Kelo v. City of New London

Background

This case was appealed to the Supreme Court of the United States from a decision by the Supreme Court of Connecticut in favor of the City of New London. The owners, including lead plaintiff Susette Kelo of 8 East Street, 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 Takings Clause of the Fifth Amendment and the Due Process Clause of the Fourteenth Amendment. The Takings Clause reads, ". . . nor shall private property be taken for public use, without just compensation." Under the Due Process Clause of the Fourteenth Amendment, this limitation also applies to the actions of state and local governments. The plaintiffs argued that economic development, the stated purpose of the taking and subsequent transfer of land to the New London Development Corporation, did not qualify as a public use under the Fifth Amendment.

The Connecticut Supreme Court heard arguments on December 2, 2002. The state court issued its decision (268 Conn. 1, SC16742) on March 9, 2004, siding with the city in a 4–3 decision, with the majority opinion authored by Justice Flemming L. Norcott, Jr., joined by Justices David M. Borden, Richard N. Palmer and Christine Vertefeuille. Justice Peter T. Zarella wrote the dissent, joined by Chief Justice William J. Sullivan and Justice Joette Katz.

The State Supreme Court held that the use of eminent domain for economic development did not violate the public use clauses of the state and federal constitutions. The court held that if a legislative body has found that an economic project will create new jobs, increase tax and other city revenues, and revitalize a depressed urban area (even if that area is not blighted), then the project serves a public purpose, which qualifies as a public use. The court also ruled that the government’s delegation of its eminent domain power to a private entity was constitutional under the Connecticut Constitution. The United States Supreme Court granted certiorari to consider questions raised in Berman v. Parker, 348 U.S. 26 (1954) and later in Hawaii Housing Authority v. Midkiff, 467 U.S. 229 (1984). Namely, whether a "public purpose" constitutes 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 (see main article: Incorporation of the Bill of Rights), protect landowners from takings for economic development, rather than, as in Berman, for the elimination of slums and blight?

Opinion of the Court

Majority and concurrence

On June 23, 2005, the Supreme Court ruled in a 5–4 decision in favor of the City of New London. Justice John Paul Stevens wrote the majority opinion, joined by Justices Anthony Kennedy, David Souter, Ruth Bader Ginsburg, and Stephen Breyer. Justice Kennedy wrote a concurring opinion setting out a more detailed standard for judicial review of economic development takings than that found in Stevens's majority opinion. In so doing, Justice Kennedy 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.

Kennedy fleshed out this doctrine in his Kelo concurring opinion; he set out a program of civil discovery in the context of a challenge to an assertion of government purpose. However, he did 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. He wrote:

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...

Dissenting opinions

The principal dissent was issued on June 25, 2005, by Justice O'Connor, joined by Chief Justice Rehnquist and Justices Scalia and Thomas. The dissenting opinion suggested that the use of this taking 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.

O'Connor 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."

Thomas also issued a separate originalist dissent, in which he argued that the precedents the court's decision relied upon were flawed. 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 additionally observed:

Something has gone seriously awry with this Court's interpretation of the Constitution. Though citizens are safe from the government in their homes, the homes themselves are not.

Thomas also made use of the argument presented in the NAACP/AARP/SCLC/SJLS 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.

Subsequent developments

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. 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 contended that the residents have been on city property for those five years and owe tens of thousands of dollars of rent. In June 2006, Governor M. 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 could retain their homes. A group of New London residents formed a local political party, One New London, to combat the takings.

The controversy was eventually settled when the city paid substantial additional compensation to the homeowners, and agreed to move Kelo's home to a new location. The land was never deeded back to the original homeowners, most of whom have left New London for nearby communities. Three years after the Supreme Court case was decided, the Kelo house was dedicated after being relocated to 36 Franklin Street, a site close to downtown New London. Susette Kelo, however, has moved to a different part of Connecticut.

In spite of repeated efforts, the redeveloper (who stood to get a 91-acre (370,000 m2) waterfront tract of land for $1 per year) was unable to obtain financing, and the redevelopment project was abandoned. As of the beginning of 2010, the original Kelo property was a vacant lot, generating no tax revenue for the city. In the aftermath of 2011's Hurricane Irene, the now-closed New London redevelopment area was turned into a dump for storm debris such as tree branches and other vegetation. However, as of May 2022, a private developer was slated to build 100 apartments, a 100-unit hotel, and a community center on the property. As of July 2024, the community center is the only project where ground has been broken.

Pfizer, whose employees were supposed to be the clientele of the Fort Trumbull redevelopment project, announced its acquisition of competitor of Wyeth 42 months after the ruling was issued in January 2009, resulting in a consolidation of research facilities of the two companies; the deal closed that October. Pfizer chose to retain the Groton campus on the east side of the Thames River, closing its New London facility in late 2010 with a loss of over 1,000 jobs. That coincided with the expiration of tax breaks on the New London site that would have increased Pfizer's property tax bill by almost 400 percent.

Public reaction

Opposition to the ruling was widespread, coming from groups such as AARP, the NAACP, the Libertarian Party, and the Institute for Justice. The American Conservative Union condemned the decision. Much of the 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. 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. Since the opposition to the ruling was so widespread, American journalist Charles C. W. Cooke argued in 2015 that a constitutional amendment like the one drafted by law professor Ilya Somin might attract enough support by a non-partisan coalition of progressives, independents and conservatives to undo the Supreme Court ruling in Kelo v. City of New London.

Some in the legal profession construed 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. Federal appeals court judge Richard Posner wrote that the political response to Kelo is "evidence of [the decision's] pragmatic soundness." Judicial action would be unnecessary, Posner suggested, because the political process could take care of the problem."

As a result, most states changed their eminent domain laws. Prior to the Kelo decision, only seven states specifically prohibited the use of eminent domain for economic development except to eliminate blight. Since the decision, forty-five states have amended their eminent domain laws, although some of these changes are cosmetic.

The New York Times editorial board agreed with the ruling, calling it "a welcome vindication of cities' ability to act in the public interest." The Washington Post's editorial board also agreed with the ruling, writing, "[t]he court's decision was correct. . . . New London's plan, whatever its flaws, is intended to help develop a city that has been in economic decline for many years." However, Reason countered that the New York Times' support of Kelo v. City of New London represents a conflict of interest, as its then-under construction headquarters building was being built on land taken by eminent domain for economic redevelopment.

The Kelo fiasco eventually cost the taxpayers tens of millions of dollars, with nothing to show for it. The "carefully vetted" municipal plans that formed the basis for the Supreme Court's decision proved to be illusory. Eventually, the City of New London extended an apology to Susette Kelo and her neighbors. In 2011, Richard N. Palmer, one of the Connecticut Supreme Court justices who voted with the 4–3 majority for the city, also apologized and said that he should have voted differently. Justice John Paul Stevens did not disavow the decision, but he explained in a speech to a bar association that he thought the use of eminent domain in New London was "unwise." Stevens also admitted that he had incorrectly cited cases as relying on the takings clause, rather than substantive due process, in his majority opinion, a mistake he called "somewhat embarrassing to acknowledge." However, he still believed the opinion was correctly decided.

Presidential reaction

On June 23, 2006, the first anniversary of the original decision, President George W. Bush issued an executive order instructing the federal government to restrict the use of eminent domain: ...for the purpose of benefiting the general public and not merely for the purpose of advancing the economic interest of private parties to be given ownership or use of the property taken. However, since eminent domain is most often exercised by local and state governments, the executive order was largely symbolic.

Congressional reaction

On June 27, 2005, Senator John Cornyn (R-Tex.) introduced legislation, the "Protection of Homes, Small Businesses and Private Property Act of 2005" (S.B. 1313), cosponsored by Bill Nelson (D-Fla.), to limit the use of eminent domain for economic development. The operative language:

prohibits the federal government from exercising eminent domain power if the only justifying "public use" is economic development; and

imposes the same limit on state and local government exercise of eminent domain power "through the use of Federal funds."

Similar bills have subsequently been put forth in the House of Representatives by Congressman Denny Rehberg (R-Mont.), Tom DeLay (R-Tex.), and John Conyers (D-Mich.) with James Sensenbrenner (R-Wisc.). As some small-scale eminent domain condemnations (including notably those in the Kelo case) can be local in both decision and funding, it is unclear how much of an effect the bill would have if it passed into law. This bill has been reintroduced several times.

Annual appropriations Acts since 2006 have included a general provision stating that federal financial assistance under those appropriations shall not be used to support any Federal, state, or local project that seeks to use the power of eminent domain, unless eminent domain is used only for public use. The appropriations provision further clarifies that a "public use" may shall not be construed to include economic development that primarily benefits private entities.

Scholarly reaction

In 2008, land use Professor Daniel R. Mandelker argued that the public backlash against Kelo is rooted in the historical deficiencies of urban renewal legislation. In particular, the article cited the failure to incorporate land use planning and a precise definition of blight in urban renewal legislation as problematic. In 2009, Professor Edward J. Lopez of San Jose State University studied passed laws and found that states with more economic freedom, greater value of new housing construction, and less racial and income inequality were more likely to have enacted stronger restrictions sooner.

Severe criticism of the Kelo decision came from Professor Gideon Kanner of the Loyola Law School, Los Angeles. Kanner wrote, "The principal failing of the Kelo decision is that it misreads the case law on which it purports to rely as a seminal precedent, and by its holding frustrates the usual mode of constitutional analysis." He likened the language in the majority's decision ("'public' means 'private' and 'use' means 'purpose,' or 'prognosticated municipal prosperity'") to the abuse of language in George Orwell's Nineteen Eighty-Four.

State legislation

Prior to Kelo, nine states specifically prohibited the use of eminent domain for economic development except to eliminate blight: Arkansas, Florida, Kansas, Kentucky, Maine, Michigan, New Hampshire, South Carolina and Washington. As of April 2019, 45 states had enacted some type of reform legislation in response to the Kelo decision. Of those states, 22 enacted laws that severely inhibited the takings allowed by the Kelo decision, while the rest enacted laws that place some limits on the power of municipalities to invoke eminent domain for economic development. The remaining five states have not passed laws to limit the power of eminent domain for economic development.

Proposition 207, the Private Property Rights Protection Act, passed in 2006.

Under pre-existing California law, takings (for conveyance to a private party, as opposed to a public use that may incidentally benefit private parties) were already illegal.

Proposition 90 failed in the November 2006 election. The initiative also included language requiring that government pay financial compensation to any property owners who could successfully argue that regulation caused them significant economic loss. Subsequently, Proposition 99 passed in the June 2008 election. It amends the state constitution to prohibit (subject to some exceptions):state and local governments from using eminent domain to acquire an owner-occupied residence [if the owner has occupied the residence for at least one year], as defined, for conveyance to a private person or business entity. In 2012, California abolished its redevelopment agencies.

Florida passed a 2006 ballot measure amending the Florida Constitution to restrict use of eminent domain. 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.

The Iowa Legislature passed a 2006 bill restricting the use of eminent domain for economic development. Gov. Tom Vilsack (D) vetoed the bill, prompting the first special session of the Iowa Legislature in more than 40 years. The veto was overridden by votes of 90–8 in the Iowa House and 41–8 in the Iowa Senate.

State supreme courts

Since Kelo was handed down, several state supreme courts have rejected the Kelo decision limiting the use of eminent domain. These include Iowa, Ohio, Oklahoma, and South Dakota.

Legacy

Jeff Benedict wrote an account of the case in a 2009 book, Little Pink House: A True Story of Defiance and Courage. Benedict's account was adapted into a film, Little Pink House, released in 2018.