Kelo v. City of New London
Significance: The Supreme Court held that government may use its power of eminent domain to seize private property against an owner's will for the purpose of transferring the property to private developers to promote economic development and increase the tax base.
Whe the city government of New London, Connecticut, became alarmed that the tax base was continually decreasing, it authorized a private entity, the New London Development Corporation (NLDC), to devise plans for economic development. When the Pfizer Corporation built a plant near the Fort Trumbull neighborhood, which contained mostly older homes, the city approved an NLCC plan to acquire the neighborhood in order to encourage economic activity. Among the owners of 115 residential and commercial lots, fifteen property owners refused to sell their lots. The city chose to exercise its power of eminent domain and authorized the NLDC to seize the lots. The controversy attracted national attention because such seizures were becoming increasingly common. Susette Kello and the other property owners sued the city, arguing that the Fifth Amendment only authorized the taking of property for a “public use,” not to sell the land to private developers. The city countered that the concept of public use was broad enough to include considerations of employment and the alleviation of the city's economic distress. The Connecticut Supreme Court agreed with the city's position. The U.S. Supreme Court upheld the ruling by a 5-4 margin. Defending the decision, Justice John Paul Stevens argued that the taking of land in New London was not simply for the private benefit of a few private individuals, but rather it was part of a development plan to promote the public's interest in overcoming economic difficulties. Rather than a narrow and “literal” reading of the takings clause, Stevens defended a “broader and more natural interpretation of public use as ‘public purpose.’” Justice Sandra Day O’Connor characterized the majority decision as a “reverse Robin Hood” action, taking from the poor to give to the rich. Justice Clarence Thomas wrote that the development plan appeared to give special consideration to the needs of the Pfizer Corporation. Throughout the country, property owners indicated strong agreement with the Court's minority. Minnesota and other states responded to the Court's ruling with legislation that significantly restricted applications of the eminent domain power.