reasonable expectation doctrine

In September 1994 the city council of Erie, Pennsylvania, enacted Ordinance 75-1994. The ordinance made it a summary offense to knowingly or intentionally appear in public in a state of nudity. It defined nudity to include the showing of human male or female genitals, pubic area, buttocks, or female breast below the top of the areola as well as any device simulating those areas. Pap's A. M., a Pennsylvania corporation, operated an establishment known as Kandyland in Erie that featured totally nude erotic dancing performed by women. After the ordinance took effect, the dancers began wearing pasties and G-strings to comply with its requirements. On October 14, 1994, Pap's filed a complaint in the Court of Common Pleas of Erie County against the city, the mayor, and members of the city council. The complaint sought declaratory relief and a permanent injunction against enforcement of the ordinance. The trial court granted the injunction and struck down the ordinance as unconstitutional. On cross-appeals the Commonwealth Court reversed the trial court's order. The Pennsylvania Supreme Court granted review and reversed again, holding that the public nudity provisions violated Pap's rights to freedom of expression under the First and Fourteenth Amendments. The city petitioned for a writ of certiorari, which the United States Supreme Court granted. Pap's then filed a motion to dismiss the case as moot on the ground that Kandyland was no longer operating as a nude dancing club and Pap's was not operating such a club at any other location. The Supreme Court denied the motion.

In 1986, petitioner David H. Lucas purchased two residential lots on the Isle of Palms in Charleston County, South Carolina, for $975,000. He intended to construct single-family homes on the parcels, which at the time were zoned for such use and required no building permit for development. No portion of the lots qualified as a critical area under then-existing coastal zone legislation. Subsequently, in 1988, the South Carolina Legislature enacted the Beachfront Management Act. The legislation established a baseline and prohibited construction of occupable improvements seaward of a line drawn 20 feet landward of that baseline, directly affecting Lucas's parcels by barring any permanent habitable structures. Lucas filed an action in the Court of Common Pleas alleging that the Act's restrictions effected a taking of his property without just compensation. Following a bench trial, the court determined that the prohibition rendered the lots valueless and ordered the state to pay just compensation in the amount of $1,232,387.50. The Supreme Court of South Carolina reversed the trial court's judgment. It accepted the legislature's findings that new construction threatened public resources and concluded that a regulation designed to prevent serious public harm could not constitute a taking. The United States Supreme Court granted certiorari to review the South Carolina Supreme Court's decision.

In 1965 New York City enacted the Landmarks Preservation Law, which created an eleven-member Landmarks Preservation Commission and authorized it to designate buildings at least thirty years old that possess special historical or aesthetic interest. The law required owners of designated landmarks to obtain Commission approval before altering exterior architectural features and imposed an affirmative duty to keep those features in good repair. In August 1967 the Commission designated Grand Central Terminal a landmark and the city tax block it occupies a landmark site; the Board of Estimate confirmed the designation the following month. Penn Central Transportation Co. and its affiliates owned the Terminal, an eight-story Beaux-Arts structure completed in 1913 that served as the main station for the New York Central and Harlem lines. On January 22, 1968, Penn Central entered a fifty-year renewable lease with UGP Properties, Inc., under which UGP agreed to construct a multistory office building cantilevered above the Terminal and to pay Penn Central at least three million dollars annually after construction. Penn Central and UGP submitted two plans prepared by architect Marcel Breuer: Breuer I, a fifty-five-story tower resting on the Terminal roof, and Breuer II Revised, a fifty-three-story building that would have removed part of the 42d Street facade. After four days of hearings at which over 80 witnesses testified, the Commission denied this application as to both proposals. Penn Central filed suit in New York Supreme Court, Trial Term, seeking a declaratory judgment, injunctive relief, and damages for a temporary taking. The trial court granted the injunctive and declaratory relief. The Appellate Division reversed, holding that Penn Central had failed to prove deprivation of all reasonable beneficial use. The New York Court of Appeals affirmed, concluding that the Terminal could still earn a reasonable return and that transferable development rights provided significant compensation. The Supreme Court noted probable jurisdiction.