The Grasping Hand:

The Grasping Hand: "Kelo v. City of New London" and the Limits of Eminent Domain

by Ilya Somin

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Overview

In 2005, the Supreme Court ruled that the city of New London, Connecticut, could condemn fifteen residential properties in order to transfer them to a new private owner. Although the Fifth Amendment only permits the taking of private property for “public use,” the Court ruled that the transfer of condemned land to private parties for “economic development” is permitted by the Constitution—even if the government cannot prove that the expected development will ever actually happen. The Court’s decision in Kelo v. City of New London empowered the grasping hand of the state at the expense of the invisible hand of the market.
           
In this detailed study of one of the most controversial Supreme Court cases in modern times, Ilya Somin argues that Kelo was a grave error. Economic development and “blight” condemnations are unconstitutional under both originalist and most “living constitution” theories of legal interpretation. They also victimize the poor and the politically weak for the benefit of powerful interest groups and often destroy more economic value than they create. Kelo itself exemplifies these patterns. The residents targeted for condemnation lacked the influence needed to combat the formidable government and corporate interests arrayed against them.  Moreover, the city’s poorly conceived development plan ultimately failed: the condemned land lies empty to this day, occupied only by feral cats. The Supreme Court’s unpopular ruling triggered an unprecedented political reaction, with forty-five states passing new laws intended to limit the use of eminent domain. But many of the new laws impose few or no genuine constraints on takings. The Kelo backlash led to significant progress, but not nearly as much as it may have seemed.

Despite its outcome, the closely divided 5-4 ruling shattered what many believed to be a consensus that virtually any condemnation qualifies as a public use under the Fifth Amendment. It also showed that there is widespread public opposition to eminent domain abuse. With controversy over takings sure to continue, The Grasping Hand offers the first book-length analysis of Kelo by a legal scholar, alongside a broader history of the dispute over public use and eminent domain and an evaluation of options for reform.
 

Product Details

ISBN-13: 9780226422169
Publisher: University of Chicago Press
Publication date: 11/23/2016
Edition description: First Edition, Enlarged
Pages: 384
Sales rank: 823,602
Product dimensions: 5.90(w) x 8.90(h) x 0.80(d)

About the Author


Ilya Somin is professor of law at the George Mason University School of Law. He is the author of Democracy and Political Ignorance: Why Smaller Government isSmarter and writes regularly for the popular Volokh Conspiracy blog.
 

Read an Excerpt

The Grasping Hand

Kelo v. City of New London and the Limits of Eminent Domain, with a New Preface


By Ilya Somin

The University of Chicago Press

Copyright © 2016 The University of Chicago
All rights reserved.
ISBN: 978-0-226-42216-9



CHAPTER 1

The Trouble in Fort Trumbull


The case that led to one of the most controversial decisions in modern Supreme Court history arose from unlikely origins in the little-known Fort Trumbull neighborhood of New London, Connecticut. It began with a small group of property owners who decided to resist the condemnation of their homes and other properties as part of a development plan intended to promote economic growth. Under normal circumstances, their case might never have gotten to court at all, as those targeted by eminent domain might not have had the time, energy, and resources needed to fight a prolonged legal battle. If it nonetheless had resulted in litigation, it could easily have ended at the state level in a decision that would have attracted little attention beyond Connecticut.

That the case became nationally famous was due to the dogged perseverance of the property owners whose land was threatened, the intervention of a major public interest law firm, and what many considered to be the surprising willingness of the Supreme Court to reopen an issue that expert opinion believed to be long settled: the power of the government to condemn private property for purposes of transferring it to other private owners. The seemingly local conflict that began in Fort Trumbull would ultimately trouble the conscience of an entire nation.

The history of the Fort Trumbull takings has already been effectively recounted in an excellent book by journalist Jeff Benedict. But Benedict's main interest was in telling the story on the ground rather than exploring the constitutional and policy questions raised by the case. This chapter builds on his work, emphasizing those points that are most relevant to the broader issues that were eventually implicated by the Supreme Court's decision.


Bulldozing a Path to Prosperity

The Fort Trumbull peninsula of New London, Connecticut had once been a moderately prosperous area. But the area's economy was heavily dependent on the Naval Undersea Warfare Center located on the peninsula. It began to fall on relatively hard times in the 1990s around the time the center was closed as a result of post–Cold War defense cuts in 1995. Both area residents and city officials hoped to revitalize the region.

Despite the difficult economic conditions, some residents — including those who later played a major role in the Kelo case — believed that Fort Trumbull could recover and that it remained an attractive place to live and do business. Richard Beyer, who had grown up in New London, bought two small properties in Fort Trumbull in 1994, in which he and a business partner then invested a substantial amount of money to refurbish them for use as rental units. Although he acknowledges that economic conditions were difficult, Beyer believed that "without question," the area had potential, so much, in his view, that "[y]ou really can't lose" by investing there. Bill Von Winkle, another future Kelo plaintiff, had a similar story. He too had grown up in the area, and purchased several properties to refurbish as rental units in the 1990s, and also lived in one of them for a time. All told, he had owned property in the area for twenty-four years, and had a total of twelve apartment rental units, a commercial building, and a restaurant. At the time the Kelo condemnations began, he had recently spent some $300,000 on renovations.

Susette Kelo, the EMT who became nationally famous because her name was listed first among the plaintiffs in the Supreme Court case, bought a home in Fort Trumbull in 1997. Although the house needed work, she fell in love with its impressive "water view" and what she called its "pizzazz." This was the home that later became famous as the "little pink house" that became an iconic image of the struggle over the Fort Trumbull condemnations. Byron Athenian, owner of an autobody shop, had purchased a house in the same area in the late 1980s, where he lived with his family, including three children. He too liked the area and did not wish to move.

Others had lived in Fort Trumbull for many years and had deep attachments to the community. Pasquale and Margherita Cristofaro, an elderly Italian American couple, had purchased a house in Fort Trumbull in 1972, after their previous residence had been condemned as part of an urban renewal taking. The Cristofaros, whose son Michael spoke for them in the Kelo litigation, were dead set against losing yet another house to eminent domain. By the late 1990s, the elder Cristofaros had moved to a different location, though they continued to own the house, which was now occupied by Michael's elder brother and his family. He had recently retired after twenty-three years of service in the U.S. Air Force, and, according to his brother, "hope[d] that this was his last move and [he] would finally be able to settle down."

Matthew Dery came from a family that had owned property in Fort Trumbull since 1890. As of the late 1990s, they owned four houses in the area, one in which Dery lived with his family; two rental units; and one where Dery's elderly parents, Charles and Wilhelmina, lived. Now in her eighties, Wilhelmina Dery had been born in that house in 1918, had never lived elsewhere, and ardently wished to continue living there for as many years as she had left.

While the future Kelo plaintiffs liked living in the Fort Trumbull area and believed it was a good community, they also recognized that it had significant economic problems in the wake of the closure of the Naval Undersea Warfare Center. Richard Beyer, for example, told me that there was "a lot of negativity" in the air about the local economy in the 1990s and that "nothing was being done" to improve it. In addition to the area's general economic doldrums, a nearby old city-owned sewage plant periodically emitted a terrible odor that annoyed many residents.

New London city officials also recognized the economic difficulties the area faced. They hoped to revitalize it, as well as the city in general. In 1997, they reestablished the New London Development Corporation, which the Supreme Court would later describe as a "private nonprofit entity established ... to assist the City in planning economic development." The NLDC would ultimately produce the plan that resulted in the Fort Trumbull condemnations.

The NLDC was reestablished after a period of dormancy, under the leadership of a new president, Claire Gaudiani, an academic and president of Connecticut College with a long history of involvement in philanthropic and social justice causes. The NLDC's resuscitation occurred in large part at the behest of the administration of Republican Connecticut Governor John Rowland. The Republican administration hoped to increase its political support by promoting economic development in overwhelmingly Democratic New London, but wanted to do it by working through an agency that was not controlled by the City's Democratic elected government, which was generally hostile to the governor. The administration recruited Gaudiani to become the new president of the NLDC because of her prestige as the president of the area's most prominent academic institution, her leadership skills, and her interest in community development.

Although this was not the reason for her selection to lead the NLDC, Gaudiani was also the wife of Dr. David Burnett, a high-ranking employee of Pfizer, Inc., then the world's largest pharmaceutical producer. Her knowledge of Pfizer led Gaudiani to recruit Pfizer executive George Milne to join the NLDC board, in part because she hoped that having a prominent corporate leader as a member would help attract investment to New London. But Gaudiani also hoped it would facilitate bringing Pfizer to the area, since she knew that the firm was in search of a location where it could build additional office space for a new headquarters, and New London fit the firm's needs.

In the fall of 1997, Gaudiani and Milne initiated discussions with Pfizer urging them to move to a former mill site location that had become available in New London. Pfizer began to show interest, and the firm and the NLDC engaged in further discussions with state officials, led by Peter Ellef, director of the state's Department of Economic Cooperation and Development, and an important adviser to Governor Rowland. As a condition of moving to the New London site, Pfizer insisted that the city and state acquire ninety acres of property in Fort Trumbull — including the former naval research facility and some sixty acres of other property — in order to turn them into upscale housing, office, space, a conference center, a five-star hotel, and other facilities that would be useful to the corporation and its employees who would work in the area. While Pfizer would not be the new owner of the properties in question, it expected to benefit from their redevelopment.

Throughout the course of the Kelo litigation, Pfizer and NLDC representatives insisted that the firm was not involved in initiating the effort to condemn and redevelop the Fort Trumbull properties and that it had not made such redevelopment a condition of its decision to open up a new headquarters facility in New London. But evidence introduced at the trial, as well as additional documentation uncovered by an investigative reporter for the New London newspaper The Day in late 2005, several months after the Supreme Court's Kelo decision was issued, shows that Pfizer "ha[d] been intimately involved in the project since its inception" and that the NLDC development plan and associated condemnations were "a condition of Pfizer's move" to New London.

Documents obtained by The Day through state Freedom of Information Act requests show that the NLDC condemnations were undertaken in large part as a result of extensive Pfizer lobbying of state and local officials. Pfizer representatives did indeed demand the redevelopment plan and its associated takings as a quid pro quo for its agreement to build a new headquarters in New London. In the fall of 1997, Pfizer had had a consulting firm prepare a design sketch for the proposed redevelopment of the Fort Trumbull area, which included proposals for the construction of a "high end residential district" and other facilities that would be of use to the firm and its employees. These ideas became the basis of an eventual agreement between Pfizer and state officials under which the firm agreed to establish a new headquarters in New London in exchange for some $118 million in state government subsidies and an additional $73 million allocated for the clearing and redevelopment of the Fort Trumbull area. State officials claimed that the combination of Pfizer's move and the redevelopment project would generate some two thousand new jobs in New London. While much evidence of Pfizer's involvement in the taking was already known before the 2005 revelations, and introduced in court, the 1997 design and its role in the planning process was not.

Most of the specific facilities that Pfizer wanted built could probably have been constructed without eliminating all the houses in the area. But NLDC leaders and Pfizer officials also believed that it was essential to wipe out all the existing buildings for aesthetic reasons. David Burnett, a high-ranking Pfizer employee and husband of Claire Gaudiani, told a reporter that the houses had to be destroyed because "Pfizer wants a nice place to operate," and "we don't want to be surrounded by tenements." Gaudiani herself stated that the houses had to be knocked down because otherwise they would have looked "ugly and dumb." In 2005, NLDC lawyer Ed O'Connell told the New York Times that the homes owned by the preexisting owners had to be torn down in order to make way for "housing at the upper end, for people like the Pfizer employees ... They are the professionals, they are the ones with the expertise and the leadership qualities to remake the city — the young urban professionals who will invest in New London."

Even before these revelations, the resisting New London property owners and other critics of the project believed that it was undertaken for the purpose of benefiting Pfizer. Richard Beyer, for example, thought the whole project was an "organized land grab" undertaken for the firm's benefit. Bill Von Winkle similarly contends that the project was "Pfizer, 100% Pfizer, wanting us out of our homes." Journalist Jeff Benedict, author of by far the most detailed account of the development of the Fort Trumbull project, concluded that Gaudiani, Milne, and other NLDC leaders genuinely believed that the plan would benefit the people of the city.

It is extremely difficult to divine their subjective motivations with any certainty. My own view, however, is closer to Benedict's than Beyer's. Having interviewed Gaudiani, I am convinced that she genuinely believed that she was acting for the public good and was not simply trying to advance the private interests of Pfizer.

But it is nonetheless problematic that a city redevelopment plan that was closely based on Pfizer's demands was produced by an agency headed by the wife of a high-ranking Pfizer employee and including a Pfizer executive on its board. At the very least, this created a potential conflict of interest. And even if Gaudiani and Milne genuinely believed they were acting in the public good, it is hard not to wonder whether their perception of where the public good lies was affected by their respective connections to Pfizer. People have an understandable tendency to believe that their own interests coincide with the public good, and the NLDC leadership may not have been immune to this common pattern.

In February 1998, Pfizer officially announced its plan to open up the new headquarters in New London. There was great optimism about the potential impact on the community. When the facility officially broke ground in September 1998, Connecticut Governor John Rowland, whose administration had provided crucial support for the venture, called it "without a doubt the most exciting partnership we have seen in the State of Connecticut," one that "will change the landscape of this community for the next 100 years." Claire Gaudiani hailed the event as "the beginning of a whole new day for New London," and George Milne promised that "[t]his is done with the commitment that if we turn this shovel, there'll be no turning back."

The NLDC meanwhile, prepared a municipal development plan that outlined an ambitious proposal to rebuild Fort Trumbull, while meeting Pfizer's requirements. The plan called for the leveling of all the structures in the entire development area and their replacement with a variety of facilities, including a marina, a park, a hotel, office space, and upscale housing. Despite former Mayor Lloyd Beachy's opposition, the New London City Council ultimately approved the plan in a 6-1 vote in January 2000, and authorized the NLDC to use eminent domain to acquire any property in the area whose owners were unwilling to sell.


Condemnation

Even before the city council officially gave it the power to use eminent domain, NLDC representatives began to work to persuade Fort Trumbull property owners to sell their land, often threatening to use eminent domain against them if they refused. Defenders of the New London condemnations argue that most Fort Trumbull residents agreed to sell their property voluntarily. NLDC Director John Brooks claims that "the vast majority of the properties were acquired in a friendly way." It is indeed true that only seven of the ninety property owners in Fort Trumbull ultimately chose to contest the NLDC's efforts to acquire their land. But the voluntariness of the transactions by which the others gave up their property is at the very least extremely questionable.

The threat of eminent domain often played a key role in inducing "voluntary" sales. As New London's lawyer Wesley Horton noted in oral argument at the Supreme Court, "[t]he large share of [the Fort Trumbull property acquisitions] was [voluntary], but of course, that's because there is always in the background the possibility of being able to condemn ... that obviously facilitates a lot of voluntary sales." When the possibility of using eminent domain to displace Fort Trumbull residents was first publicly discussed in early 1998, numerous residents wrote letters to the state Department of Economic and Community Development indicating that, though they might support redevelopment, they had a strong preference for remaining in their homes. As The Day reported in January 1999, "among the letters were comments such as 'I am a senior citizen who has lived here 27 years and am not about to move'; 'I am not interested in selling my home'; and 'I've lived here since 1958 and I do not want to move.'"


(Continues...)

Excerpted from The Grasping Hand by Ilya Somin. Copyright © 2016 The University of Chicago. Excerpted by permission of The University of Chicago Press.
All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
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Table of Contents

Preface to the Paperback Edition ix

Acknowledgments xvii

Introduction 1

Chapter 1 The Trouble in Fort Trumbull 11

Chapter 2 From Public Use to Public Purpose 35

Chapter 3 The Perils of Public Purpose 73

Chapter 4 The Kelo Decision 112

Chapter 5 The Political Backlash 135

Chapter 6 Why the Backlash Often Fell Short 165

Chapter 7 The Judicial Reaction 181

Chapter 8 Should Blight and Economic Development Takings Be Reformed or Banned? 204

Conclusion 232

Appendix A 247

Appendix B 251

Notes 253

Index 345

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