The Court's 2004-2005 Term: What the Economic Redevelopment Takings Case Tells Us About the Court, Congress, and Justice O'Connor

In a number of columns this summer, I will examine important rulings from the Supreme Court's recently concluded cycle, especially those that came down toward the end of the Term.

Today, I begin with the highly-publicized and contentious Kelo v. New London case, brought under the Takings Clause of the Fifth Amendment. There, the Court ruled against homeowners who were trying to resist a forced sale of their property to their city.

Specifically, the Court held that the use to which the city wanted to put the property counted as a "public use," and therefore was constitutional under the Takings Clause.

The Factual Background of the Case

The case involved a challenge to an integrated economic redevelopment plan adopted in 2000 by New London, Connecticut. The plan was designed to revive the City's "distressed" economy by creating over 1,000 jobs and increasing tax revenues.

The plan called for the creation of a "small urban village" near a new $300 million research facility that the Pfizer pharmaceutical company was planning to establish. The proposed new urban village would include restaurants and stores in which to shop, as well as marinas for commercial and recreational use.

Under the plan, the City would obtain and then transfer certain parcels of land to a private developer in a long-term lease. These parcels would then be re-leased by the developer to private tenants - businesses, office occupants, etc.

As John Dean's interview with the plaintiffs' lawyer posted on this website a few weeks ago explains, the plaintiffs were homeowners who refused to sell their property to the City as it began to execute its redevelopment plan.

The Supreme Court's Ruling

When New London instituted eminent domain condemnation proceedings, plaintiffs sued in state court. They claimed that the City's annexation of their property would violate the Fifth Amendment because the taking would not be for "public use" as the Amendment requires.

Instead, plaintiffs argued, where, as here, government takes property and then gives it to another private owner, the government has acted for private, not public, purpose.

The Supreme Court, by a 5-4 vote, rejected plaintiffs' claim, and upheld the City's power to take their property to implement its economic redevelopment plan.

The majority reasoned that economic redistribution of property - even from one private owner to another - often can generate public benefits, such as improved aesthetics, increased public resources (in the form of tax revenues), and better health.

In doing so, the majority emphasized the limited institutional role that courts have within a democratic system. Courts are not as well-situated as are legislative and executive bodies to determine whether a particular land use redistribution plan will in fact generate physical, cosmetic or monetary public benefits. Thus, the Court said, ordinarily judges should be very deferential when reviewing an economic redevelopment plan under the "public use" clause of the Fifth Amendment.

As Justice Kennedy explained in his crucial concurring opinion, a plan should be upheld unless there is "clear" evidence demonstrating that the plan was designed simply to benefit a particular private party, with the supposed public benefits being merely "incidental or pretextual".

The Kelo ruling -- and the reaction to it --- highlight many important things about where the Supreme Court is situated these days. And taking the Court's temperature in this regard is all the more crucial now, in light of Justice O'Connor's departure.

The (Over)Reaction on the Hill - And What it Says About the Dysfunctional Congressional/Judicial Relationship

Let us begin with reaction to the ruling, particularly Congress' reaction. Just days after the case came down, an unusual coalition of conservative Republican and liberal African American lawmakers moved rapidly on legislation that would effectively overrule the Court's Kelo decision.

The proposed bills would deprive federal funding to any city or state that uses eminent domain to take private property and transfer it to other private owners for economic redevelopment purposes. In other words, cities or states that opt to do what New London did to the Kelo plaintiffs would lose all federal money for any such projects.

Technically, the Supreme Court's holding would still stand, even if Congress' proposals become law: State and local governments still would not be violating the Fifth Amendment if they did what New London is trying to do.

But in reality, such local government action - while constitutional - would never be practically feasible again. States and localities depend very heavily on federal monies, including (perhaps especially) in the context of land use and redevelopment. Thus, passage of the kind of legislation Congress is considering would make the government power that the Kelo Court recognized as constitutionally permissible all but meaningless in the real world.

Similar Recent Bills Illustrate the Same Dysfunctional Dynamic

This is certainly not the first time in recent years that Congress has reacted hostilely to Supreme Court rulings by proposing legislation that would limit or undo the effect of the Court's actions. For example, as I have written, the House (but, happily, not the Senate) has passed two so-called "jurisdiction stripping" bills in the past few years. These bills would deprive the federal courts - including the Supreme Court - of the power to hear certain kinds of cases that members of Congress believe the federal courts may resolve in way that many legislators see as incorrect.

One such bill was prompted by the Court's decision in the Newdow v. Elk Grove School District case. There, the Court dodged the Establishment Clause issue presented by the words "one nation under God" in the Pledge of Allegiance, but held open the possibility that the issue might soon be presented to - and squarely confronted by - the Court. The bill would strip federal courts of jurisdiction in cases involving the validity of the Pledge - apparently due to fear that the Supreme Court would otherwise ultimately invalidate the "under God" words.

The other jurisdiction-stripping bill was prompted by the (to my mind, baseless) fears that the Supreme Court is ready to hold that same-sex couples have a federal constitutional right to marry. This bill would strip federal courts of power to hear all cases involving the Defense of Marriage Act passed by Congress a decade ago.

While Congress Has Clear Power to Enact the Kelo Legislation, Congress' Reaction is Rash

Jurisdiction-stripping bills like these raise complicated issues about the limits on Congress' power under Article III. In contrast,

the spending clause proposals being considered in response to the Kelo case are probably easily within Congress' constitutional authority. That's because, so long as a spending condition has some reasonable relationship to the programs that Congress is considering funding in the first place -- which would likely be true in the redevelopment area - Congress has broad discretion to decide to pull the monetary plug.

But all three of these examples are similar in a more important way: They all reflect how quickly, reflexively, and angrily Congresspersons react to Supreme Court rulings when the results rub people on the Hill the wrong way.

Indeed, these legislative proposals are themselves part of a broader dysfunctional relationship between Congress and the federal courts (especially the Supreme Court) - a relationship characterized largely by mutual disdain and disrespect. Federal courts routinely strike down Congressional acts that courts see as ill-considered and constitutionally thoughtless. Seemingly in response, Congress regularly threatens to manipulate the jurisdiction or (in the case of the U.S. Court of Appeals for the Ninth Circuit) the geographical boundaries of courts to rein in the perceived judicial activism.

And, regrettably, it is against this backdrop of anger and dysfunction (reflected, as well, in the Senatorial wrangles over the use of the filibuster in judicial nominations) that the Supreme Court vacancy created by Justice O'Connor's announced retirement will be filled, and the hearings on Judge John Roberts as her replacement conducted.

Poor Press Coverage That Ignores the Pre-Existing Legal Backdrop Contributes to the Problem

Congress' reaction is not only angry - it is ill-informed. Congress, and most of the American public, have thus far acted as if the Kelo decision broadly extended local government power that had never come close to existing before. But, in fact, the power exercised by New London had already been affirmed by the Supreme Court in numerous cases over the last 50 years.

What is remarkable about Kelo, then, was not the way it came out. It was that the dissenters came within one vote of revolutionizing takings law in the other direction.

I say this because of three cases in particular that the Court had already decided prior (indeed, in two of the three instances decades prior) to Kelo.

In Berman v. Parker in 1954, the Court held that the "public use" requirement was satisfied when government took a private, decently-maintained commercial property located in an otherwise blighted area for transfer to a private redevelopment agency planning to build private housing as part of an area redevelopment plan. The Court there said: "The concept of the public welfare is broad and inclusive. . . It is within the power of the legislature to determine that the community should be beautiful as well as healthy, spacious as well as clean, well-balanced as well as carefully patrolled. . . It is not for [the Court] to []appraise [these values.]"

This generous approach was followed in Hawaii Housing Authority v. Midkiff, a 1984 case. There, the Court allowed eminent domain to be used to force the sale of fee simple title by Hawaiian landowners to their tenants. Why was this forced transfer among private hands held to serve a "public use"? Simply because Hawaii thought that land ownership was too narrowly concentrated and that the residential ownership market was skewed because the supply was controlled by too few persons.

And just two years ago, in Brown v. Legal Foundation of Washington, the Court found a "public use" served by the state of Washington's decision to pay for legal services for the needy by taking the interest earned on pooled trust funds that lawyers hold on behalf of clients. Indeed, it held that this taking of this interest money "unquestionably" satisfied the public use requirement of the Fifth Amendment.

In fact, the Brown Court suggested -- over the protestations of Justice Scalia's dissent -- that any purpose for which government could spend tax dollars is a public enough purpose to justify a taking. Since a state could certainly spend its own tax-generated dollars to pay for access by the poor to legal services, it followed that taking private property for that purpose was also OK - assuming, of course, that just compensation is given to those whose property is taken. (The Fifth Amendment's Takings Clause, it's important to remember, allows takings for "public use" only when "just compensation" is paid.)

Under these cases, there is simply no good argument made in the Kelo case that New London's redevelopment plan failed the public use requirement: Kelo was a garden-variety application of well-settled law. And literally nothing more.

Why, then, is Congress (and much of the American public) so up in arms? In part, because the press has done such a terrible job of communicating the Kelo decision to the non-legal world.

Most headlines and/or lead paragraphs in most major papers characterized the Kelo ruling as having "expanded" or "enlarged" or "increased" state and local eminent domain power. More accurate headlines would simply have said that it "reaffirmed" such authority.

If everyone realized that most state governments have for 50 years enjoyed the power to do what New London is doing, and that most governments have not, during all that time, regularly abused the power, then perhaps people would be less beside themselves.

It is the same press that has misreported Kelo that will play such a crucial role in communicating all the big ideas surrounding Judge Roberts, his record, and his likely effect on future jurisprudence.

Let us hope the press is a little more careful in the coming weeks than it has been in the past few.

Justice O'Connor's Dissenting Opinion - Not Her Best Effort on Which to Leave

But the blame lies not with the press alone. Justice O'Connor's dissent in Kelo (for four Justices) is itself open to criticism in its unwillingness to deal with the three cases I described above.

Remarkably - and misleadingly - Justice O'Connor characterizes the question presented in Kelo as "one of first impression." And she says of Berman and Midkiff (which, it bears mention, she herself authored) that those cases involved taking of land where the land was itself "inflicting affirmative harm on society."

This argument is quite weak. "Affirmative[ly] harm[ful]" as compared to what? If the land that was being taken in Berman and Midkiff was harmful simply insofar as there was some better comparative use to which the property could have been put, then those cases are identical to Kelo. In all three instances, the preexisting use is "harmful" only in that the land could be used to promote the public benefit more than it currently is.

As Jed Rubenfeld has pointed out in a related setting, the so-called "harm principle" that Justice O'Connor weakly tries to invoke here can be manipulated very easily and ordinarily does not provide a principled basis for distinction.

But perhaps Justice O'Connor means to suggest that the land in Berman and Midkiff was, before the taking, being used harmfully in that society would be better off if the land simply didn't exist. Imagine, for example, that a piece of land is a magnet for crime, or for a dangerous disease-carrying insect, or the like, such that if the earth opened up and swallowed that parcel, we (the public) would all be better off. If the absence of the land's existence -- rather than a better imaginable use - is the baseline for measuring harm, then perhaps the "harm principle" can have more meaningful content.

But the problem here for Justice O'Connor is that the facts of Berman and Midkiff do not support any contention that the land at issue there was affirmatively injurious or harmful in this way:

The findings of area "blight" in Berman that Justice O'Connor recites did not include any findings of crime or disease spread - instead they focused on things like overcrowding and the absence of light; indeed they were not qualitatively different from the legislative finding in Kelo that the redevelopment area in New London was "distressed."

In Midkiff, meanwhile, if the private land that was seized had never existed, land ownership would have been more concentrated in even fewer hands. Thus, the problem Hawaii was trying to solve would have been greater, not lesser, if the property in question never existed.

Finally, in Brown - a case Justice O'Connor doesn't even discuss - how could anyone on earth argue that client monies sitting in trust accounts managed by lawyers are causing anyone any harm of any kind, except insofar as the money represented a lost opportunity for better use?

And again, if the argument is that losing a chance for better use is a kind of harm, then that is precisely the kind of harm New London saw with respect to plaintiffs' property in Kelo.

Why Justice O'Connor Didn't Simply Vote to Overrule The Earlier Cases

In short, Justice O'Connor identifies no plausible way to get around these earlier cases.

(One possible distinction might be that Midkiff and Brown - and maybe Berman - involved "Robin Hood" eminent domain, taking from the rich and giving to the poor. Arguably, the New London plan was not as progressive. But Justice O'Connor's dissent did not rely on this distinction, and it likely would not appeal to Justice O'Connor and some of the other Kelo dissenters.)

Thus, the conclusion is inescapable that these three cases - whether they were rightly or wrongly decided themselves (a matter on which I take no position) - should either have controlled how Kelo was decided, or been overruled to make way for a new rule to be set out in Kelo.

Why didn't Justice O'Connor, then, simply say she wanted to overrule the three prior cases, to set out a new rule?

Part of the answer is that Justice O'Connor does not like to overrule big cases (perhaps particularly ones she authored.)

Indeed, her two most momentous votes and writings in her quarter-century on the Court were refusals to overrule. In the Grutter affirmative action case, she sought to avoid overruling the Bakke decision. In the Casey abortion decision, she and Justices Kennedy and Souter declined to overrule Roe v. Wade.

In both Grutter and Casey, Justice O'Connor made her aversion to overruling prior precedent a linchpin of her view. In both, she invoked notions of reliance (suggesting that judges should not change course because society has already structured itself around past rulings) to support applying the doctrine of stare decisis (Latin for "Let the decision stand.")

An argument could be made that local government reliance on the Berman/Midkiff line of cases is much less important than societal reliance on Bakke and Roe, but Justice O'Connor apparently still had trouble simply voting to overrule the former.

That points up not just an important observation about Justice O'Connor's style but also one about stare decisis more generally: Sometimes an unwillingness to acknowledge past mistakes by the Court leads Justices to make arguments that have little intellectual credibility.

A final observation about Justice O'Connor's position in Kelo warrants mention in light of her recently-announced retirement: Perhaps it was Justice O'Connor's experience as a legislator that led her to smell a rat in the New London case, to believe that private rather than public interest was doing the work in New London in a way that separates that case from earlier ones.

Whether or not there is anything to this possibility - and the Justice herself certainly did not elaborate any such intuition -- we ought to remember that Justice O'Connor is the only sitting Justice who has elective office/legislative experience. That is one of the many perspectives that is likely to be gone after she is replaced.