 United States Court of Appeals
     for the Federal Circuit
            ______________________

A&D AUTO SALES, INC., ALLEY’S OF KINGSPORT,
   INC., ARCHER CHRYSLER JEEP WEST, INC.,
ARCHER CHRYSLER PLYMOUTH, INC., ARCHER
 DODGE, INC., ARCHER FINANCIAL HOLDINGS,
 INC., AXELROD CHRYSLER DODGE JEEP, INC.,
AXELROD CHRYSLER, INC., BARRY DODGE INC.,
   BENNETT AUTOPLEX INC., BENSON MOTOR
   INC., ARROW FORD, INC., BILL KAY SUZUKI,
  INC., BOARDWALK AUTO CENTER, INC., BOB
     LUEGERS MOTORS, INC., BOB ROHRMAN
     MOTORS, INC., BOB TAYLOR JEEP, INC.,
BONDY'S FORD, INC., BROTHER'S MOTORS, INC.,
BURKE AUTOMOTIVE GROUP, INC., BY FISHEL'S
JEEPS, INC., CARDENAS MOTORS, INC., CARSON
  AUTOMOTIVE INC., CDOHY, INC., CARSON CJ,
  LLC, CENTURY DODGE, INC., CHILSON, INC.,
  CLARKSTON MOTORS, INC., COLEMAN AUTO
 GROUP, INC., COLEMAN CHRYSLER JEEP, INC.,
    COUNTRY MOTORS, INC., CRAIN CDJ, LLC,
 CUNNINGHAM CHRYSLER JEEP, INC., CURFIN
     INVESTMENTS, INC., DJ-MACK INC., DET
    AUTOMOTIVE GROUP, INC., DAVE CROFT
MOTORS, INC., BURKE BROTHERS, INC., DODGE
      OF ENGLEWOOD, INC., DON DRENNEN
CHRYSLER JEEP, INC., DON PHILLIPS & SON SR.
  ENTERPRISES, INC., DONATO & SON'S JEEP,
INC., DOUGLAS AUTOMOTIVE GROUP, INC., EJE,
    INC., EL DORADO MOTORS, INC., ELHART
  DODGE, INC., ELHART PONTIAC-GMC TRUCK,
  INC., ERTLEY CHRYSLER JEEP DODGE, LLC.,
       FITZGERALD AUTO MALLS, INC., FT
 AUTOMOTIVE II, LLC, FT AUTOMOTIVE IV, LLC,
2                        A&D AUTO SALES, INC.   v. US



 FORT MORGANAUTO CENTER, INC., FOX HILLS
  MOTOR SALES, INC., G.K. ALCOMBRACK, INC.,
  GOLDEN MOTORS, INC., GRAYSON PONTIAC,
INC., GRESHAM CHRYSLER JEEP, INC., GRUBBS
   NISSAN MID-CITIES LIMITED, HAHN MOTOR
COMPANY, HAMILTON CHRYSLER, INC., HARVEY
  M. HARPER CO., HOOVER MOTORS HOLDING
CO., INC., HOOVER DODGE, INC., I.M. JARRETT &
     SON, INC., ISLAND JEEP, INC., JAMES W.
    HALTERMAN, INC., JIM MARSH AMERICAN
  CORPORATION, JOHN CULLEN DODGE, LLC,
  JOHNSON COUNTY MOTORS, L.C., KINGSTON
     DODGE, INC., KITAGAWA MOTORS, INC.,
      KOVATCH FORD, INC., LFCJ, INC., LEE
PETERSON MOTORS, INC., LENIHAN JEEP, INC.,
LIVONIA CHRYSLER JEEP, INC., LOU BACHRODT
   CHEVROLET, INC., MANCARI'S OF ORLAND
    HILLS, INC., MARKETPLACE SUZUKI, INC.,
   MARSTALLER MOTORS, INC., MELCHIORRE,
  INC., MILLER-CAMPBELL COMPANY, MILLER
 MOTOR CAR CORPORATION, MILNER O'QUINN
     CHRYSLER DODGE JEEP, INC., MORONG
  BRUNSWICK, NEIL HUFFMAN ENTERPRISES,
    INC., NEIL HUFFMAN, INC., LUNT MOTOR
     COMPANY, MANUEL DODGE, INC., MATT
  MONTGOMERY, INC., MATTHEWS CHRYSLER,
   INC., MT. CLEMENS DODGE, INC., NEW CITY
 AUTO SALES, INC., NORTHGLENN DODGE, INC.,
   JEFF HUNTER MOTORS, INC., JELMAC LLC,
 PAINTER SALES AND LEASING, PAINTER'S SUN
 COUNTRY CHRYSLER, INC., PEN MOTORS, INC.,
  PLEASANT VALLEY MOTORS, INC., PRESTON
CHRYSLER JEEP, INC., PRIDE CHRYSLER JEEP,
   INC., QUALITY JEEP-CHRYSLER, INC., RFJS
     COMPANY, LLC, REUTHER DODGE LLC,
 REUTHER'S INVESTMENT COMPANY, RHODEN
AUTO CENTER, INC., RICHARD CHRYSLER JEEP,
 INC., RIVERSIDE AUTO SALES OF MARQUETTE,
A&D AUTO SALES, INC.   v. US                3



INC., ROCK OF TEXAS AUTOMOTIVE, INC., ROHR-
     ALPHA MOTORS, INC., SCK, INC., SCOTIA
     MOTORS, INC., SCOTT CHEVROLET, INC.,
    SHOEMAKER AUTO GROUP, INC., SIEMANS
   IMPORTS, INC., SOUTH SHORE AUTO LINES,
   INC., SOUTHEAST AUTOMOTIVE, INC., STAR
 CHRYSLER, INC., TAMAROFF 12 MILE MOTORS,
  INC., TARBOX CHRYSLER JEEP, LLC, TARBOX
MOTORS INC., TAYLOR & SONS, INC., TED BRITT
      OF FREDERICKSBURG, INC., TENAFLY
  CHRYSLER JEEP, INC., TETON MOTORS, INC.,
    THOMAS SALES & SERVICE, INC., TOMSIC
   MOTOR COMPANY, TRANSIT LLC, TRI-STATE
  AUTOMOTIVE ASSOCIATES, INC., THE UNION
  SALES COMPANY, URKA AUTO CENTER, INC.,
 VALLEY DODGE, INC., VERONA MOTOR SALES,
   INC., VIC OSMAN LINCOLN-MERCURY, INC.,
 VILLAGE CHRYSLER JEEP, INC., WACO DODGE
 SALES, INC., WALKER MOTORS, INC., WALLACE
 CHRYSLER JEEP, LLC, WESTMINSTER DODGE,
INC., WESTSIDE DODGE, INC., WHEATON MOTOR
    CITY, INC., WHEELER LEASING CO. II, INC.,
 WHITEY'S, INC., WILLIAM T. PRITCHARD, INC.,
   WRIGHT DODGE, LLC, WYCKOFF CHRYSLER,
       INC., AND YOUNG VOLKSWAGEN, INC.,
                  Plaintiffs-Appellees

                               v.

                   UNITED STATES,
                  Defendant-Appellant
                 ______________________

                       2013-5019
                 ______________________
4                                     A&D AUTO SALES, INC.   v. US



    Appeal from the United States Court of Federal
Claims in No. 11-CV-0100, Senior Judge Robert H. Hodg-
es, Jr.
        -----------------------------------------------------------

    COLONIAL CHEVROLET CO., INC., AND MIKE
            FINNIN MOTORS, INC.,
               Plaintiffs-Appellees

                                v.

                     UNITED STATES,
                    Defendant-Appellant
                   ______________________

                         2013-5020
                   ______________________

     Appeal from the United States Court of Federal
Claims in No. 10-CV-0647, Senior Judge Robert H. Hodg-
es, Jr.
                ______________________

                   Decided: April 7, 2014
                   ______________________

    ROGER J. MARZULLA, Marzulla Law, LLC, of Washing-
ton, DC, argued for plaintiffs-appellees in case no. 2013-
5019. With him on the brief were NANCIE G. MARZULLA.
Of counsel on the brief was LEONARD A. BELLAVIA, Bella-
via Gentile & Associates, LLP, of Mineola, New York.

    HARRY ZANVILLE, Law Office of Harry Zanville, San
Diego, California, argued for plaintiffs-appellees in case
no. 2013-5020. With him on the brief were STEVEN J.
EAGLE, Law Office of Steven J. Eagle, of Arlington, Vir-
ginia, RICHARD D. FAULKNER, JAMES D. BLUME, Blume,
Faulkner Skeen & Northam, PPLC, of Richardson, Texas,
A&D AUTO SALES, INC.   v. US                            5



and G. KEVIN BUCHANAN, Buchanan & Bellan, L.L.P., of
Dallas, Texas.

    KENNETH M. DINTZER, Assistant Director, Civil Divi-
sion, Commercial Litigation Branch, United States De-
partment of Justice, of Washington, DC, argued for
defendant-appellant. With him on the brief were STUART
F. DELERY, Principal Deputy Assistant Attorney General,
JEANNE E. DAVIDSON, Director, DAVID A. HARRINGTON,
and ELIZABETH M. HOSFORD, Senior Trial Counsels, and
SARAH M. VALENTI and SETH W. GREENE, Trial Attorneys.
Of counsel were DANIEL B. VOLK, and SARAH M.
BIENKOWSKI, Attorneys.

    JONATHAN A. MICHAELS, Michaels Law Group, APLC,
of Newport Beach, California, for amici curiae, Spitzer
Motor City, et al. With him on the brief was KATHRYN J.
HARVEY. Of counsel on the brief was ALLEN P. PRESS,
Green Jacobson, P.C., of Clayton, Missouri.
                  ______________________

     Before NEWMAN, DYK, and TARANTO, Circuit Judges.
DYK, Circuit Judge.
    These appeals arise from two takings suits related to
the 2009 bankruptcies of General Motors Corporation
(“GM”) and Chrysler LLC (“Chrysler”). The plaintiffs are
former dealers of those companies whose franchises were
terminated in the bankruptcies. The plaintiffs allege that
these terminations constituted a taking because the
government required them as a condition of its providing
financial assistance to GM and Chrysler and/or to the
companies that succeeded them in the bankruptcies. The
government moved to dismiss the suits for failure to state
a claim. The United States Court of Federal Claims
(“Claims Court”) denied dismissal, and the government
brought these interlocutory appeals.
6                                  A&D AUTO SALES, INC.   v. US



    Because we lack the benefit of a fully developed factu-
al record, we do not at this stage address every issue the
government raises. As to the issues we do address, we
reject the government’s arguments for dismissal. While
we hold that the complaints are deficient because they do
not sufficiently allege that the economic value of the
plaintiffs’ franchises was reduced or eliminated as a
result of the government’s actions, we nonetheless affirm
the Claims Court’s decision to deny dismissal at this point
in the proceedings. The proper remedy is to grant the
plaintiffs leave to amend their complaints to include the
necessary allegations, and on remand the Claims Court
shall do so.
                       BACKGROUND
    At this stage in the proceedings, we accept the deal-
ers’ well-pleaded factual allegations as true. Ashcroft v.
Iqbal, 556 U.S. 662, 678 (2009). While we primarily
consider the allegations in the complaint, we may also
look to “matters incorporated by reference or integral to
the claim, items subject to judicial notice, [and] matters of
public record.” 5B Charles Alan Wright & Arthur R.
Miller, Federal Practice and Procedure § 1357 (3d ed.
2004).
                              I
    The bankruptcies of GM and Chrysler took place in
the historic recession and credit crisis of 2008–09. GM
and Chrysler were in serious financial difficulty, as loans
to automobile dealers and consumers had come to an
“abrupt halt” and sales “plummeted.” A&D J.A. 78. 1


    1  This opinion refers to the joint appendix in No.
2013-5019, A&D Auto Sales, Inc. v. United States, as the
“A&D J.A.” The joint appendix in No. 2013-5020, Colonial
Chevrolet Co. v. United States, is referred to as the “Colo-
A&D AUTO SALES, INC.   v. US                                7



Automobile sales were down more than 37% from the
previous year, falling to their lowest level in 26 years. In a
major public speech, President Bush expressed fears that
“[i]f we were to allow the free market to take its course
now, it would almost certainly lead to disorderly bank-
ruptcy and liquidation for the automakers.” President
George W. Bush, President Bush Discusses Administra-
tion’s Plan to Assist Automakers (Dec. 19, 2008) (tran-
script        available        at        http://georgewbush-
whitehouse.archives.gov/news/releases/2008/12/20081219.
html). In late 2008, the chief executives of GM and Chrys-
ler appeared before Congress to ask for emergency finan-
cial assistance in the form of loans and lines of credit.
Shortly thereafter, Treasury Secretary Henry Paulson
created the Automotive Industry Financing Program,
through which the Department of Treasury (“Treasury”)
would make loans and other investments in the automak-
ers using government funds. As the plaintiffs agree, the
stated goal of the program was to avoid “disorderly bank-
ruptcy and liquidation,” which would entirely eliminate
them as ongoing entities. Id. The program was created as
a part of the wider Troubled Asset Relief Program
(“TARP”), which made similar investments in a number of
financial institutions. TARP had been established by
Congress two months earlier, in the Emergency Economic
Stabilization Act of 2008, Pub. L. 110-343, 122 Stat. 3765.
    The government’s first assistance to the automakers
consisted of stopgap loans ($13.4 billion to GM, $4 billion
to Chrysler) intended to keep the companies from having
to cease operations pending talks over more comprehen-
sive assistance. In connection with these loans, the gov-
ernment and the automakers entered formal agreements



nial J.A.” The government’s briefs are referred to as
“Gov’t’s A&D Br.” and “Gov’t’s Colonial Br.”
8                                 A&D AUTO SALES, INC.   v. US



setting forth the conditions of the government’s assis-
tance. One condition was that the companies would
submit viability plans demonstrating that they could
achieve financial stability with the help of the govern-
ment funds. GM and Chrysler submitted their viability
plans in February 2009 as required.
     The government rejected GM and Chrysler’s initial
viability plans and called for the submission of revised
proposals. Executive branch officials in charge of oversee-
ing the financial assistance suggested that the companies
adopt various changes to improve their long-term viabil-
ity, such as focusing on lighter, more fuel-efficient vehi-
cles and (in GM’s case) more quickly reducing the number
of brands. The government specifically suggested that the
automakers should significantly reduce the number of
dealers within their franchise networks to improve their
viability. Although the automakers were already reducing
their dealer ranks over time and GM’s initial viability
plan had included additional dealer terminations, the
government determined that the current and proposed
pace of terminations was too slow, and that the compa-
nies’ large dealer networks were an obstacle to viability.
The government advised the companies they should
expand their terminations and that they might accom-
plish the terminations expeditiously by opting to reject
the franchise agreements in bankruptcy proceedings. 2



    2    Two provisions of the Bankruptcy Code are cen-
tral to the bankruptcies at issue. 11 U.S.C. § 363 author-
izes certain sales of a debtor’s assets. And 11 U.S.C. § 365
provides that a bankruptcy trustee “may assume or reject
any executory contract or unexpired lease of the debtor.”
Debtors-in-possession in chapter 11 bankruptcies, like
GM and Chrysler, generally have a trustee’s powers. 11
U.S.C. § 1107.
A&D AUTO SALES, INC.   v. US                              9



Outside bankruptcy, the dealer franchises had protections
against termination under various state and federal
franchise laws. The complaints allege that the govern-
ment’s proposals concerning franchise terminations were
mandatory—that is, that the government required the
automakers to include them or else forgo any further
financial assistance. At this stage, we accept the plain-
tiffs’ allegations as true, and proceed on the assumption
that the government required these terms as a condition
of financial assistance.
    The companies eventually adopted the government’s
suggestions for a bankruptcy filing, reduction of their
dealer networks, and other changes. Each filed for Chap-
ter 11 reorganization, and the government made available
an additional $38 billion in financing ($30 billion in loans
and equity investments to GM, $8 billion in loans to
Chrysler) for restructuring the companies. After approval
by the bankruptcy court under 11 U.S.C. § 363, the old
GM and Chrysler entities sold most of their operating
assets to newly created entities commonly called “New
GM” and “New Chrysler”—in which the federal govern-
ment, and other entities, acquired specified ownership
interests. As a result of the sale, the government acquired
a 60.8% ownership stake in New GM’s common stock, as
well as a portion of its preferred stock. The dealer fran-
chises that were not terminated were transferred to the
new entities along with other assets. The termination of
the remaining franchises was handled differently by each
company. In Chrysler’s case, the franchises were eventu-
ally terminated by the bankruptcy estate. In GM’s case,
either the franchises were terminated by the bankruptcy
estate or the dealers signed “Deferred Termination
Agreements” providing for a transition to termination. To
the extent the franchises were terminated by action of the
bankruptcy estate, the affected dealers received unse-
cured claims against the estates, see 11 U.S.C. § 365(g); In
re Old Carco LLC, 406 B.R. 180, 190 (Bankr. S.D.N.Y.
10                                A&D AUTO SALES, INC.   v. US



2009), but it is unclear whether they have received any-
thing for those claims. It is unclear as well whether the
dealers who signed termination agreements received any
compensation.
                             II
    The first of these two suits was filed in September
2010 by several terminated GM and Chrysler dealers.
Suing on behalf of themselves and a putative class of
others similarly situated, the plaintiffs alleged that the
government had effected a taking of their dealer fran-
chises (including rights conferred by state law) by “coer-
ci[ng]” the automakers—that is, by requiring dealer
terminations as a condition of financial assistance. Colo-
nial J.A. 29; see also A&D J.A. 20. The plaintiffs alleged
that this constituted a regulatory taking. They did not
allege a physical taking. 3



     3  In addition to the plaintiffs’ franchise agreements,
the Colonial complaint identified a handful of “distinct
investment-backed expectation assets” including “real
property,” “enhancements to real property,” “buildings,”
“fixtures,” “specialized tools,” “signage,” and inventory of
parts and vehicles. Colonial J.A. 32. It also identified
intangible assets such as “debt collateralization and/or
other specialized floor plan financing,” “blue sky,” and
“good will.” Colonial J.A. 32. The complaint did not allege
a taking of those assets, however. It simply identified
them as evidence of the plaintiffs’ “distinct investment-
backed expectation[s]” in their dealership franchises.
Colonial J.A. 32.
        The complaint also identified two government ac-
tions (aside from the alleged requirement of dealer termi-
nations in exchange for financing) that were alleged to be
takings: (1) the actions of the bankruptcy court that
A&D AUTO SALES, INC.   v. US                             11



    In February 2011, a separate group of former Chrys-
ler dealers brought a second suit in the Claims Court. The
two complaints were largely identical in substance.
     Both cases were assigned to the same judge of the
Claims Court. Shortly after amended complaints were
filed, the government moved pursuant to Claims Court
Rule 12(b)(6) to dismiss each complaint for failure to state
a claim. 4 The Claims Court denied both motions, issuing
an identical order in each case. The Claims Court con-
cluded that the plaintiffs’ allegations were sufficient to
make out a prima facie takings claim. The court noted
that it was “not aware of a takings theory that resembles
the legal and factual theories offered so far” and that the
plaintiffs’ “unusual allegations” did “not fit neatly into a
normal takings framework.” Colonial J.A. 4; A&D J.A. 4.
Nonetheless, the court found that the “[p]laintiffs should
have the opportunity to develop [their] case[s].” Colonial
J.A. 6; A&D J.A. 6. The court reasoned that the possibility
that the plaintiffs could prevail “demand[ed] rejection of
[the government’s] motion to dismiss on the pleadings as
premature.” Colonial J.A. 6; A&D J.A. 6.
   After the Claims Court denied dismissal, the govern-
ment moved the court to certify an interlocutory appeal
under 28 U.S.C. § 1292(d)(2). The government asked the


approved the terminations, and (2) a federal law that
allowed terminated dealers to seek reinstatement through
arbitration. Each government action was alleged to be a
taking independent of the others. However, the plaintiffs
later dismissed these claims.
    4   The government also moved to dismiss for lack of
subject matter jurisdiction. It is not clear that the gov-
ernment presses that issue on appeal. In any event, we
see no lack of subject matter jurisdiction in the Claims
Court.
12                                 A&D AUTO SALES, INC.   v. US



Claims Court to certify two questions: whether the com-
plaints failed to state a claim upon which relief could be
granted, and whether bankruptcy court findings preclud-
ed the suit. The Claims Court certified the first question
only. The government then filed petitions for interlocutory
appeal with this court. We granted the petitions, agreeing
“that the criteria for interlocutory appeal . . . are met and
that these petitions should be granted and heard on the
merits by this court.” Order Granting Petitions for Inter-
locutory Appeal 6, November 30, 2012, ECF No. 2-3. We
review the denial of the government’s motions to dismiss
de novo. See, e.g., First Med. Health Plan, Inc. v. Vega-
Ramos, 479 F.3d 46, 50–51 (1st Cir. 2007) (on interlocuto-
ry appeal, denial of motion to dismiss is reviewed de
novo).
                        DISCUSSION
                              I
    We address initially the scope of our review in this
case. Our appellate jurisdiction is ordinarily limited to the
Claims Court’s final decisions. See 28 U.S.C. § 1295(a)(3).
But our jurisdiction extends to certain interlocutory
orders as well pursuant to § 1292(d)(2). In interlocutory
appeals, the scope of the issues is “limited to the order
appealed from, but not to the specific stated question”
articulated by the Claims Court. 16 Charles Alan Wright,
Arthur R. Miller, & Edward H. Cooper, Federal Practice
and Procedure § 3929, at 454 (3d ed. 2012). We may
consider “any question reasonably bound up with the
certified order, whether it is antecedent to, broader or
narrower than, or different from the question specified by
the [Claims Court].” Id. at 457; see Sky Techs. LLC v. SAP
AG, 576 F.3d 1374, 1378–79 (Fed. Cir. 2009); United
States v. Connolly, 716 F.2d 882, 884–85 (Fed. Cir. 1983).
But we are not obligated to decide all questions presented
by the order. See Wright, Miller, & Cooper, supra, at 448
(noting that courts of appeals have discretion to vacate an
A&D AUTO SALES, INC.   v. US                              13



initial grant of permission to appeal). That is particularly
so in cases where “an underdeveloped record may lead to
ill-informed decision of an important question.” Id. at
450–51.
     The facts of this case are unique and raise issues that
have not been decided before, and the record at this stage
consists of little more than the plaintiffs’ allegations. As
discussed below, we decline to address some questions
asked at this preliminary stage without the benefit of a
full factual record. But we conclude that other issues are
ripe for decision.
                               II
     The Takings Clause of the Fifth Amendment guaran-
tees just compensation whenever private property is
“taken” for public use. U.S. Const. amend. V. The plain-
tiffs do not allege, and their complaints do not assert facts
supporting an allegation of, a “direct government appro-
priation or physical invasion of [their] private property.”
Lingle v. Chevron U.S.A. Inc., 544 U.S. 528, 537 (2005);
see, e.g., United States v. Pewee Coal Co., 341 U.S. 114
(1951) (seizure and operation of private coal mine); United
States v. Gen. Motors Corp., 323 U.S. 373 (1945) (occupa-
tion of private warehouse). Nor do they allege, or support
an allegation, that the government stepped into the shoes
of the dealers by assuming their contractual rights or
transferring them to a third party. 5
    Government action that does not directly appropriate
or invade, physically destroy, or oust an owner from


    5  In that sense, this case is distinguishable from
Armstrong v. United States, 364 U.S. 40, 46–49 (1960) and
International Paper Co. v. United States, 284 U.S. 399,
408 (1931). To the extent the Colonial plaintiffs suggest
otherwise, there is no support for such a contention.
14                                 A&D AUTO SALES, INC.   v. US



property but is overly burdensome may be a regulatory
taking. “The general rule at least is that while property
may be regulated to a certain extent, if regulation goes too
far it will be recognized as a taking.” Penn. Coal Co. v.
Mahon, 260 U.S. 393, 415 (1922); see also Lingle, 544 U.S.
at 537 (regulation is a taking if it is “so onerous that its
effect is tantamount to a direct appropriation or ouster”).
The plaintiffs have alleged only regulatory takings.
     The Supreme Court has treated certain regulatory ac-
tions as “categorical” takings. A categorical taking occurs
where regulations “compel the property owner to suffer a
physical invasion of his property” or “prohibit all economi-
cally beneficial or productive use.” Lucas v. S.C. Coastal
Council, 505 U.S. 1003, 1015 (1992) (internal quotation
marks omitted). Beyond those categories, the Supreme
Court has “generally eschewed any set formula, instead
preferring to engage in essentially ad hoc, factual inquir-
ies.” Id. (internal quotation marks omitted). But three
factors have “particular significance” in the analysis: (1)
“the character of the governmental action,” (2) “the extent
to which the [action] has interfered with distinct invest-
ment-backed expectations,” and (3) “[t]he economic impact
of the regulation on the claimant.” Penn. Cent. Transp.
Co. v. City of New York, 438 U.S. 104, 124 (1978). And of
course, “the existence of a valid property interest is neces-
sary in all takings claims.” Wyatt v. United States, 271
F.3d 1090, 1097 (Fed. Cir. 2001).
    The Supreme Court has mainly applied the categori-
cal test to regulatory takings of real property. See Lucas,
505 U.S. at 1015–19. As the Claims Court recognized,
other circuits view the Lucas test as applying only to land.
Hawkeye Commodity Promotions, Inc. v. Vilsack, 486 F.3d
430, 441 (8th Cir. 2007) (“[I]t appears that Lucas protects
real property only.”); Unity Real Estate Co. v. Hudson, 178
F.3d 649, 674 (3d Cir. 1999) (“[T]he categorical approach
has only been used in real property cases.”); see also
Lucas, 505 U.S. at 1027–28 (“[I]n the case of personal
A&D AUTO SALES, INC.   v. US                             15



property, by reason of the State’s traditionally high de-
gree of control over commercial dealings, [the owner]
ought to be aware of the possibility that new regulation
might even render his property economically worth-
less . . . .”). We have applied the categorical test to per-
sonal property on occasion. E.g., Rose Acre Farms, Inc. v.
United States, 373 F.3d 1177, 1196–98 (Fed. Cir. 2004);
Maritrans, Inc. v. United States, 342 F.3d 1344, 1353–55
(Fed. Cir. 2003). But those cases involved only tangible
property. Rose Acre Farms, 373 F.3d at 1196 (chickens);
Maritrans, 342 F.3d at 1354 (barges); see also Brown v.
Legal Found. of Wash., 538 U.S. 216, 220 (2003). We have
not had occasion to address whether the categorical
takings test applies to takings of intangible property such
as contract rights. We decline to decide the issue at this
stage of the litigation since the issue has not been briefed
by the parties.
                               A
    We begin our analysis in this case with the alleged
property interest, an issue equally relevant to alleged
categorical takings and to takings governed by the Penn
Central analysis. There is no dispute that the plaintiffs’
franchise agreements are property for purposes of the
Takings Clause. In general, “[v]alid contracts are proper-
ty, whether the obligor be a private individual, a munici-
pality, a state, or the United States.” Lynch v. United
States, 292 U.S. 571, 579 (1934); see also U.S. Trust Co. of
N.Y. v. New Jersey, 431 U.S. 1, 19 n.16 (1977) (“Contract
rights are a form of property and as such may be taken for
a public purpose provided that just compensation is
paid.”). Franchise agreements are no exception to this
general rule.
    The government argues that the plaintiffs nonetheless
lack a compensable property interest. As the government
points out, during the lifetime of the agreements, the law
of bankruptcy has always allowed a trustee or debtor-in-
16                                  A&D AUTO SALES, INC.   v. US



possession to reject executory contracts as GM and Chrys-
ler did here. See generally 11 U.S.C. § 365(a). The gov-
ernment argues that this principle of bankruptcy law
“inhere[d]” in the franchise agreements, and that termi-
nation of the agreements therefore did not concern a
compensable property interest of the plaintiffs. Gov’t’s
Colonial Br. 13; Gov’t’s A&D Br. 13.
    We reject this argument. It is true that “background
principles” of law may “inhere” in a plaintiff’s title to his
property and thereby limit his ability to recover for a
taking. Lucas, 505 U.S. at 1029; see also Bair v. United
States, 515 F.3d 1323, 1327–28 (Fed. Cir. 2008); M & J
Coal Co. v. United States, 47 F.3d 1148, 1154 (Fed. Cir.
1995). For example, the common law of nuisance limits
uses of real property that interfere with neighbors’ rights
of enjoyment. See Lucas, 505 U.S. at 1029–30. Thus a
landowner may not recover for a taking when the gov-
ernment forbids a use that is a nuisance at common law.
Id. The law of nuisance inheres in the landowner’s title,
so there is no taking if a use restriction falls within the
scope of nuisance law. Id.; see also Calero-Toledo v. Pear-
son Yacht Leasing Co., 416 U.S. 663, 680–90 (1974) (no
taking when innocent owner’s property is subject to
forfeiture due to criminal acts of lessee); Commonwealth
Edison Co. v. United States, 271 F.3d 1327, 1352–53 (Fed.
Cir. 2001) (en banc).
    If a challenged restriction was enacted before the
property interest was acquired, the restriction may be
said to inhere in the title. 6 If a challenged restriction was
enacted after the plaintiff’s property interest was ac-
quired, it cannot be said to “inhere” in the plaintiff’s title.


     6   This is not always true with respect to land use
restrictions. See Palazzolo v. Rhode Island, 533 U.S. 606,
626–30 (2001).
A&D AUTO SALES, INC.   v. US                             17



For example, in Bair v. United States, we held that a law
giving priority to federal government liens inhered in the
title of liens owned by other parties and created after the
priority statute was enacted. 515 F.3d at 1331. The exer-
cise of the government’s lien did not effect a taking be-
cause the priority law predated the plaintiffs’ liens and
therefore inhered in their title. Id. Other circuits have
similarly held that a law allowing bankrupt debtors to
avoid certain liens inhered in the title of subsequently
created liens. See, e.g., In re Weinstein, 164 F.3d 677, 686
(1st Cir. 1999); In re Thompson, 867 F.2d 416, 422 (7th
Cir. 1989). But though prospective application of such
laws does not give rise to takings liability, retroactive
application to existing property interests would raise
“difficult and sensitive questions” of a taking. United
States v. Sec. Indus. Bank, 459 U.S. 70, 82 (1982).
    Here, the plaintiffs do not dispute that the bankrupt-
cy law allowing trustees or debtors-in-possession to reject
executory contracts predated the creation of their fran-
chise agreements. Thus the plaintiffs could have no
compensable property interest if the government action
were limited to the bankruptcy court’s approval of the
terminations. The government’s problem is the alleged
government action here is not the bankruptcy court’s
approval of the franchise terminations (a theory that the
plaintiffs have abandoned). The plaintiffs allege that the
government action was requiring dealer terminations as a
condition of financial assistance to the automakers. The
challenged government action did not predate the acquisi-
tion of the plaintiffs’ interests. The plaintiffs’ franchise
agreements are valid and compensable property interests.
                               B
    We turn next to whether there has been government
action sufficient to invoke a takings analysis either under
Lucas or Penn Central. The question here is whether the
government is liable for a taking where it offers financing
18                                 A&D AUTO SALES, INC.   v. US



to a third party as a way of inducing or requiring action
that affects or eliminates the property rights of the plain-
tiff. We conclude that such actions may give rise to tak-
ings liability depending on the circumstances. There is no
per se rule either precluding or imposing liability when
the government instigates action by a third party. But
two broad principles drawn from the cases may guide the
analysis.
    First, in some circumstances, government action di-
rected to a third party does not give rise to a taking if its
effects on the plaintiff are merely unintended or collat-
eral. See generally Omnia Comm. Co. v. United States,
261 U.S. 502, 510–11 (1923). In Omnia, for example, the
government requisitioned a steel producer’s entire output
for the war effort, thereby preventing the plaintiff from
exercising purchase rights it had obtained through a
contract with the producer. Id. at 507. The Supreme
Court concluded that the plaintiff’s loss was merely
“consequential loss or injury” resulting from the requisi-
tion, and that no compensation was due the plaintiff. Id.
at 510. Similarly, in T.O.F.C., Inc. v. United States, the
government appropriated real property of a bankrupt
railroad, terminating the plaintiff’s contractual right to
operate a particular rail facility and receive the profits.
231 Ct. Cl. 182, 183 (1982). Our predecessor court held
that the plaintiff’s loss was merely a “consequential
injur[y] which result[ed] from the exercise of lawful
power.” Id. at 192. A number of our cases have found no
taking where the challenged government action was of
general application and the plaintiff was but one member
of an affected class of persons. See, e.g., Palmyra Pac.
Seafoods, LLC v. United States, 561 F.3d 1361, 1365–66
(Fed. Cir. 2009); Huntleigh USA Corp. v. United States,
525 F.3d 1370, 1379–80 (Fed. Cir. 2008); Air Pegasus of
D.C., Inc. v. United States, 424 F.3d 1206, 1216 (Fed. Cir.
2005). As the Supreme Court has explained, “A member of
the class which is regulated may suffer economic losses
A&D AUTO SALES, INC.   v. US                             19



not shared by others. His property may lose utility and
depreciate in value as a consequence of regulation. But
that has never been a barrier to the exercise of the police
power.” Bowles v. Willingham, 321 U.S. 503, 518 (1944).
    In summary, in the cases relied on by the government,
the effect of the government action upon the plaintiff was
merely collateral or unintended or the action affected a
general class. Here, the complaints allege that the effect
of the government action on the plaintiffs’ property was
neither collateral nor unintended and the action affected
only Chrysler and GM dealers. The complaints allege that
dealer terminations were the direct and intended result of
the government’s actions directed to Chrysler and GM
dealers because the financing was expressly conditioned
on the terminations. This case is therefore different from
the cases on which the government relies.
     A second principle applies where the government’s ac-
tion was direct and intended. In such circumstances, the
government may be liable if the third party is acting as
the government’s agent or the government’s influence
over the third party was coercive rather than merely
persuasive. See Tex. State Bank v. United States, 423 F.3d
1370, 1376–77 (Fed. Cir. 2005); Lion Raisins, Inc. v.
United States, 416 F.3d 1356, 1362–63 (Fed. Cir. 2005);
Casa de Cambio Comdiv S.A., de C.V. v. United States,
291 F.3d 1356, 1361–62 (Fed. Cir. 2002); B & G Enters. v.
United States, 220 F.3d 1318, 1323–25 (Fed. Cir. 2000);
Langenegger v. United States, 756 F.2d 1565, 1572 (Fed.
Cir. 1985). An agency relationship may exist where the
third party is hired or granted legal authority to carry out
the government’s business. See, e.g., Yearsley v. W.A. Ross
Constr. Co., 309 U.S. 18, 21–23 (1940) (construction
company hired to build river dikes); Lion Raisins, 416
F.3d at 1363–64 (quasi-public crop marketing committee
authorized to set price floors for crops); Hendler v. United
States, 952 F.2d 1364, 1378–79 (Fed. Cir. 1991) (state
officials authorized to perform environmental tests on the
20                                A&D AUTO SALES, INC.   v. US



plaintiffs’ land). Here, GM and Chrysler were not acting
as agents of the government in terminating the franchise
agreements.
    The question of coercion is more complex. While the
complaints here allege that the government coerced GM
and Chrysler into terminating the franchise agreements,
they do not allege that the government either by statute,
regulation, or direct order required the terminations. 7
Rather, the complaints allege that the government re-
quired the terminations as a condition of financial assis-
tance, and that that action was coercive because the
automakers could not survive without the financing. The
line between coercion (which may create takings liability)
and persuasion (which does not create takings liability) is
highly fact-specific and hardly simple to determine.
    Our predecessor court found coercion in Turney v.
United States, where the government induced the Philip-
pines to forbid exportation of certain military equipment
within its borders that the United States had unwittingly
sold to the plaintiffs in a surplus auction after World War
II. 126 Ct. Cl. 202, 207–08 (1953). The court found that
the government had exerted unusual influence over the
Philippine government’s decision: “Our armed forces had


     7  To the extent the A&D plaintiffs suggest in their
brief that the government “command[ed]” the termina-
tions apart from the financing arrangement, A&D Br. 33
(internal quotations marks omitted), that suggestion is
unsupported by the complaint and identifies no mecha-
nism of such “command.” For example, the plaintiffs have
not made allegations based on the government’s owner-
ship interests in New GM and New Chrysler, which chose
the particular franchise agreements to include in their
acquisitions under 11 U.S.C. § 363, leaving the rest with
Old GM and Old Chrysler.
A&D AUTO SALES, INC.   v. US                                 21



just liberated the Philippines from the Japanese. Our
Government had given one hundred million dollars worth
of surplus property to the Philippines . . . . When we
requested that Government to place an embargo upon the
exportation of any of the property, it, naturally, readily
complied.” Id. at 214. Thus, when the embargo placed
“irresistible pressure” on the plaintiffs to turn the proper-
ty over to the United States, it created a taking. Id.
    In Langenegger v. United States, by contrast, this
court concluded that the government’s influence over an
expropriation by the El Salvadoran government was not
coercion but “friendly persuasion.” 756 F.2d at 1572
(internal quotation marks omitted). Distinguishing Tur-
ney, we explained that
    the United States cannot be held responsible
    merely because its activity is that of “friendly”
    persuasion regarding general policy, common
    among allies, or when the sole benefit to the Unit-
    ed States is the political stability of its neighbors.
    Diplomatic persuasion among allies is a common
    occurrence, and as a matter of law, cannot be
    deemed sufficiently irresistible to warrant a find-
    ing of [coercion], however difficult refusal may be
    as a practical matter.
Id. at 1572.
    The plaintiffs have not alleged coercion flowing from
an existing relationship between the government and a
third party that gave the government the ability to exer-
cise general control over the third party’s action. Rather
they allege monetary inducement designed to compel
specific actions. The only appellate takings precedent
cited to us involving monetary inducement of third party
action is B & G Enterprises v. United States, 220 F.3d at
1318. In that case, Congress offered monetary grants to
the states on the condition that they adopt laws prohibit-
ing cigarette sales to minors. Id. at 1321. California
22                                A&D AUTO SALES, INC.   v. US



fulfilled the condition by enacting a law banning cigarette
vending machines in establishments open to minors,
which resulted in the loss of valuable contracts to the
plaintiff, a vending machine operator. Id. at 1322. We
held that the federal government was not liable for a
taking. Id. at 1323. We concluded that “it was California’s
decision to create restrictions on the placement of tobacco
vending machines, not the federal government’s. Congress
may have provided the bait, but California decided to
bite.” Id. at 1325. In other words, coercion was not estab-
lished.
    The question here is whether the automakers were
coerced by the government’s offer of financial assistance. 8
Unfortunately there is a paucity of information as to the
relevant circumstances of the government’s financial
assistance to the automakers. The circumstances relevant
to the issue of coercion include but are not limited to
whether the government insisted on the terminations,
whether the terminations would have occurred in any
event absent government action, whether the government
financing was essential to the companies, whether the
government had any role in creating the economic circum-
stances alleged to give rise to coercion, and whether the
government targeted the dealers for termination. Under
these circumstances, we think it is premature at this
stage in the case to address the issue of coercion and
whether, if coercion existed, takings liability follows. In
this context coercion is a necessary—but not sufficient—
feature to establish takings liability.




     8  For present purposes we do not distinguish the
Old and New companies. If that distinction is significant,
it may be explored on remand.
A&D AUTO SALES, INC.   v. US                              23



    In declining to decide the coercion issue on the pre-
sent record, we can and do reject two arguments made by
the government related to the issue of coercion.
    First, the bankruptcy court’s findings do not estop the
plaintiffs from arguing that the government coerced the
automakers into action. Collateral estoppel only applies if
“the issue [in the instant action] is identical to one decid-
ed in the first action.” In re Freeman, 30 F.3d 1459, 1465
(Fed. Cir. 1994) (emphasis added). The issue here is
whether the government coerced GM and Chrysler
through a coercive offer of financial assistance. The issue
before the bankruptcy court was whether New GM and
New Chrysler purchased the assets of Old GM and Old
Chrysler “in good faith.” 11 U.S.C. § 363(m); see In re
Chrysler, LLC, 405 B.R. 84, 108 (Bankr. S.D.N.Y. 2009);
In re Gen. Motors Corp., 407 B.R. 463, 494 (Bankr.
S.D.N.Y. 2009). Whatever the bankruptcy court found is
immaterial. Its findings on good faith are not collateral
estoppel on the issue of coercion.
    Second, the government action in this case was not
undertaken in a simply proprietary role. Proprietary
government action typically involves bargaining with
private actors for the provision or procurement of goods
and services; the action is deemed proprietary even
though the government may enter into the contractual
relationship in pursuit of a larger governmental objective.
See, e.g., St. Christopher Assocs., L.P. v. United States,
511 F.3d 1376, 1385–86 (Fed. Cir. 2008) (mortgage);
Alaska Airlines, Inc. v. Johnson, 8 F.3d 791, 792–93, 798
(Fed. Cir. 1993) (airfare); Sun Oil Co. v. United States,
215 Ct. Cl. 716, 724 (1978) (oil and gas lease). In those
cases, the government is usually subject to contractual
remedies that make takings liability redundant. See
Hughes Commc’ns Galaxy, Inc. v. United States, 271 F.3d
1060, 1070 (Fed. Cir. 2002); Sun Oil, 215 Ct. Cl. at 770
(“[W]hen [the government] ‘comes down from its position
of sovereignty and enters the domain of commerce, it
24                               A&D AUTO SALES, INC.   v. US



submits itself to the same laws that govern individuals
there.’” (quoting Cooke v. United States, 91 U.S. 389, 398
(1875))). Here, the government did not bargain or contract
with the plaintiffs, and the plaintiffs have no ordinary
commercial remedy against the government. While the
proprietary action doctrine might well bar a takings claim
by GM and Chrysler, which signed loan agreements
defining the rights between themselves and the govern-
ment, that doctrine does not appear directly relevant to a
takings claim by the plaintiffs.
    Yet the government’s purpose in requiring the dealer
terminations may still be relevant to both the categorical
takings and Penn Central analyses, as bearing on wheth-
er the government’s actions were regulatory in nature or
were designed to protect the government’s financial
interest in repayment. The government argues that in
requiring a viability plan that included dealer termina-
tions, it acted like a commercial lender, which would have
ensured likely repayment of the assistance. See Gov’t’s
Colonial Br. 25 (asserting that the government’s condi-
tions were “the sort of arrangement that a private party
might demand in similar circumstances”); Gov’t’s A&D
Br. 23 (same). Concerns about securing repayment of
government loans exist even in loan programs having a
predominantly public purpose. See, e.g., United States v.
Kimbell Foods, Inc., 440 U.S. 715, 737 (1979). To the
extent the dealer terminations were designed to protect
the government’s investment by assuring the viability of
New GM and New Chrysler and the repayment of the
loans and other assistance, that purpose could be viewed
as non-regulatory. But that issue has not been fully
developed at this stage, and so we defer its consideration
in the first instance to the Claims Court.
                            C
   We turn next to the alleged economic impact of the
government action. In order to establish a regulatory
A&D AUTO SALES, INC.   v. US                              25



taking, a plaintiff must show that his property suffered a
diminution in value or a deprivation of economically
beneficial use. This is equally true under the categorical
test of Lucas v. South Carolina Coastal Council and the
Penn Central test. Lucas, 505 U.S. at 1015 (plaintiff must
show loss of “all economically beneficial or productive
use”); Penn Cent., 438 U.S. at 124 (court weighs “economic
impact of the regulation on the claimant”); see also Brown,
538 U.S. at 240 n.11 (“[J]ust compensation for a net loss
of zero is zero.”). We have measured the diminution in
value of the plaintiff’s property by “‘the change, if any, in
the fair market value caused by the regulatory imposi-
tion,” where the alleged taking is permanent rather than
temporary. Forest Props., Inc. v. United States, 177 F.3d
1360, 1367 (Fed. Cir. 1999) (quoting Fla. Rock Indus., Inc.
v. United States, 18 F.3d 1560, 1567 (Fed. Cir. 1994)). “[I]f
the regulatory action is not shown to have had a negative
economic impact on the [plaintiff’s] property, there is no
regulatory taking.” Hendler v. United States, 175 F.3d
1374, 1385 (Fed. Cir. 1999).
    Thus, by necessity, proving economic loss requires a
plaintiff to show what use or value its property would
have but for the government action. We have often reject-
ed takings claims where plaintiffs failed to make such a
showing. In Forest Properties, for example, we rejected a
takings claim because the plaintiff “failed to introduce
convincing evidence to show the amount, if any, by which
the value of the relevant property . . . was reduced.” 177
F.3d at 1367. The plaintiff had acquired 62 acres of land,
9.4 acres of which were protected wetlands that the
plaintiff was denied a permit to develop. Id. at 1362–63.
In its takings suit, the plaintiff introduced evidence that
it had lost significant profits as a result of the permit
denial. Id. at 1367. But the plaintiff failed to produce
evidence that showed “the amount by which the fair
market value of the 62 acres was reduced by the denial of
the permit,” and so we concluded there was insufficient
26                                  A&D AUTO SALES, INC.   v. US



evidence of a taking. Id. Similarly, in Seiber v. United
States, we found no temporary taking where the plaintiffs
failed to show the economic impact of a delay in approval
of a logging permit. 364 F.3d 1356, 1371–72 (Fed. Cir.
2004). Thus, a showing of but-for economic use or value is
a necessary element of a regulatory takings claim.
    Since there can be no regulatory taking without a
showing of but-for decline in value, a takings plaintiff
must also allege sufficient facts in its complaint to show
what use or value its property would have had. The
Claims Court rules require “a short and plain statement
of the claim showing that the pleader is entitled to relief.”
R. Ct. Fed. Cl. 8(a)(2). This means the complaint must
contain “sufficient factual matter, accepted as true, to
‘state a claim to relief that is plausible on its face.’” Iqbal,
556 U.S. at 678 (quoting Bell Atl. Corp. v. Twombly, 550
U.S. 544, 570 (2007)). A claim is facially plausible “when
the plaintiff pleads factual content that allows the court
to draw the reasonable inference that the defendant is
liable.” Id. If the plaintiff fails to include such allegations
in his complaint, it is deficient.
    In an analogous case, the Supreme Court found a se-
curities fraud complaint deficient because it only alleged
that the plaintiffs paid “artificially inflated purchase
prices” for the defendant’s stock. See Dura Pharm., Inc. v.
Broudo, 544 U.S. 336, 347 (2005) (internal quotation
marks omitted). As a matter of securities law, the Court
concluded that inflated purchase prices were not per se
economic losses. Id. at 342. The Court, applying general
requirements for pleading, held that the complaint was
deficient—it only stated that the plaintiffs purchased
stock at an inflated price, not that a later price drop
caused them economic loss. Id. at 346–48. The Court drew
a direct link between the substantive law and the suffi-
ciency of the complaint: “Our holding about plaintiffs’
need to prove proximate causation and economic loss
leads us also to conclude that the plaintiffs’ complaint
A&D AUTO SALES, INC.   v. US                              27



here failed adequately to allege these requirements.” Id.
at 346 (emphasis in original).
    In this case, the government argues that the plaintiffs
have failed to sufficiently plead economic loss, and that in
reality the franchise agreements were worthless absent
the government’s financial assistance to the automakers.
We agree that the plaintiff’s allegations are insufficient.
The complaints contain no allegations regarding the but-
for economic loss of value of the plaintiffs’ franchises from
which to establish an economic loss. Absent an allegation
that GM and Chrysler would have avoided bankruptcy
but for the government’s intervention and that the fran-
chises would have had value in that scenario, or that such
bankruptcies would have preserved some value for the
plaintiffs’ franchises, the terminations actually had no net
negative economic impact on the plaintiffs because their
franchises would have lost all value regardless of the
government action. Having failed to include such allega-
tions, the dealers fail to satisfy the pleading standards
necessary to survive a motion to dismiss.
    However, we must disagree with the government that
the proper remedy is to dismiss the complaints. The
proper remedy is rather to grant the plaintiffs leave to
amend their complaints. The Claims Court rules liberally
provide for amendments of the complaint after the filing
of the defendant’s answer. See R. Ct. Fed. Cl. 15(a)(2)
(“[A] party may amend its pleadings [before trial] only
with the opposing party’s written consent or the court’s
leave. The court should freely grant leave when justice so
requires.”). Interpreting an analogous provision of the
Federal Rules of Civil Procedure, the Supreme Court
explained that this mechanism should be liberally al-
lowed:
    In the absence of any apparent or declared rea-
    son—such as undue delay, bad faith or dilatory
    motive on the part of the movant, repeated failure
28                                 A&D AUTO SALES, INC.   v. US



     to cure deficiencies by amendments previously al-
     lowed, undue prejudice to the opposing party by
     virtue of allowance of the amendment, futility of
     amendment, etc.—the leave sought should, as the
     rules require, be “freely given.”
Foman v. Davis, 371 U.S. 178, 182 (1962) (quoting Fed. R.
Civ. P. 15(a)).
    We think those principles support a grant of leave to
amend in this case. The plaintiffs have failed to properly
allege economic loss, but at oral argument in this court
they disputed the government’s assertion that the fran-
chises were valueless and made clear that they intended
to establish loss of value. In this situation the appropriate
remedy is to grant leave to amend to include specific
allegations establishing loss of value. Of course it would
not be sufficient to include conclusory loss of value allega-
tions. See Iqbal, 556 U.S. at 678 (“A pleading that offers
‘labels and conclusions’ or ‘a formulaic recitation of the
elements of a cause of action will not do.’” (quoting
Twombly, 550 U.S. at 555)).
                             D
    Finally, the “distinct investment-backed expectations”
of the plaintiffs are a factor of the Penn Central analysis
that the parties have not addressed. See 438 U.S. at 124.
Subsequent cases have clarified that “to support a claim
for a regulatory taking, an investment-backed expectation
must be reasonable.” Cienega Gardens v. United States,
331 F.3d 1319, 1346 (Fed. Cir. 2003) (internal quotation
marks omitted); see Ruckelshaus v. Monsanto Co., 467
U.S. 986, 1005 (1984) (stating that “reasonable invest-
ment-backed expectations” are one factor in the takings
analysis). Assessing the reasonableness of a plaintiff’s
expectations “is an objective, but fact-specific inquiry into
what, under all the circumstances, the [plaintiff] should
have anticipated.” Cienega Gardens, 331 F.3d at 1346; see
id. at 1348–53 (engaging in extensive analysis of whether
A&D AUTO SALES, INC.   v. US                              29



“a reasonable developer in the [plaintiff’s] circumstances”
would have held the same expectations).
    While the parties do not address this factor in this
appeal, it will necessarily be a feature of the Claims
Court’s analysis under Penn Central. The Claims Court
should engage in “an objective, but fact-specific inquiry,”
id. at 1346, into the reasonableness of the plaintiffs’
expectation that their franchise agreements would be
continued absent government action. We express no
opinion on the proper analysis of this factor. It will be up
to the Claims Court to weigh the reasonableness of the
plaintiffs’ expectations in the first instance.
                         CONCLUSION
    We conclude that the Claims Court properly declined
to dismiss the plaintiffs’ complaints at this preliminary
stage. While the plaintiffs’ allegations of economic loss are
deficient in their present form, the deficiencies may be
cured, and the Claims Court is instructed to grant the
plaintiffs leave to make such curative amendments as
may be necessary. Further proceedings must be consistent
with this opinion.
                        REMANDED
                               COSTS
    No costs.
