Today in 2005: The Supreme Court hears oral arguments on Kelo v. City of New London

February 22, 2013

Today in Legal HistoryOn January 21, 2010, the U.S. Supreme Court handed down its decision in Citizens United v. FEC, holding that legal entities, such as corporations, are entitled to the same First Amendment speech protections as individuals.

Citizens United sparked a significant amount of public outrage when it was first announced, and even today, it continues to be regarded with a large amount of hostility by the public.  In fact, it is likely the ruling most reviled by the public today.

However, Citizens United actually usurped that distinction from another case, which was decided four and a half years earlier: Kelo v. City of New London.

Kelo, decided on June 23, 2005, held that the transference by the government from one private owner to another in the name of “economic development” is a permissible “public use” under the Takings Clause of the Fifth Amendment (the Takings Clause holds that private property may only be taken by the government for a “public use”).

The facts of the case involve the decision by the City of New London, Connecticut to designate an area for a redevelopment project to boost its ailing economy.  As part of this project, the city set out to purchase all property within the area.

When some of the property owners within the designated area refused to sell to the city, New London began condemnation proceedings on the properties, and those owners then brought a constitutional challenge against the city’s actions.

The case, after working its way through the Connecticut state courts, made its way to the U.S. Supreme Court.

Oral arguments in the case were heard on February 22, 2005, eight years ago today.  Unsurprisingly, nearly the entirety of the arguments was spent discussing the definition of “public use” and the actual consequences of different definitions.

The attorney for Kelo argued that a definition of “public use” is much too broad if loosened to include any private uses with a “public benefit” attached, that such a benefit could virtually always be found, and that, as a consequence, “every property, every home, every business can then be taken for any private use.”

On the other side, the attorney for the City of New London argued that the “public benefit” interpretation had already been established by the Supreme Court on two earlier occasions: 1954’s Berman v. Parker and 1984’s Hawaii Housing Authority v. Midkiff.

True, both of those cases espoused a laxer definition of “public use.”

Berman involved the use of eminent domain to redevelop a heavily blighted area in Washington, D.C., and Midkiff concerned a plan to redistribute land to break up the dramatic land ownership concentration in Hawaii.

Nevertheless, the public benefit was far more pronounced and easily discernable in either of those cases than in Kelo.

In both Berman and Midkiff, the public at large were direct beneficiaries of the government taking.

In Berman, the area to be redeveloped “had so deteriorated that, for example, 64.3% of its dwellings were beyond repair,” and Congress had determined that it had become “injurious to the public health, safety, morals, and welfare.”

In Midkiff, over 90% of all privately owned land in Hawaii was held by only 72 owners, which, according to the Hawaii Legislature, was “skewing the State’s residential fee simple market, inflating land prices, and injuring the public tranquility and welfare.”

By contrast, the redevelopment area in Kelo was not blighted, nor was it suffering from extreme ownership concentration.  Instead, the city was itself experiencing a serious economic depression, and the redevelopment was for the purpose of improving those conditions through increased tax revenue and more jobs.

Some of the Justices addressed this disparity by inquiring into whether, if the Court ruled for the city, there would be any meaningful limit imposed on governments, or whether any private property could be taken without any judicial oversight.

This concern seemingly manifested as Justice Kennedy’s concurring opinion, in which he held that future such cases may be subject to a more stringent standard of review in cases where “the risk of undetected impermissible favoritism of private parties is so acute that a presumption (rebuttable or otherwise) of invalidity is warranted under the Public Use Clause.”

Regardless, the Court’s ruling in Kelo (which sided with the city) was an unambiguous expansion of state eminent domain power, in that it allowed the government to transfer property from one private owner to another simply because the latter will have a higher tax burden than the former.

Kelo can be further distinguished from Berman and Midkiff in that the direct beneficiaries of the property transfers in the latter two cases were the public at large, whereas the beneficiary of Kelo’s property transfer was a private development corporation, and the “public benefit” attached from that transfer would only be realized as a potential consequence of a benefit realized by the large corporation.

Thus, where Berman and Midkiff could be characterized as populist, Kelo certainly would be viewed as “trickle-down,” 

Unfortunately, as is often the case, this “trickle-down” didn’t quite pan out: much of the affected area remains undeveloped, and the one major “job-creator” that came to the area because of the redevelopment (Pfizer) left before the property tax break expired (Pfizer’s property tax bill would have increased over 400%).  Moreover, the exit of Pfizer from the community caused the loss of 1,500 jobs.

Thus, the likely reason for the unpopularity of Kelo is the same as that for Citizens United: the Court unequivocally sided with large corporate interests at the expense of the general public.

Although it’s conceivable that Citizens United is the last time that the Supreme Court makes such a decision, given the current Court’s track record, it’s more likely that it’ll only be a matter of time until Citizens United is replaced as the scorn of the people by a new ruling, just as it itself replaced Kelo.