them a meaning that the writers intended, or would have intended if they had foreseen the problem in the case before the court, even if the writers did not use exactly the right words.

The Iowa Supreme Court last month decided a case that is an instructive example of how these two theories play out when courts read statutes that, if applied according to their plain meaning, could lead to absurd results. The case involved a statute addressing the definition of agricultural leases. The particular question was, “Does a single horse make a farm?”  Porter vs. Harden (Iowa S. Ct. No. 15–0683, Filed March 10, 2017 Amended March 13, 2017). In answering the question, the majority of the court employed the context based rule whereas the dissent, and the Iowa Court of Appeals before it, employed the plain meaning rule.

The question arose in the setting of a lease termination and the answer was important because Iowa law gives tenants differing protections depending on the type of property being leased and the duration of the lease. For example, residential tenants are given more protections than commercial tenants because generally residential tenants have much less bargaining power and sophistication than commercial tenants who have the means to negotiate with their landlords.  

Farm tenants, since 1939, have been given certain statutory protections because of the seasonal nature of the business and the historical importance of agriculture to Iowa. Particularly, in terminating a farm tenancy, the landlord must follow timelines set by the legislature.  Generally, the law requires written notice of termination to be given on or before September 1, with termination to occur the following March 1. This assures that there is sufficient time for the tenant to harvest growing crops and for the parties to negotiate a new lease or find other land to rent, or find another tenant. A 2006 amendment to the statute added grazing to the existing list of agricultural activities.

The parties in the Porter case had a month to month lease. In those cases, either party has the power to cancel the lease by giving 30 days notice to the other party, if the subject of the lease is not agricultural land. Porter, the landlord, gave Harden, the tenant, notice that it was canceling the lease in 30 days, thus following the legal requirements for terminating a month to month lease. The tenants on this six-acre property, which was their primary residence, claimed they were entitled to the much longer notice required to terminate a farm tenancy because they had a horse grazing on the property. They claimed that a close reading of the statute regarding farm leases required only one grazing animal to qualify the property as a farm. The district court did not agree and ruled in the landlord’s favor saying, “the keeping of one 38-year old horse does not make this a farm tenancy.” The tenant appealed.

The Iowa Court of Appeals reversed the district court and ruled that, even though it might be an absurd result, as the statute was written, the definition of livestock “means an animal …”. Reading the statute strictly, one old horse could make a farm tenancy.  The landlord asked the Supreme Court to review the Court of Appeals’ decision.

The Supreme Court looked again at the statute and decided the Court of Appeals was reading the statute too literally. To determine what the legislature meant required reading the statute in context of its purpose as well other statutes addressing the same or similar subject matter. It then said, “just as we would not conclude that someone with a small vegetable garden ‘produces crops . . . on the land’ …, we think it would be questionable to hold that someone keeping an old mare at the homestead ‘provides for the care and feeding of livestock on the land’ within the meaning of the same statute.”  

The Court emphasized that it would assume the legislature intended a reasonable interpretation of the statute and imprinted a primary purpose test on the statute. That is, one must look at the property to see if its main object was the growing of crops or the feeding of livestock. By accepting the “one old mare” argument, any tenant anywhere could create a farm merely by bringing an old horse or a few chickens onto the property. Probably not what the legislature intended.

However, one justice dissented essentially adopting the Court of Appeals reasoning. When a statute’s language is plain and unambiguous, a court should look no further than the statute. Here the statute says “an animal.” Even though the result may be absurd, it is up to the legislature to fix it, not the courts. The courts have only to apply the statute as written, even if poorly written. If the legislature does not like the result, it can rewrite the statute.

If you have questions about this case, or other issues involving leases, you need not hesitate to contact us.

Apologies to William Shakespeare’s play, Richard III,  Act-V, Scene-IV.

On the Death of Justice Antonin Scalia

Justice Antonin Scalia, perhaps the most controversial figure of the modern Supreme Court, has unexpectedly passed away at age 79. Unfortunately, the political posturing over when and how to replace him began almost immediately following the public announcement of his death. For a lovely tribute to a man whose intellect, influence, and personal relationships deserved a great deal more time and attention than they received, check out what Ruth Bader Ginsburg had to say about her good friend Justice Scalia.

But, inevitably, on to the politics. One major point of contention has been whether there is historical precedent for either nominating and confirming a new justice in an election year (which the Republicans do not wish to do), or delaying a new appointment for nearly a year (which the Democrats do not wish to do). For those who are interested, my husband, Shannon Patrick, who is a data geek and an Excel whiz, has put together a spreadsheet showing relevant dates and gaps over the history of the Supreme Court. If you would like a copy of the Excel document so you can also manipulate the data, please email me.

The facts are these: There are 341 days between Justice Scalia’s death and the day the next president will be sworn in. She or he will not be able to appoint a new justice immediately, so there would be at least a few more days or weeks before a new justice could take office. According to Shannon’s data, there has been only one vacancy of that length in the last 150 years, when Justice Harry Blackmun was appointed following a 391-day vacancy. Before that, there was the 1862, mid-Civil War appointment of Justice David Davis, which filled a seat following a vacancy of 589 days (this happened to be the third-longest Supreme Court vacancy ever). The trend (PDF) since transportation has evolved beyond horse, buggy, and dirt roads, has been for appointments to take a shorter and shorter period of time. If you omit the outliers, the trend (PDF) becomes even more clear. The longest vacancies in the modern era have come about as a result of failed nominations (Robert Bork prior to Justice Kennedy, with a 237-day vacancy, and both G. Harrold Carswell and Clement Haynsworth prior to Justice Blackmun, with the 391-day vacancy).

We all know that there are some fairly major political elements at play here. Justice Scalia considered himself an originalist: that is, he believed that the Constitution should be interpreted the way it was meant by the men who wrote it, at the time that they wrote it. He usually, but not always, agreed with his fellow Republican-appointed justices, particularly in the politically controversial cases that garner the most attention in the news: political money, same-sex rights, abortion, presidential elections.

But there are purely non-political considerations: the fact that a seat is left open by his death, no matter how long it remains open, has the potential to result in some (possibly many) decisions that have no majority opinion. When there is a 4-4 decision by the Supreme Court, the result is that the lower court’s ruling stands but has no precedential value. These 50-50 splits at the Supreme Court level are a problem for our judicial system as a whole. Cases generally reach the Supreme Court only when there is disagreement among the circuit courts of appeals regarding how a particular law or part of the Constitution ought to be interpreted. Even then, the Supreme Court generally has to wait until a case comes up that gives it an opportunity to resolve the question. There is no guarantee that the opportunity to resolve the questions posed by some of the cases from this session will be repeated in the near, or even far, future. Circuit splits (where the law is interpreted differently in different jurisdictions) can be dangerous. They cause forum shopping, meaning that attorneys maneuver to ensure that litigation will take place in a forum that has advantageous law for their clients. While forum shopping may be good legal representation (a lawyer should always be a zealous advocate and endeavor to get the best possible result for her client), it is bad when forum shopping is possible because our nation’s top court is unable to tell us how to correctly interpret the law. I would not want to see that sort of chaos for the next year.

I am not going to try to claim that the Supreme Court is an apolitical institution. That would be disingenuous at best, for reasons that others have articulated better than I can here. (Disclaimer: The two linked books were written by one of my law professors and law school classmates, respectively.) But businesses thrive in a stable climate. It is not possible to figure out how to comply with the law, get your compliance regime set, and get down to business, when you do not even know for certain what the law says—or worse, when you do know that it is not possible to follow the same law in two different jurisdictions at the same time. We need a full complement of justices handing down decisions that let the American people, and our businesses, know what our laws say.

I am not given to urging politlcal action on this blog, but this is one time I would urge you to contact your Senators and let them know that leaving an open Court seat for nearly a year, as is nigh-unprecedented in modern times, would be bad for business and bad for our country.

What do you think?

The PTO, the First Amendment, and Disparaging (Re)Marks

A note before we start: This post contains racial slurs because they are a part of the trademarks at issue in the cases I am discussing. After struggling with how to address this fact, I have decided to spell them out in full because 1) they are spelled out in the trademarks as well as the cases; and 2) in one case, the slur was deliberately chosen by a member of the relevant racial group as a political statement. I wish to handle this matter with sensitivity, and I welcome an open and honest discussion about this choice; if you choose to comment, though, refer to my Terms of Use for my comment policy.

By now, you have probably heard about the Washington Redskins “losing” their trademarks. Some of the reports going around are a little overblown; the team hasn’t actually lost its ability to use the trademark, but the federal trial court in the Eastern District of Virginia has ruled that the U.S. Patent and Trademark Office (PTO) acted appropriately when it decided to remove the trademark from the Principal Register (cancel the mark registration) because it was a disparaging term. The Principal Register is a list that the PTO maintains of trademarks that meet its standards for receiving certain nationwide statutory protections. Among the standards: a mark cannot be “immoral, deceptive, or scandalous matter; or matter which may disparage or falsely suggest a connection with persons, living or dead, institutions, beliefs, or national symbols, or bring them into contempt, or disrepute.” Sometimes the PTO believes a mark meets its standards and registers a mark, but later a third party introduces evidence that convinces the PTO that the mark did not actually meet the standards. That is what happened here: a group of Native Americans brought evidence to the PTO showing that the “Redskins” marks were disparaging, so the PTO decided to cancel registration. If a mark is not registered with the PTO, the owner can still use the mark, and the mark may still be eligible for common law protection. The team certainly did not lose its marks entirely. In fact, because this was a trial court decision about a PTO decision, it is not yet final by a long shot; the decision may be appealed to the Circuit Court of Appeals with jurisdiction over the trial court (in this case, the Fourth Circuit), and from there it may even be heard by the Supreme Court. The team’s marks are therefore still showing as “registered” on the PTO website.

What you may not have heard is that the Federal Circuit Court of Appeals (the FCCA) also recently ruled in a trademark case involving a racial slur, and it’s a doozie. The FCCA ruled that the First Amendment prohibits the government from denying federal registration of trademarks on the basis that they are disparaging. This overturns part of the Lanham Act, the law that allows the PTO to decide which trademarks to register, and opens the door to overturning other parts (e.g., the prohibition on “scandalous” marks). The case focused on a band named The Slants, a name selected by the group in order to reclaim a racial slur. The PTO had denied registration on the basis that the term was disparaging, the same reason it agreed to cancel registration of the Washington Redskins’ trademarks.

Why did the two courts take such very different approaches to the issue? There are several reasons, but it boils down to this: the court in the case that was decided first, the Redskins case, was a federal trial court. It was constrained by precedent (that is, by what higher courts had decided before on the same subject). The court in the Slants case (the FCCA) was an appellate court and was empowered to overturn its own precedent—and it did just that. In fact, the FCCA overturned one of the cases that the Virginia trial court relied upon in ruling against the football team. The Virginia court held that the decision not to register the mark was a form of government speech, outside the purview of the First Amendment; and that the speech was not prohibited by canceling the mark anyway. The Federal Circuit held that the government had no business constraining the speech of others by withholding the benefits associated with registration based on the content of the speech (the trademark).

What happens next could be the interesting part. For those who are unfamiliar with our court system, in the hierarchy of courts, there are many district courts throughout the country. Each district court’s decisions can be appealed to one of the twelve Circuit Courts of Appeals, depending mostly upon its geographic location. And each of the Circuit Courts of appeals’ decisions can, in turn, be appealed to the Supreme Court of the United States (SCOTUS). SCOTUS will usually only hear an appeal when there is a split among the Circuit Courts of Appeals—that is, when there is disagreement among the Circuits about how a particular legal issue ought to be handled.

The Federal Circuit Court of Appeals may have just created a split. The Virginia court’s ruling is on appeal to the Fourth Circuit Court of Appeals. If the Fourth Circuit decides not to overrule its own precedent on the subject of disparaging trademarks and the First Amendment, we could very well see the Supreme Court resolving this issue within the next few years.

My thought: it is surprising that it took this long for this First Amendment ruling to occur. The First Amendment has been methodically knocking down morality clause-like parts of statutes (like this portion of the Lanham Act) since the 1950s. At one time, the Post Office famously would not carry the book Lady Chatterley’s Lover, which it considered to be obscenity. The thought of the Post Office discriminating based on the intellectual content of the mail today is laughable. Today, the rulings upholding the Lanham Act’s prohibitions on disparaging marks have been twisting themselves in knots trying to draw distinctions between government speech and other speech. It has felt inconsistent with the progress of the First Amendment cases. I will be slightly surprised if there is still a circuit split after the Fourth Circuit rules on the Redskins case. If SCOTUS hears these cases, though, I will be shocked if this “morality clause” does not fall to the First Amendment.

What do you think?