Mich. Supreme Court weighs case demanding reimbursement for business closures during COVID

Lansing ― Michigan's highest court is poised to decide the fate of two separate cases arguing service venues such as restaurants, bars and gyms should be compensated by the state for pandemic-ordered closures during COVID-19.

The venues are seeking their day in court to show evidence regarding their estimated losses, the state's role in those losses and the evidence ― or lack of it — supporting the closures. Lower courts so far have blocked the groups from presenting their cases in court.

The cases seek reimbursements for closures initially ordered by Gov. Gretchen Whitmer that were later adjusted or reinforced by the Michigan Department of Health and Human Services and the Michigan Liquor Control Commission.

"The government took the position over and over and over again that we’re doing what we're doing for a public purpose of protecting the public from potential COVID-19," said Phil Ellison, an attorney representing gyms and fitness centers in one case, during oral arguments Wednesday before the court.

"We have said over and over at every stage of this litigation that the government can take, but if they're going to take they have to pay."

Solicitor General Ann Sherman said a court decision allowing the plaintiffs to move forward with their case would make Michigan a "national outlier" for the handling of pandemic takings cases.

"When the state acts out of necessity to protect against a grave threat to public health it’s not a taking," Sherman said. "It removes these inquiries from the takings analysis."

But Justin Majewski, an attorney for the bars and restaurants in the case, argued the orders in Michigan went beyond what was needed to preserve public health.

"These regulations just went too far," Majewski said. "They took too much. And they lasted far too long.”

Justice David Viviano questioned why the state was blocking the parties from presenting their cases in court, noting the state was asking the court to take Whitmer's reasoning detailed in executive orders as "unassailable" proof that the closures were justified.

"What would happen in this case if there was discovery?" Viviano asked. "Why would that be so detrimental to the case, if you're so confident in the state's position?"

The arguments Wednesday were in two different cases: one filed by gyms and fitness centers that lost money because of the closures; another by banquet halls, restaurants and bars that were ordered closed by both the Department of Health and Human Services and the state's Liquor Control Commission during the pandemic.

It's not the only COVID-era case the Michigan Supreme Court currently has before it. The high court heard oral arguments in October from college students from across Michigan who want to be reimbursed for tuition and living expenses when they were forced online during the pandemic.

The restaurants and fitness centers argued the pandemic closure orders amounted to an unlawful taking by the government in violation of the state and federal constitutional takings clause.

The fitness centers obtained a favorable ruling from the Court of Claims, which found there was a genuine question of whether the closures were "reasonable and not arbitrary." But the Court of Appeals reversed the Court of Claims and ruled in favor of the state, which had sought to dismiss the case.

The case filed by a Macomb County bowling alley and catering service on behalf of restaurants and bars was swatted down in both the Court of Claims and the Court of Appeals, with the latter court citing the analysis used to make its decision in the fitness center case.

The state's Supreme Court had ordered oral arguments on a couple of factors needed to prove a government taking, such as the extent of the economic impact and the extent of the infringement on property interests.

During arguments Wednesday, Justice Richard Bernstein voiced some concerns over the state's arguments, noting fitness centers and restaurants were ordered under criminal penalty to comply with temporary closures or limitations and suffered some long-term damages as a result.

"At the end of the day, the argument is that the executive can make the determination that you are going to be shut down and ultimately, from the argument you're putting forward, a restaurant owner, a ma and pa shop basically really has no recourse at the end of the day," Bernstein said.

But Justice Elizabeth Welch questioned how the court could allow a case seeking reimbursements to be made for restaurants and fitness centers when history showed more straightforward cases where the takings clause wasn't applied.

"How do you get past the prohibition-era cases, which clearly resulted in lots of businesses not being able to put their property to its best use and it was still not deemed to be a taking?" Welch asked.

eleblanc@detroitnews.com