Week 12 - Eminent Domain

What are “takings”?

"Takings" refer to situations where the government appropriates private property for public use, usually with compensation to the owner. This principle is grounded in the Fifth Amendment of the U.S. Constitution.

What is eminent domain?

Eminent domain is the power of the government to take private property for public use, with compensation provided to the property owner, rooted in the Fifth Amendment of the U.S. Constitution.

How did Kelo v. City of New London expand the scope of eminent domain ?

Issue(s):

• Does economic development qualify as a “public use” under the Fifth Amendment’s Takings Clause, allowing government to use eminent domain to take private property from one owner and transfer it to another private party (with just compensation)?

• Or is “public use” limited to direct public use (e.g., roads, parks) or eliminating blight?

Facts (include arguments):

• New London, CT was economically depressed: high unemployment, declining population, closed naval base.

• City hired New London Development Corporation (NLDC) to create a 90-acre economic revitalization plan near a new Pfizer facility promising 1,000+ jobs, tax revenue, waterfront development.

• Plan included hotels, offices, condos, marina—private development, not public land.

• NLDC bought most land from willing sellers, but 9 owners (petitioners, led by Susette Kelo and Wilhelmina Dery) refused.

  • Kelo: prized her waterfront home.

  • Dery: born in her home (1918), lived there 87 years with husband.

  • Properties were not blighted; taken only because they were in the development footprint.

• City used eminent domain (Conn. statute) to condemn the holdouts.

• Petitioners sued, claiming no “public use” since land went to private developers, not public facilities.

Procedural posture:

• Petitioners sued in Connecticut Superior Court.

• Trial court blocked some takings (parcel 4A) but allowed parcel 3 (offices).

• Connecticut Supreme Court (4-3) upheld all takings as valid “public use.”

• U.S. Supreme Court granted certiorari to decide the federal Takings Clause question.

Judgment:

• Supreme Court affirmed (5-4): Economic development qualifies as “public use” under the Fifth Amendment.

• City’s comprehensive economic plan satisfies the Takings Clause, even though private parties will develop the land.

Applicable Rules and Precedent:

• Fifth Amendment Takings Clause: “Nor shall private property be taken for public use, without just compensation.”

• Key precedents expanding “public use”:

  • Berman v. Parker (1954): Urban renewal in blighted area OK, even if land goes to private redevelopers.

  • Hawaii Housing Auth. v. Midkiff (1984): Taking land from oligopoly landlords to give to tenants OK to break up land concentration.

• Standard of review: Highly deferential to legislative judgments about what constitutes a “public purpose.” Courts do not second-guess comprehensive plans.

Holding:

• “Public use” = “public purpose”, not literal public access or ownership.

• Economic development is a valid public purpose, even if:

  • Land goes to private parties.

  • No blight exists.

  • Benefits include jobs, tax revenue, revitalization.

• Courts must defer to legislative plans that are comprehensive and carefully considered.

• Hypothetical abuses (taking A’s land just to give to richer B) can be addressed case-by-case, not by a bright-line rule.

Reasoning:

• Historical evolution: Early “use by the public” test (railroads) was impractical; courts adopted broader “public purpose” test.

• Precedent controls: Berman and Midkiff allow takings for urban renewal and economic goals, even when private parties benefit.

• New London’s plan:

  • Comprehensive (90 acres, mixed uses).

  • Deliberated (public meetings, state approval).

  • Legitimate purpose (jobs, taxes, revitalization).

• No principled distinction: Economic development is as valid as eliminating blight or oligopoly.

• Private benefit inevitable: Any public project (roads, schools) benefits private contractors; the purpose, not mechanics, matters.

• States can restrict: Federal Constitution sets minimum; states can impose stricter “public use” limits.

Rule of Law:

• The Takings Clause permits eminent domain for economic development if it serves a public purpose (jobs, tax revenue, revitalization), even if:

  • Private parties receive and develop the land.

  • No blight exists.

• Courts give broad deference to legislative economic plans that are comprehensive and reasonably conceived.

• “Public use” means “public purpose”, not literal public ownership or access.

Key takeaway:

• Kelo dramatically expanded eminent domain to include economic development takings, making nearly any private property vulnerable if legislators claim it serves a public purpose like jobs or taxes.

• The decision sparked backlash: 45+ states passed stricter laws limiting eminent domain post-Kelo.

• Critics see it as eviscerating property rights, turning “public use” into a rubber stamp for transferring land from unpopular owners to politically connected developers.

• Defenders argue it gives necessary flexibility for urban revitalization in a changing economy.

Dissent (Justice O’Connor, joined by Rehnquist, Scalia, Thomas):

• The majority erases “public use” from the Constitution, making all private property vulnerable to takings for “economic development” (i.e., whoever pays more taxes).

• This invites abuse: government can take A’s land to give to B if B’s project generates more revenue.

• Precedent (Berman, Midkiff) involved blight or oligopoly, not healthy homes; New London’s homes were not blighted.

• The Court abrogates the Framers’ intent to protect property from private transfers.

Dissent (Justice Thomas):

• The majority nullifies the Public Use Clause, replacing it with a vague “public purpose” test.

• Original meaning: “Public use” meant direct public benefit (highways, forts), not vague economic promises tied to Pfizer’s interests.

• The Court should overrule precedents that strayed from the text, history, and original understanding of the Takings Clause.

What is meant by “no blight exists”?

"No blight exists" refers to a situation where properties do not exhibit signs of deterioration or neglect, and thus do not qualify as needing revitalization or redevelopment. In the context of eminent domain, it emphasizes that properties taken for economic development are not necessarily in a state of decay.

What is condemnation?

Condemnation is the legal action by which a government exercises its power of eminent domain to take private property for public use, often involving compensation to the property owner.

What boundaries for eminent domain did the court in County of Wayne v. Hathcock make clear?

Issue(s):

• Does economic development (e.g., building a business/technology park to create jobs and tax revenue) qualify as a “public use” under Michigan’s Constitution, allowing eminent domain to take private property from unwilling owners and transfer it to private developers?

• Should the Court overrule Poletown (1981), which allowed takings for a private auto plant?

Facts (include arguments):

• Wayne County wanted to build the “Pinnacle Project”: a 1,300‑acre business/technology park near Detroit’s airport.

  • Goal: jobs, tax revenue, economic growth by attracting high‑tech businesses.

  • Funded partly by FAA grant (airport noise abatement program).

• County bought most land voluntarily, but needed 46 more parcels from 19 holdout owners (defendants like Edward Hathcock).

  • Properties were not blighted; taken only because they were in the footprint.

• County used eminent domain (Resolution of Necessity) after negotiations failed.

• Defendants argued:

  • No “public use” under Michigan Constitution (Art. 10, §2).

  • Poletown (allowing takings for a GM plant) should be overruled.

Procedural posture:

• Defendants sued to block the condemnations.

• Wayne Circuit Court and Court of Appeals upheld the takings, relying on Poletown.

• Michigan Supreme Court reviewed the constitutional “public use” question.

Judgment:

• Michigan Supreme Court reversed (6-1): The takings do not advance a “public use” under the Michigan Constitution.

• Overruled Poletown*: Economic development alone does not justify eminent domain.

• Remanded for summary judgment for defendants.

Applicable Rules and Precedent:

• Michigan Constitution, Art. 10, §2: “Private property shall not be taken for public use without just compensation.”

• Pre‑1963 test (common understanding at ratification): Transfer to private entity OK only if:

  1. Extreme public necessity (e.g., railroads needing contiguous land only government can assemble).

  2. Public oversight/control after transfer (e.g., regulated utilities).

  3. Land selected for public reasons (e.g., slum clearance for health/safety).

• Poletown (1981): Allowed takings for a GM plant to create jobs—now overruled as inconsistent with original meaning.

Holding:

• Economic development (jobs, taxes) is not a “public use” justifying eminent domain unless it fits one of three pre‑1963 categories:

  1. Extreme necessity (impracticable without government assembly).

  2. Public accountability post‑transfer.

  3. Public‑purpose selection (e.g., blight removal).

• The Pinnacle Project fits none:

  • Business parks can be built privately without eminent domain.

  • No ongoing public control.

  • Properties not selected for inherent public need (no blight).

• Overrules Poletown*: Job creation alone does not satisfy “public use”; it strayed from the Constitution’s original meaning at 1963 ratification.

Reasoning:

• Original public meaning: At 1963 ratification, “public use” was understood through pre‑1963 cases; Poletown contradicted this and is not binding.

• Pinnacle fails all tests:

  • No extreme necessity (shopping centers, office parks exist without eminent domain).

  • Private owners will pursue profit maximization, not public goals.

  • Benefits (jobs, taxes) are incidental to private development, not a reason to select these parcels.

• Public use protects property rights: Eminent domain is an exception to property rights, limited to cases where private assembly is impossible or public need is clear.

Rule of Law:

• Under Michigan Constitution, eminent domain transferring land to private parties requires a “public use” fitting one of three categories:

  1. Extreme public necessity (e.g., railroads).

  2. Public oversight of private use.

  3. Public‑purpose selection (e.g., blight).

• Economic development (jobs, taxes) alone is not a public use justifying takings.

Key takeaway:

• Hathcock overruled Poletown* and rejected broad economic development takings under Michigan’s stricter “public use” test.

• It protects property owners from being displaced for private projects promising vague benefits like jobs/taxes.

• Post‑Kelo (federal deference to economic takings), states like Michigan can (and did) adopt narrower rules to limit eminent domain abuse.

• Reinforces that “public use” means more than incidental public benefit from private profit.

What was the reason behind allowing the use of eminent domain in Poletown?

Evidence of severe economic conditions, need for new industrial development to revitalize local industries, economic boost, lack of other sites

• power of eminent domain is to be used in this instance primarily to accomplish the essential public purposes of alleviating unemployment and revitalizing the economic base of the community

• said not every corporation will meet with similar acceptance simply because it may provide some jobs or add to the industrial or commercial base if the public benefit is not so clear and significant

In City of Oakland v. Oakland Raiders was eminent domain allowed to take a NFL franchise, and not actual physical property?

Issue(s):

• Can a city use eminent domain to condemn intangible property rights (e.g., an NFL franchise, contracts, goodwill) associated with a professional sports team to prevent it from moving to another city?

• Does this serve a valid “public use” under California’s Constitution and statutes?

Facts (include arguments):

• The Oakland Raiders (NFL team) had a license to play at Oakland Coliseum since 1966, renewed several times.

• In 1980, contract talks failed; Raiders announced plans to move to Los Angeles.

• City of Oakland sued to condemn the Raiders’ franchise rights (membership in NFL, player contracts, goodwill) via eminent domain.

  • Goal: Keep the team in Oakland for economic benefit (jobs, revenue, Coliseum usage).

• Raiders argued:

  • Intangible property (franchise, contracts) cannot be condemned.

  • No public use—just forcing a private business to stay.

• Trial court granted summary judgment for Raiders, dismissing the case.

Procedural posture:

• City filed eminent domain action.

• Trial court granted summary judgment for Raiders, holding no power to condemn intangibles or franchise.

• California Supreme Court reviewed on appeal.

Judgment:

• Supreme Court reversed summary judgment (4-3).

• Intangible property (franchises, contracts) can be condemned if for a public use.

• Remanded for full trial to determine if keeping the Raiders serves a public use.

Applicable Rules and Precedent:

• Eminent domain power:

  • Inherent sovereign power, limited by “public use” and “just compensation” (Cal. Const.; Code Civ. Proc. §1240.010).

  • No constitutional limit on type of property (real, personal, tangible, intangible).

• Intangibles are condemnable:

  • West River Bridge (1848): Franchises are “incorporeal property” subject to eminent domain.

  • Kimball Laundry (1949): Intangibles (e.g., laundry routes) have value like physical property.

• Public use:

  • Broadly defined: “promotes the general interest” in a legitimate government object (Bauer).

  • Legislative declaration of public use is presumptively valid.

  • Can be challenged as arbitrary, capricious, or abuse of discretion.

Holding:

• California eminent domain law allows taking any property, including intangibles like franchises, contracts, and goodwill.

• No explicit prohibition on taking ongoing businesses (unlike golf courses).

• Owning/operating a sports franchise may be a valid public purpose (recreation, economic benefit), similar to stadiums or fairs.

• Remand for trial: City must prove public use through facts/circumstances (economic studies, Coliseum history, public benefit).

Reasoning:

• Intangibles are property: No constitutional or statutory bar; precedents confirm franchises/contracts are condemnable.

• Public use possible:

  • Cities own stadiums, baseball teams (e.g., Visalia); recreation is a legitimate municipal function.

  • Economic studies, Coliseum integration with city life may show public benefit.

• Summary judgment improper:

  • Factual disputes (economic impact, public purpose) require full trial.

  • Legislative authorization presumes public use unless proven arbitrary.

• Not deciding wisdom: Court won’t judge economic policy, only legal power.

Rule of Law:

• Eminent domain can take any property (tangible/intangible, real/personal, ongoing businesses) if for a public use and with just compensation.

• Professional sports franchises may serve a public use (recreation, economic development), subject to factual proof.

• Summary judgment is improper if public use is factually disputed; requires trial on merits.

Key takeaway:

• California allows unprecedented use of eminent domain to seize a sports franchise to keep it from leaving, if proven for public use.

• Intangibles (franchises, contracts) are fully condemnable like land.

• Opened door to novel takings of businesses, but requires proof of public purpose—not automatic.

• Chief Justice Bird’s concurrence/dissent warned of limitless abuse (e.g., condemning rock promoters, small businesses), but majority saw it as a legitimate recreation/economic tool.

Concurrence/Dissent (Chief Justice Bird):

• Agrees with result (remand), but warns the power is virtually unlimited and ripe for abuse.

• Questions:

  • Can cities condemn any business that wants to leave? (Rock concerts, expanding stores?)

  • Does taking employment contracts violate employees’ rights?

• Endorses the power reluctantly, fearing it invades property rights for dubious policy goals.

What happened after eminent domain ruling of Oakland Raiders case?

• Lower courts ruled that using eminent domain to stop the team from moving violated the federal Constitution's Dormant Commerce Clause (City of Oakland v. Oakland Raiders, 1985; U.S. Supreme Court denied cert, 1986).

  • Dormant Commerce Clause: Prevents states/local governments from unreasonably burdening interstate commerce.

• NFL also tried to block the move:

  • The National Football League sued to stop the Raiders from relocating to Los Angeles.

  • Raiders countersued under federal antitrust laws.

  • Raiders won a multi-million-dollar verdict against the NFL.

“Just compensation” will…

not always make a property owner whole

How is fair market value determined?

Traditional real estate appraisal techniques, including the sale price of similar properties and actual rental values, each side will retain realtors or appraisers