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NEW LONDON, CT-In a 17-page decision, the US Supreme Court has ruled that a local government has the right to use its eminent domain powers to seize private property to transfer it to another private entity. In Kelo v. the City of New London, seven plaintiffs including homeowner Susette Kelo and other property and small business owners, filed suit in December 2000 after New London officials and the New London Development Corp. condemned their Fort Trumbull properties so a number of private development projects could move forward. City officials maintained the projects would bring a great economic benefit to the area.

“The city has carefully formulated an economic development that it believes will provide appreciable benefits to the community,” Justice John Paul Stevens wrote in an opinion joined by Justices Anthony Kennedy, David H. Souter, Ruth Bader Ginsburg and Stephen G. Breyer. “Promoting economic development is a traditional and long accepted function of government.”

In the dissent, Justice Sandra Day O’Connor wrote, “Any property may now be taken for the benefit of another private party, but the fallout from this decision will not be random. The beneficiaries are likely to be those citizens with disproportionate influence and power in the political process, including large corporations and development firms.” She was joined in the dissent by Chief Justice William H. Rehnquist and Justices Antonin Scalia and Clarence Thomas.

“Given the court’s prior jurisprudence, the outcome in this case was not surprising,” says Peter G. Verniero, who chairs Newark-based Sills Cummis Epstein & Gross’ Appellate Practice Group and is co-chair of the firm’s Corporate Internal Investigations and Business Crimes Practice Group. He also formerly served as a justice of the New Jersey Supreme Court as well as state Attorney General. “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.”For Verniero’s case notes, click here.

“The court simply got the law wrong today, and our Constitution and country will suffer as a result,” says Scott Bullock, senior attorney for the Institute for Justice, which represented the plaintiffs. “With today’s ruling, the poor and middle class will be most vulnerable to eminent domain abuse by government and its corporate allies. The 5-to-4 split and the nearly equal division among state supreme courts shows just how divided the courts really are. This will not be the last word.”

“I was in this battle to save my home and, in the process, protect the rights of working class homeowners throughout the country,” Kelo says. “I am very disappointed that the court sided with powerful government and business interests, but I will continue to fight to save my home and to preserve the Constitution.”

The RealShare Conference series is holding a forum, “Redevelopment After the Kelo v. New London Decision-Who Wins, Who Loses?” on Tuesday, July 12 at the Hyatt New Brunswick, Two Albany St., New Brunswick, NJ. There will be a keynote presentation by Justice Peter Verniero (retired), followed by a discussion featuring Ed McManimon, partner, McManimon & Scotland; Kevin Moore, partner, Sills Cummis Epstein & Gross and Jim Tutleltaub, partner, Carlin & Ward, PC. For additional information go to, http://www.realshareconferences.com/kelo.htm.

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