The New Mexico Supreme Court recently heard oral arguments on whether businesses can sue the state for compensation due to COVID-19 closures. The Court has not yet made a decision.

This case was the third lawsuit on its kind in the New Mexico Supreme Court. Businesses sued the governor over her public health orders. In previous cases, the Court held in favor of the Governor’s Office.

New Mexico Businesses Say They Deserve Compensation

Throughout the COVID-19 pandemic, New Mexico businesses experienced a number of shutdowns and re-openings. A number of businesses contend that they deserve compensation from the state for lost revenue.

“The right to have property and not have it taken by the government without providing just compensation is fundamental liberty recognized in our bill of rights,” said Blair Dunn, an attorney representing the parities of interest.

Dunn also argued that these cases should remain in District Court to address individual cases. He said there there should be no sweeping decision by the New Mexico Supreme Court.

The State of New Mexico, Governor Michelle Lujan Grisham and former Health Secretary Kathy Kunkel are defendants in more than a dozen lawsuits pending before District Courts across New Mexico. Each action seeks similar relief. They argue that the state should compensate them for losses suffered due to the public health orders.

Court pleadings show that 14 lawsuits were filed over the state’s public health restrictions by October. Dunn said the number has since increased to about 20. Moreover, Dunn has a slate of potential plaintiffs waiting for the Supreme Court’s ruling before deciding whether to file their own complaints.

New Mexico businesses bringing the lawsuits include restaurants, Hike Family Fun Center, a floral shop, Elite Fitness and tanning. Also part of the case are Mauger Estates B&B in Albuquerque and Eli’s Bistro Inc. Two Santa Fe companies are parties to the case: the Santa Fe Oxygen and Healing Bar and Apothecary Restaurant. They are two adjacent downtown businesses that have the same owner.

To avoid confusion and contradictory orders, the State Attorney General’s Office requested that the state supreme court offer an opinion.

The State’s Position

The state argues that the order doesn’t constitute a regulatory seizure of property — as the businesses claim. Instead, it is an exercise of the state’s police powers and restricts the use of business property only temporarily, for a proper purpose.

If New Mexico state law permitted these types of damage claims, Assistant District Attorney Nicholas Sydow wrote in a brief, “this specter of liability would hobble the State’s ability to take emergency action — whether destroying a burning building or prohibiting activity known to spread a pandemic.”

The state argued that public health orders and business shutdowns were necessary and legal to protect the state’s citizens in the pandemic from COVID-19.

Sydow argued that the state would be forced to make a choice between facing high costs from liability claims and “abandoning regulations that save lives.”

There’s no indication when the New Mexico Supreme Court will reconvene to render the ruling on the controversy.

Will the U.S. Supreme Court be Next?

The U.S. Supreme Court has yet to consider any case similar to this one, Dunn said. However, he thinks that this case could wind up in Washington, DC.

“Based on the way things have trended with the [New Mexico] Supreme Court giving the state a lot of leeway” in pandemic-related civil complaints, he said, “we expect we’ll be doing a petition to the United States Supreme Court as well.”