In September 2020, the CDC issued a nationwide order temporarily halting residential evictions, which remained effective for nearly a year. 

On June 6, 2025, the United States Court of Appeals for the Federal Circuit agreed that the Centers for Disease Control and Prevention’s (CDC) 2020 residential eviction moratorium constituted a physical taking of a landlord’s property. In doing so, the court denied the United States’s petition for panel rehearing and rehearing en banc of the panel’s August 7, 2024, opinion and order in Darby Development Company, Inc. v. United States, 112 F.4th 1017 (2024), which had overturned the Federal Court of Claims’ decision dismissing the landlord’s claims that the CDC’s 2020 eviction moratorium constituted a physical taking of its property. The decision opens up the potential for billions of dollars of takings claims against the federal government for the nationwide order.

In September 2020, the CDC issued a nationwide order temporarily halting residential evictions, which remained effective for nearly a year. Associations of real estate agents and rental property managers quickly sued the CDC. The District Court for the District of Columbia granted the associations’ expedited motion for summary judgment but granted a stay pending appeal. Eventually, in Alabama Ass’n of Realtors v. Dep’t of Health and Human Services, 594 U.S. 758 (2021), the Supreme Court of the United States ruled that the plaintiffs in that case had a substantial likelihood of success on the merits, in effect finding that the CDC’s order was unauthorized under 42 U.S.C. § 264(a).

With that decision in hand, Darby filed suit against the United States in the Court of Claims, claiming that the eviction moratorium constituted a physical taking of its property for public use for which just compensation was owed. The government responded that the CDC’s order was unauthorized and therefore could not support a takings claim, and that the order merely regulated the landlord-tenant relationship and was not a physical taking. The Court of Claims agreed the order was unauthorized as decided in Alabama Ass’n and dismissed the claim.

On appeal, a three-judge panel of the Federal Circuit reversed. According to the Federal Circuit, citing Del-Rio Drilling Programs Inc. v. United States, 146 F.3d 1358, 1362 (Fed. Cir. 1998), an action of the government is legally authorized in the takings context if the action is “chargeable to the government.” “An action will normally be deemed authorized if it was done by government agents ‘within the general scope of their duties’[.]” Government action is only unauthorized if outside the scope of the government agent’s duties or if done despite an explicit prohibition by Congress.

And, according to the Federal Circuit, the CDC’s order was authorized as under the general scope of the surgeon general’s authority and was in fact ratified by Congress when it extended the order in December 2020 and appropriated money for emergency rental assistance. The dissent and the government both argued that the order was not authorized as found in in Alabama Ass’n.

The panel of the Federal Circuit went one step further, finding that the CDC’s order amounted to a physical taking of the property by preventing Darby from evicting or excluding from the property at least some nonrent-paying tenants. According to the panel, Darby stated a cognizable claim that the order appropriated the property for third parties’ enjoyment, much like the physical taking found in Cedar Point Nursery v. Hassid, 594 U.S. 139 (2021).

So, what happens next? The case was remanded to the Court of Claims for further proceedings. The government has 90 days from the June 6, 2025, order denying the petition for rehearing to petition for a writ of certiorari to the U.S. Supreme Court. A justice of the Supreme Court, for good cause, may extend that timeline for up to 60 days. One circuit judge wrote separately to suggest the Supreme Court should provide guidance on this issue.

If the government does not petition for a writ of certiorari or the Supreme Court decides not to hear the case, the case will continue in the Federal Court of Claims. Darby, and any landlord bringing a similar claim, will still have to prove an actual taking occurred, meaning that they will have to (1) have had a tenant that did not pay rent during the time in which the CDC order was in effect (2) for which they could evict under the tenant’s lease and under state law, (3) but for which they could not evict due to the order. If a landlord can prove that, then there will be a determination of what just compensation for that taking should be.

As it stands, the decision allows landlords to seek just compensation from the federal government for a physical taking of their property where the three enumerated facts above are present.

For More Information

If you have any questions about this Alert, please contact George J. Kroculick, David Amerikaner, Anna Wills, any of the attorneys in our Real Estate Practice Group or the attorney in the firm with whom you are regularly in contact.

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