Helping Americans stay fit and healthy has always been a passion for Yvette Franco-Clark and her husband Randy Clark. Few people are fortunate to take what they love and turn it into a profitable business. But in 2019, the couple had a once-in-a-lifetime opportunity to buy their own local gym in Alma, Michigan.
Owning a gym had long been a dream of Randy’s. With over 40 years in the fitness industry, he’d become a reputable personal trainer: His clients included an NFL player and military personnel preparing for basic training. The only thing he was missing was his own gym.
They had no idea that just one year later, the world would be turned upside down.
Fortune smiled on Randy and Yvette when they were approached with the deal of a lifetime: A friend of theirs owned a local gym and was looking to sell.
They couldn’t have asked for a better opportunity. The gym was ready-made, complete with equipment and a strong membership base. To make it their own, they abandoned the old name and rechristened the facility “Gym 24/7 Fitness.”
The couple had the perfect combination of skills to run a fitness business together: Randy had the training expertise and Yvette already had a career in health.
After earning her bachelor’s degree in health and wellness, Yvette spent 14 years teaching medical courses, including phlebotomy and medical terminology. She takes a holistic approach to health, emphasizing diet and exercise and how they work together to keep a person healthy. For Yvette, the gym would be an extension of her life’s passion.
The business was registered under Yvette’s name. She took on most of the behind-the-scenes work of running the gym while Randy ran the floor and trained his clients.
This wasn’t their first joint venture. For years, the husband-and-wife duo traveled around to local middle schools teaching children about diet and exercise. It was a passion project for the pair, who provided the lessons free of charge.
When they weren’t busy teaching middle schoolers about health, they were raising their four children and working their day jobs. Their hard work paid off when they took ownership of the gym in March of 2019. Like the rest of us, they had no idea that just one year later, the world would be turned upside down.
Closed for Business
In March 2020, COVID-19 was spreading quickly across the United States. Michigan’s governor, Gretchen Whitmer, used her emergency powers to shut down all nonessential businesses, including gyms.
As “two weeks to flatten the curve” turned into months, Yvette and Randy’s gym—the business that had brought their dream to life—turned into an empty, lifeless vessel. Yvette remembers,
My husband and I would come into the gym, and I mean, it was so heartbreaking to come in here and not hear the banging and the sounds of the metal hitting the floor, and people lifting weights, and the music going. You walked in here and this gym was just—it was dead. The equipment was there and there was no life here.
Like many small business owners, Yvette and Randy were frustrated: The pandemic shutdowns seemed indefinite. Yvette has always been a strong believer in property rights. It didn’t sit well with her that the government could order her gym to close without offering compensation for her economic losses.
Her frustration led her to Philip Ellison, a local property rights attorney with a special interest in the Takings Clause. Nestled within the text of the Fifth Amendment, the Takings Clause promises individuals that governments cannot take their property without giving them just compensation. This is a fundamental principle of property rights with roots reaching all the way back to Magna Carta.
Philip explained to Yvette and Randy that by forcing the closure of their gym, the government had engaged in a regulatory taking. In a regulatory taking, the government doesn’t take physical possession of property but severely limits the use of it. On paper, the Clarks were still the owners of the gym, but what did that really mean if the couple was no longer able to use their property—a property that paid for their livelihood? The government had taken the use of their gym from them and given nothing in return.
With Philip Ellison’s help, the couple sued the state for violating the Takings Clause and sought compensation for their losses.
The Ghost of Penn Central
When courts are tasked with determining whether an unconstitutional regulatory taking has occurred—and thus, if an individual is entitled to compensation—they rely on a three-pronged test known as the “Penn Central Test.”
Penn Central Transportation Co. v. City of New York was a 1978 Supreme Court case about proposed renovations to Grand Central Terminal. Penn Central, the financially struggling railroad company that owned Grand Central, wanted to build a 55-story office tower above the station. The company desperately needed the revenue an office tower would bring. But the City of New York Landmarks Preservation Commission denied the request on the grounds that Penn Central was an historic landmark.
Penn Central argued the Commission’s denial was an unconstitutional taking because it deprived the company of the value of its property. But the Supreme Court decided that no government taking had occurred, based on an ad hoc factual inquiry that focused on three factors:
- Economic Impact of the Regulation on the Property Owner
How significantly does the regulation reduce the property’s economic value or interfere with its use?
- Interference with Investment-Backed Expectations
Does the regulation disrupt reasonable expectations the property owner had when he or she acquired or invested in the property?
- Character of the Government Action
Is the government action more like a physical invasion or a broader public regulation for the common good?
This three-factor test—the ghost of the Penn Central decision—would henceforth become the measuring stick used to determine if a regulatory taking had occurred that required the government to compensate a property owner.
In Yvette and Randy’s case, the trial court determined that the couple’s takings claim failed the Penn Central Test. While the Michigan Court of Appeals did recognize the Clarks’ financial losses, it decided that the public purpose of COVID shutdowns outweighed Randy and Yvette’s property rights.
But the fact remains that the government took control of the Clarks’ property without giving them any compensation for their losses. Relying solely on the Penn Central Test effectively denied the couple their constitutional rights.
Pacific Legal Foundation is now joining Philip in continuing Yvette and Randy’s fight.
Fixing Penn Central
The Penn Central Test routinely falls short when it comes to upholding the Fifth Amendment. Penn Central is so amorphous and subjective that no one really knows what it means, which inevitably leads to conflicts in the courts and inequitable application.
As PLF writes in our petition to the Supreme Court on behalf of Yvette and Randy:
The enduring problem is that no one—courts included—know what these factors really mean, collectively or individually. Nor how to apply them, nor how, or even if, to weigh them. At this point, it is axiomatic that Penn Central is simply not capable of predictably, consistently, and uniformly determining ‘how far is too far?’
Constitutional rights cannot be protected if the courts do not know how to protect them. Justice Clarence Thomas voiced similar concerns in his 2021 Supreme Court opinion in Bridge Aina Le‘a, where he described Penn Central as a “standardless standard.”
PLF’s John Groen elaborates on this sentiment in his recently published paper in Touro Law Review: “Takings, Original Meaning, and Applying Property Law Principles to Fix Penn Central.” The Penn Central Test, Groen says, leaves “great discretion to judges to reach whatever result is desired.”
While the Supreme Court has said that there is no “magic formula,” there is a better way to weigh regulatory takings, especially in cases like the Clarks’.
“Property owners lose most Penn Central cases,” Groen points out.
In his dissent to the Michigan Supreme Court’s denial of Yvette and Randy’s appeal, Justice David Viviano echoed Groen’s thoughts. “By looking the other way on claims like these, we damage the credibility of the judiciary to serve as a bulwark of our liberty and ensure that the government does not take private property without just compensation—even in times of crisis,” he wrote.
It’s time for the courts to institute another method of assessing regulatory takings—which is exactly what PLF is asking the Supreme Court to do. As Groen suggests, “In setting a path forward, the takings analysis should be consistent with basic principles of property law.”
Yvette and Randy have an opportunity to fix Penn Central: They’re trying to bring their case to the Supreme Court, where justices would be able to create a new rubric that provides property owners with the protections guaranteed in the Constitution.
The Clarks Press On
While Yvette and Randy hope the Supreme Court will provide a legal remedy for their economic losses, there is much more at stake. For them, this fight is about holding the government accountable when they step out of bounds.
“They’re violating the constitutional rule of law,” Yvette says. “The government doesn’t have the authority, and shouldn’t have the authority, and we the people should be standing up against them for their tyrannical actions and behavior. Period.”
Yvette also hopes that by winning this case, they can make an impact on a broader scale.
I would be very happy if we won. Because it shows that we the people can stand for what is right, and that we do have the ability to win. We do have a right to fight for our freedom, and we should fight for that. And it would represent that our freedom does still exist in this country.
