Kelo v. City of New London, 545 U.S. 469 (2005), Justice John Paul Stevens wrote for the five-justice majority that the city's use of eminent domain was permissible under the Takings Clause because the general benefits the community would enjoy from economic growth qualified as "public use".
After the Court's decision, the city allowed a private developer to proceed with its plans; however, the developer was unable to obtain financing and abandoned the project, and the contested land became an undeveloped empty lot.
The decision from this case sparked controversy with 47 states and 12 states amending their state constitutions to stop eminent domain from benefiting private parties.
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, and later in Hawaii Housing Authority v. Midkiff, . 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?
Kelo was the first major eminent domain case heard at the Supreme Court since 1984. In that time, many states and municipalities had slowly extended their use of eminent domain, frequently to include economic development purposes. At the time of the Kelo decision, the high courts of Kansas, Maryland, Minnesota, New York, and North Dakota all had held that simply increasing tax revenue and creating jobs are public purposes and that eminent domain for the purpose of private development is constitutional. On the other hand, the state high courts of Arkansas, Florida, Illinois, Kentucky, Maine, Michigan, Montana, South Carolina, and Washington had held that eminent domain for economic development was impermissible. In the Kelo case, Connecticut had a statute allowing eminent domain for "economic development" even in the absence of blight. There was also 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.
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. Susette Kelo's supporters ranged from the libertarian Institute for Justice (the lead attorneys on the case) to the NAACP, AARP, the Southern Christian Leadership Conference and South Jersey Legal Services. The latter groups signed an amicus brief arguing that eminent domain has often been used against politically weak communities with high concentrations of minorities and elderly.
The case was argued on February 22, 2005. Oral arguments were presented on behalf of the petitioners (plaintiffs) by Scott G. Bullock of the Institute for Justice in Washington, D.C. and on behalf of the respondents (defendants) by Wesley W. Horton of Horton, Shields & Knox in Hartford, CT. The case was heard by only seven members of the court. With William Rehnquist and John Paul Stevens (who were senior to Sandra Day O'Connor) absent, O'Connor became the senior justice presiding over oral arguments, becoming the first woman to do so before the Court.
During the case, Justice Antonin Scalia asked whether a ruling in favor of the city would destroy "the distinction between private use and public use." He also asked if private use, which provided merely incidental benefits to the state, was "not enough to justify use of the condemnation power."
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 sets out a program of civil discovery in the context of a challenge to an assertion of government purpose. 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. He wrote:
<blockquote>
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...
</blockquote>
Kelo v. City of New London did not establish entirely new law concerning eminent domain. Although the decision was controversial, it was not the first time "public use" had been interpreted by the Supreme Court as "public purpose." In the majority opinion, Justice Stevens wrote the "Court long ago rejected any literal requirement that condemned property be put into use for the general public" (545 U.S. 469). Thus, precedent played an important role in the 5–4 decision of the Supreme Court. The Fifth Amendment was interpreted the same way as in Midkiff (467 U.S. 229) and other earlier eminent domain cases.
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:
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:
Thomas additionally observed:
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:
Subsequent developments
right|thumb|200px|One of the few remaining houses in the Fort Trumbull neighborhood, September 1, 2006. Underneath the white paint can just barely be read the words "" and the web URLs of two organizations protesting over-use of eminent domain, [[Castle Coalition and Institute for Justice.]]
right|thumb|200px|The same house, June 10, 2007. The "thank you" is still visible, but some windows are broken, and others are boarded up, and "No Trespassing" has been spray-painted on it, as well as the URLs being obscured by spray paint.
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 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. 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.
After the Pfizer announcement, the San Francisco Chronicle, in November 2009, in its lead editorial called the Kelo decision infamous:
<blockquote> The well-laid plans of redevelopers, however, did not pan out. The land where Susette Kelo's little pink house once stood remains undeveloped. The proposed hotel-retail-condo "urban village" has not been built. And earlier this month, Pfizer Inc. announced that it is closing the $350 million research center in New London that was the anchor for the New London redevelopment plan, and will be relocating some 1,500 jobs.</blockquote>
The Chronicle editorial quoted from The New York Times: <blockquote> "They stole our home for economic development," ousted homeowner Michael Cristofaro told the New York Times. "It was all for Pfizer, and now they get up and walk away." The promised 3,169 new jobs and $1.2 million a year in tax revenues had not materialized, and nearly 2 decades passed before serious development on the site began.
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
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 Posts 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. 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. instructing the federal government to restrict the use of eminent domain: