A legal battle over the pandemic-era eviction moratorium is set to continue after a U.S. federal appeals court refused to halt a lawsuit challenging the government’s actions during COVID-19. In a 7–3 decision last Friday, the U.S. Court of Appeals for the Federal Circuit denied a request for a full-court rehearing, leaving the door open for landlords and property owners to pursue claims against the federal government—unless the Supreme Court intervenes.
The case traces back to the Biden administration’s sweeping response to the pandemic, which made it illegal for residential landlords to evict tenants who could not pay rent. The policy aimed to prevent a wave of homelessness during a time of unprecedented economic and public health turmoil. When the Centers for Disease Control and Prevention lifted the moratorium in September 2021, Darby Development Company and 37 other landlords and property owners sued the government. They argued that the eviction ban had cost them significant revenue and amounted to a “compensable taking or an illegal extraction” under the Fifth Amendment.
Initially, a circuit court judge sided with the government in May 2022, dismissing claims made by the landlords. But the plaintiffs appealed, and in August 2024, a three-judge appellate panel reversed the lower court’s decision, reviving the lawsuit. The government then sought a rehearing from the full appeals court, which was denied last week, effectively allowing the case to proceed.
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At the heart of the legal fight is whether the CDC’s eviction moratorium constituted an “authorized” government action that resulted in an illegal taking of property. The plaintiffs argue that the moratorium prevented them from finding new tenants and collecting rent, while the government contends that the CDC acted within its authority to prevent the spread of disease—even if those actions were outside its normal scope. As the ruling explained, “simply because the Order was abnormal does not mean that the CDC—the agency charged with issuing regulations ‘as in [its] judgment’ are necessary to prevent the interstate spread of communicable diseases … was acting outside the ‘normal scope’ of its duties for takings-claim purposes when issuing it.”
The court also distinguished between a “physical taking by the government” and a “regulatory taking,” a key point that could determine whether the federal body is liable for billions of dollars in compensation to property owners.
“Property owners deserve the opportunity to be heard and to seek fair compensation when government action effectively deprives them of use and income from their property,” said Shannon McGahn, chief advocacy officer of the National Association of Realtors, according to Reuters.
While the government still has the option to appeal to the Supreme Court, it remains uncertain whether the justices will take up the case. Given the potential financial stakes, however, a Supreme Court review appears increasingly likely.
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