Kelo v. City of New London, 545 U.S. 469 (2005), is a landmark decision by the Supreme Court of the United States in which the Court held, 5–4, that the use of eminent domain to transfer land from one private owner to another private owner to further economic development does not violate the Takings Clause of the Fifth Amendment. In the case, plaintiff Susette Kelo sued the city of New London, Connecticut, for violating her civil rights after the city tried to acquire her house's property through eminent domain so that the land could be used as part of a "comprehensive redevelopment plan". 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 expanding their eminent domain authorities 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.Kelo v. The city of New London, 268 Conn. 1, 843 A.2d 500 (Conn. 2004). Justice Peter T. Zarella wrote the dissent, joined by Chief Justice William J. Sullivan and Justice Joette Katz.Kelo, 268 Conn. at 144, 843 A.2d at 587 (Zarella, J., concurring in part and dissenting in part).
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.Prince George’s County v. Collington Crossroads, Inc., 339 A.2d 278, 283-88 (Md. 1975) (condemnation for industrial park)City of Minneapolis v. Wurtele, 291 N.W.2d 386, 390 (Minn. 1980) (condemnation for hotel, retail, and office space)Cannata v. City of New York, 11 N.Y.2d 210, 214-15 (N.Y. 1962) (condemnation for industrial park)City of Jamestown v. Leevers Supermarkets, 552 N.W.2d 365, 369 (N.D. 1996) (condemnation for supermarket) 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.City of Little Rock v. Raines, 411 S.W.2d 486, 494-95 (Ark. 1967) (condemnation of agricultural property in order to sell or lease it to private industries not public use)Baycol, Inc. v. Downtown Dev. Auth., 315 So.2d 451, 455-59 (Fla. 1975) (condemnation for shopping mall not public purpose)Southwestern Illinois Development Authority v. National City Environmental, L.L.C., 768 N.E.2d 1, 9-11 (Ill. 2002), cert. denied, 537 U.S. 880 (2002) (condemnation for racetrack expansion not public use, even though it would contribute to economic growth in region)City of Owensboro v. McCormick, 581 S.W.2d 3, 5-8 (Ky. 1979) (“No ‘public use’ is involved where the land of A is condemned merely to enable B to build a factory”Opinion of the Justices, 131 A.2d 904, 906-07 (Me. 1957) (act permitting condemnation for industrial development unconstitutional)County of Wayne v. Hathcock, 684 N.W.2d 765 (Mich. 2004) (eminent domain for development of a technology park violated Michigan Constitution even if it would result in economic development)City of Bozeman v. Vaniman, 898 P.2d 1208, 1214 (Mont. 1995) (chamber of commerce could not occupy 40% of visitors center to be built on land taken by eminent domain)Georgia Dept. of Transportation v. Jasper County, 586 S.E.2d 853, 856-57 (S.C. 2003) (condemnation for business development not for public use)Petition of Seattle, 638 P.2d 549, 556-57 (Wash. 1981) (disallowing plan to use eminent domain to build retail shopping, where purpose was not elimination of blight) 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 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...
[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...Kelo, 545 U.S. at 491–92.
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: