The Reliance Interest in Property Revisited
By Joseph William Singer
Thirty years ago, the U.S. Steel Corporation decided to close a plant in Youngstown, Ohio. The factory was the mainstay of the town and its closing was likely to have a devastating impact on the local economy as well as the lives of all the workers who would be laid off. The union did all it could to keep the factory open, but to no avail. In a final burst of creativity, the union came up with the idea of buying the factory from the company. If they won’t run it, maybe we can. But the company adamantly refused to consider selling to the union. It took the inconsistent positions that the factory was unprofitable and that if the union did operate it that the union would be competing with the old employer and illegitimately harming U.S. Steel’s business. In the face of this intransigence, the union went to court. Among other things, it asked the court to order the company to sell the factory to the union upon payment of fair market value. In effect, the union claimed that it, or the town, had a right of first refusal in the property.
Trial Judge Lambros was sympathetic. “[I]t seems to me,” he said, “that a property right has arisen from this lengthy, long-established relationship between United States Steel, the steel industry as an institution, the community in Youngstown, the people in Mahoning County and the Mahoning Valley in having given and devoted their lives to this industry.”1 Yet when push came to shove, Judge Lambros felt that he could find no precedent in Ohio law for such a property right and that finding was upheld by the Sixth Circuit.2 Because precedent is far from unchanging and because I shared Judge Lambros’ instinct that a long relationship may create property rights when the owner shares access to the property with another, I wrote an article entitled The Reliance Interest in Property, in which I argued that Judge Lambros could have interpreted the common law to find such a property right.3 In addition, I suggested a number of remedies, two of which I want to revisit now. First, I argued that the court could have and should have recognized a right of first refusal in either the union or the town, enforceable by injunctive relief ordering the company to transfer title for fair market value. Second, I argued that the town could exercise its power of eminent domain to take the property from U.S. Steel and transfer it to the union or to another employer who would agree to operate the factory.
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