Kelo v. City of New London

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Kelo v. City of New London, Case citation|545 U.S. 469 (2005)[1], was a case decided by the Supreme Court of the United States involving the use of eminent domain to transfer land from one private owner to another to further economic development. The case arose from the condemnation by New London, Connecticut, of privately owned real property so that it could be used as part of a comprehensive redevelopment plan. The Court held in a 5-4 decision that the general benefits a community enjoyed from economic growth qualified such redevelopment plans as a permissible "public use" under the Takings Clause of the Fifth Amendment.

The decision was widely criticized by American politicians and the general public. Many members of the general public viewed the outcome as a gross violation of property rights and as a misinterpretation of the Fifth Amendment, the consequence of which would be to benefit large corporations at the expense of individual homeowners and local communities. Most in the legal profession construe the public's outrage as being directed not at the interpretation of legal principles involved in the case, but at the broad moral principles of the general outcome.[2]

History

The case was appealed from a decision in favor of the city of New London by the Supreme Court of Connecticut, which found that the use of eminent domain for economic development (the central focus of the case) did not violate the public use clauses of the state and federal constitutions. The court found that if an economic project creates new jobs, increases tax and other city revenues, and revitalizes a depressed (even if not blighted) urban area, it qualifies as a public use. The court also found that government delegation of eminent domain power to a private entity was also constitutional as long as the private entity served as the legally authorized agent of the government.

The United States Supreme Court granted certiorari to consider questions first raised in Berman v. Parker, and later in Hawaii Housing Authority v. Midkiff, [1]. Namely, does a "public purpose" constitute a "public use" for purposes of the Fifth Amendment's Taking Clause, "nor shall private property be taken for public use, without just compensation"? Specifically, does the Fifth Amendment, applicable to the states through the Due Process Clause of the Fourteenth Amendment, protect landowners from the use of eminent domain for economic development, rather than, as in Berman, for the elimination of slums and blight?

The case

The development plan

The city of New London, Connecticut, had by the early 2000s fallen on hard economic times. The city's tax base and population were continually decreasing, and city leaders were growing desperate for a new hope of economic development. In 1998, the pharmaceutical company Pfizer began construction of a major new research facility on the outskirts of the Fort Trumbull neighborhood of New London. Seeing an opportunity, the city of New London reactivated the New London Development Corporation, a private entity under the control of the city government, to consider plans to redevelop the Fort Trumbull neighborhood and encourage new economic activities that might be brought in by the Pfizer plant.[3]

The development corporation created a development plan that included a resort hotel and conference center, a new state park, 80–100 new residences (which is now down to a mix of 14 rental townhouses and 66 apartments in a three-story building), and various research, office, and retail space. The plan divided the area into seven parcels, but did not specify the exact plans for development in any but the first parcel (the resort hotel and conference center). The city in 2000 approved the development plan and authorized the corporation to acquire the necessary land in the Fort Trumbull neighborhood.

Fort Trumbull was an older neighborhood, some 90 acres (364,000 m²) in size and including 115 residential and commercial lots. The development corporation offered to purchase all 115 lots; however, the owners of 15 of these properties did not wish to sell to the corporation. Of the 15 properties, ten were owned by occupants, and five by investors. Nine Owners, not all of whom were full-time residents, were the petitioners in this case; the lead plaintiff, Susette Kelo, owned a small home on the Thames River in the development area.

The city of New London chose to exercise its power of eminent domain. The city ordered the development corporation, a private entity acting as the city's legally appointed agent, to condemn the 15 holdout owners' lots.

The case in the Connecticut courts

The owners sued the city in Connecticut courts, arguing that the city had misused its eminent domain power. The power of eminent domain is limited by the Fifth and Fourteenth Amendments to the United States Constitution. The Fifth Amendment, which restricts the actions of the federal government, says in part that "private property [shall not] be taken for public use, without just compensation"; under Section 1 of the Fourteenth Amendment, this limitation is also imposed on the actions of U.S. state and local governments. Kelo and the other appellants argued that economic development, the stated purpose of the Development Corporation, did not qualify as public use.

Certiorari to the U.S. Supreme Court

This case was the first major eminent domain case heard at the Supreme Court since 1984. In that time, states and municipalities had slowly extended their use of eminent domain, frequently to include economic development purposes where applicable. In the Kelo case, there was an additional twist in that the development corporation was ostensibly a private entity; thus the plaintiffs argued that it was not constitutional for the government to take private property from one individual or corporation and give it to another, if the government was simply doing so because the repossession would put the property to a use that would generate higher tax revenue.

The first eminent domain case since Midkiff to reach the Supreme Court, Kelo became the focus of vigorous discussion and attracted numerous supporters on both sides. Some 40 amicus curiae briefs were filed in the case, 25 on behalf of the petitioners. Suzette Kelo's supporters ranged from the libertarian Institute for Justice (the lead lawyers) to the NAACP, AARP and the late Martin Luther King's Southern Christian Leadership Conference. The latter three groups signed an amicus brief arguing that eminent domain has often been used against politically weak communities with high concentrations of minorities and elderly.

Oral argument

The case was argued on February 22, 2005. The case was heard by only seven members of the court with Associate Justice Sandra Day O'Connor presiding, as Chief Justice William Rehnquist was recuperating from medical treatment at home and Associate Justice John Paul Stevens was delayed on his return to Washington from Florida; both absent Justices read the briefs and oral argument transcripts and participated in the case decision.

During oral arguments, several of the Justices asked questions that forecast their ultimate positions on the case. Justice Scalia, for example, suggested that a ruling in favor of the city would destroy "the distinction between private use and public use," asserting that a private use which provided merely incidental benefits to the state was "not enough to justify use of the condemnation power."

The Court's decision

Majority and concurring opinions

On June 23, 2005, the Supreme Court, in a 5–4 decision, found for the City of New London. Justice John Paul Stevens wrote the majority opinion; he was joined by Justices Anthony Kennedy, David Souter, Ruth Bader Ginsburg and Stephen Breyer. Justice Kennedy also penned a concurring opinion setting out more detailed standards for judicial review of economic development takings than that found in Stevens' majority opinion. In so doing, he contributed to the Court's trend of turning minimum scrutiny--the idea that government policy need only bear a rational relation to a legitimate government purpose--into a fact-based test. In Hawaii Housing Authority v. Midkiff, 467 US 229 (1984), the Court had said that the government purpose under minimum scrutiny need only be "conceivable." In two 1996 cases, however, the Court clarified that concept. In Romer v. Evans, 517 US 620, the Court said that the government purpose must be "independent and legitimate." And in U.S. v. Virginia, 518 U.S. 515, the Court said the government purpose "must be genuine, not hypothesized or invented post hoc in response to litigation." Thus, the Court made it clear that, in the scrutiny regime established in West Coast Hotel v. Parrish, 300 US 379 (1937), government purpose is a question of fact for the trier of fact.

Kennedy fleshed out this doctrine in his Kelo concurring opinion, in which he sets out a program of civil discovery in the context of a challenge to an assertion of government purpose in the eminent domain context. However, he does not explicitly limit these criteria to eminent domain, nor to minimum scrutiny, suggesting that they may be generalized to all health and welfare regulation in the scrutiny regime. Because Kennedy signed on to the Court's majority opinion, his concurrence is not binding on lower courts. He writes:

"A court confronted with a plausible accusation of impermissible favoritism to private parties should [conduct]….a careful and extensive inquiry into ‘whether, in fact, the development plan [chronology]

[1.] is of primary benefit to . . . the developer…, and private businesses which may eventually locate in the plan area…,

[2.] and in that regard, only of incidental benefit to the city…[.]’"

Kennedy is also interested in facts of the chronology which show, with respect to government,

[3.] awareness of…depressed economic condition and evidence corroborating the validity of this concern…,

[4.] the substantial commitment of public funds…before most of the private beneficiaries were known…,

[5.] evidence that [government] reviewed a variety of development plans…[,]

[6.] [government] chose a private developer from a group of applicants rather than picking out a particular transferee beforehand and…

[7.] other private beneficiaries of the project [were]…unknown [to government] because the…space proposed to be built [had] not yet been rented…."

Dissenting opinions

Justice Sandra Day O'Connor wrote the principal dissent, joined by Chief Justice William Rehnquist, Justice Antonin Scalia, and Justice Clarence Thomas. Justice O'Connor objected to the fact that an unelected (therefore voter-unaccountable) private nonprofit corporation was the primary beneficiary of the government taking. As a result, the dissenting opinion suggested that the use of this takings power in a reverse Robin Hood fashion— take from the poor, give to the rich— would become the norm, not the exception: "Any property may now be taken for the benefit of another private party, but the fallout from this decision will not be random. The beneficiaries are likely to be those citizens with disproportionate influence and power in the political process, including large corporations and development firms." She argued that the decision eliminates "any distinction between private and public use of property — and thereby effectively delete[s] the words 'for public use' from the Takings Clause of the Fifth Amendment." 125 S.Ct. 2655, 2671

Clarence Thomas also penned a separate originalist dissent, in which he argued that the precedents the court's decision relied upon were flawed and that "something has gone seriously awry with this Court's interpretation of the Constitution." He accuses the majority of replacing the Fifth Amendment's "Public Use" clause with a very different "public purpose" test: "This deferential shift in phraseology enables the Court to hold, against all common sense, that a costly urban-renewal project whose stated purpose is a vague promise of new jobs and increased tax revenue, but which is also suspiciously agreeable to the Pfizer Corporation, is for a 'public use.'" Thomas also made use of the argument presented in the NAACP/AARP/SCLC amicus brief on behalf of three low-income residents' groups fighting redevelopment in New Jersey, noting: "Allowing the government to take property solely for public purposes is bad enough, but extending the concept of public purpose to encompass any economically beneficial goal guarantees that these losses will fall disproportionately on poor communities. Those communities are not only systematically less likely to put their lands to the highest and best social use, but are also the least politically powerful."[4]

Subsequent history

Following the decision, many of the plaintiffs expressed an intent to find other means by which they could continue contesting the seizure of their homes. However, the Supreme Court having disposed of the eminent domain issue, the only legal avenue left to Kelo and her fellow residents may be to contest the fairness of the amount that the city intends to pay for the land— the city has reportedly set aside $1.6 million to buy all 15 homes, and city officials believe that they will be in possession of the property within a few months.[5] Soon after the decision, city officials announced plans to charge the residents of the homes for back rent for the five years since condemnation procedures began. The city contends that the residents have been on city property for those five years and owe tens of thousands of dollars of rent. The case was finally resolved when the City agreed to move Kelo's house to a new location. The controversy was eventually settled when the city paid substantial additional compensation to the homeowners.[2].

In June 2006 Governor Jodi Rell intervened with New London city officials proposing the homeowners involved in the suit be deeded property in the Fort Trumbull neighborhood so they may retain their homes. But two years after the Supreme Court decision nothing is happening on the ground and it appears doubtful whether the city's redevelopment project will proceed. In spite of the city's arguments to the Supreme Court about its state of decline that was said to justify this redevelopment project, the Fitch bond rating service gave New London's general obligation bonds a solid investment grade rating of AA-.

Public reaction

Opinion polls found that the public overwhelmingly disapproved of the ruling. A Christian Science Monitor online poll found that 93% disagreed with the ruling. Most other polls, depending on the question posed, reacted negatively in the 65% to 97% range. Opposition to the ruling was stated by popular groups such as AARP, the NAACP, the Libertarian Party, and the Institute for Justice. Many owners of family farms also disapproved of the ruling, as they saw it as an avenue by which cities could seize their land for private developments. The grassroots lobbying group American Conservative Union and The New Media Journal described the decision as judicial activism, as did numerous blogs. [3] [4] A group of New London residents formed a local political party, One New London [5], to combat the takings. While unsuccessful in gaining control of the New London City Council they gained two seats, and continue to try to take over New London City Council to rectify the Ft. Trumbull takings.

Reactions

By July 2007, 42 states had enacted some type of reform legislation in response to the Kelo decision. 21 of those states enacted laws that severely inhibit the takings allowed by the Kelo decision, while 21 others enacted laws that place some limits on the power of municipalities to invoke eminent domain for economic development. The remaining eight states have not passed laws to limit the power of eminent domain for economic development. [6]

New Hampshire

Subsequent to this decision, there was widespread outrage across the US. A California developer and libertarian, Logan Darrow Clements scooped a similar proposal by New Hampshire libertarians to seize Justice Souter's 'blighted' home in Weare, New Hampshire, via eminent domain in order to build a "Lost Liberty Hotel" which he said would feature a "Just Desserts Cafe."Officials of the Libertarian Party of New Hampshire (LPNH) and the Coalition of New Hampshire Taxpayers had been eyeing the Justice's property to build a Constitution Park. A few weeks later, LPNH Vice-Chair Mike Lorrey discovered that Justice Breyer owned an extensive vacation estate in Plainfield, NH, and announced on the New Hampshire Public Radio show The Exchange focusing on eminent domain that LPNH would be pursuing their Constitution Park concept with Breyer's property in mind. Lorrey and Clements both advocated an amendment to New Hampshire's Constitution limiting eminent domain, which passed New Hampshire's legislature on March 24, 2006. The text of the amendment is as follows: "No part of a person's property shall be taken by eminent domain and transferred, directly or indirectly, to another person if the taking is for the purpose of private development or other private use of the property.[6]" It passed by an overwhelming margin in the 2006 general election.[7]

California

California's Proposition 90 -- Failed in the November 2006 election. [8]

Florida

Florida passed a 2006 ballot measure amending the Florida Constitution to restrict use of eminent domain.[9] The amendment says in part:

Private property taken by eminent domain [...] may not be conveyed to a natural person or private entity except as provided by general law passed by a three-fifths vote of the membership of each house of the Legislature.

Ohio

An attempted use of eminent domain was brought before the Ohio supreme court in Norwood, Ohio v. Horney. The Supreme Court of Ohio held in favor of the property owners.

Michigan

Michigan passed a restriction on the use of eminent domain in November 2006, Proposition 4, 80% to 20%. The text of the ballot initiative was as follows [10]

A PROPOSED CONSTITUTIONAL AMENDMENT TO PROHIBIT GOVERNMENT FROM TAKING PRIVATE PROPERTY BY EMINENT DOMAIN FOR CERTAIN PRIVATE PURPOSES

The proposed constitutional amendment would:
• Prohibit government from taking private property for transfer to another private individual or business for purposes of economic development or increasing tax revenue.
• Provide that if an individual’s principal residence is taken by government for public use, the individual must be paid at least 125% of property’s fair market value.
• Require government that takes a private property to demonstrate that the taking is for a public use; if taken to eliminate blight, require a higher standard of proof to demonstrate that the taking of that property is for a public use.
• Preserve existing rights of property owners.

Further reading

  • Joshua U. Galperin, "A Warning To States, Accepting this Invitation May be Hazardous to Your Health (Safety and Public Welfare): An Analysis of Post-Kelo Legislative Activity." 31 Vermont Law Review 663 (Spring 2007).
  • John Ryskamp, The Eminent Domain Revolt: Changing Perceptions in a New Constitutional Epoch, New York: Algora Publishing, 2006.

References

Gideon Kanner, Kelo v. New London: Bad Law, Bad Policy and Bad Judgment, 38 The Urban Lawyer 201 (Spring 2006)

External links

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