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Like most disputes, this one centered on a straightforward concept. The US constitution forbids the government from taking a person’s property unless it is for a “public use” and the person receives “just compensation.” That process, known as eminent domain, was challenged by a group of homeowners in Kelo v. City of New London, a case originating from Connecticut but one that may have far-reaching effect throughout the country. The principal question before the US Supreme Court was whether the constitution’s public-use clause is satisfied when the government condemns property for the generalized purpose of improving the economic development of a locality in need of revitalization. The answer to that question, according to the court, is yes.

Briefly, the facts were these. The City of New London sought to acquire property through eminent domain as part of an economic development project expected to create jobs and to generate badly needed tax revenues. The property would be leased to private developers who, in turn, would construct some residential dwellings, a waterfront hotel and conference center, and a public walkway along the waterfront, as well as commercial stores and offices. City planners intended the project to complement the intended construction, on an adjacent site, of a global research facility of the pharmaceutical giant, Pfizer Inc.

A group of area homeowners objected. They did not want to sell their property and did not want the government to take it – regardless of the compensation that they might have received. The homeowners argued that the development project did not amount to a valid public use and, hence, the city’s efforts to condemn their land was unconstitutional.

The Supreme Court of Connecticut sided with the city. It held that economic development projects that create new jobs, increase tax and other revenues, and contribute to urban revitalization, satisfy the constitution’s public-use clause. In so holding, the Connecticut court cited prior rulings of the US Supreme Court in which the federal high court made clear that the judiciary should not substitute its judgment for that of an elected body, such as a local government, in respect of what constitutes a public use of condemned land, unless that local judgment is palpably unreasonable.

On appeal, a sharply divided US Supreme Court affirmed. Writing for the court’s five-member majority, Justice Stevens reaffirmed the court’s long-established principle that judges should refrain from second-guessing legislative or local bodies in defining or determining whether the public-use requirement has been satisfied, within broad limits. “It is not for the courts to oversee the choice of the boundary line nor to sit in review on the size of a particular project area,” Justice Stevens wrote, citing the court’s prior case law. He was quick to add, however, that states are free to impose greater limitations on condemnation proceedings than those required by the federal constitution.

Given the court’s prior jurisprudence, the outcome in this case was not surprising. Still, the fact that four members of the court, including Justice O’Connor, often the swing-vote in controversial cases, strongly dissented could mean that the issue could be revisited in some future case. For now, however, the Kelo ruling should bring a measure of certainty to condemnation proceedings throughout the Unites States, with courts deferring to state or local governmental decisions to a wide extent.

Peter G. Verniero chairs the firm’s Appellate Practice Group and is co-chair of the firm’s Corporate Internal Investigations and Business Crimes Practice Group. He formerly served as a justice of the New Jersey Supreme Court as well as state Attorney General.

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