Anticompetitive Takings: ALF Urges The Supreme Court Revisit Kelo

Violet Dock Port was a privately owned, 75-acre port facility on the Mississippi River in St. Bernard Parish, Louisiana.  Violet Dock was designed and maintained to service ocean-going ships for the U.S. Navy as well as other commercial operations.  In 2010, Violet Dock was improving its facilities to expand its business to support cargo operations.  In December 2010, the St. Bernard Port, Harbor & Terminal District expropriated Violet Dock’s entire property, driving the company out of business. The District replaced Violet Dock with a bulk cargo facility to be operated by Associated Terminals. Associated Terminals was a private company and competitor of Violet Dock.  Associated Terminals took over the Violet Dock’s contracts with the Navy.

The Louisiana Supreme Court approved this forcible transfer of private commercial property to eliminate competition with a public enterprise — and for the benefit of another private entity. In doing so, it blessed the use of eminent domain for anticompetitive purposes that are antithetical to the public interest. This concretely demonstrates the perverse implications of this Court’s decision in Kelo v. City New London, 545 U.S. 469 (2005).

The constitutional basis for a Kelo taking remains questionable, however even the dissent in that case did not contemplate the levels of abuse and corruption that can now be observed across the country when large firms lobby local authorities to take property from their competitors under the guise of so called “public use.” That is precisely what happened here: the government displaced an independent enterprise from the market for an overtly anticompetitive purpose.

 

Issue Areas:

Free Enterprise, Individual Liberty, Limited Government, Property Rights

Case:

Violet Dock Port, Inc., LLC, v. St. Bernard Port, No. 17-1656 (Supreme Court) (petition stage)

Read the Amicus Brief:
Question(s) Presented:

  1. What standards must courts apply under the Public Use Clause to determine whether the stated purpose for a taking is a pretext for private benefit?
  2. Whether the Public Use Clause of the Fifth Amendment is satisfied where private property is taken to advance a public corporation’s pecuniary gain as a market participant, in competition with the entity targeted for condemnation?
  3. Should this Court overrule Kelo v. City of New London’s ruling that transferring property from one private owner to another for the purpose of “economic development” is a public use justifying the use of eminent domain under the Fifth Amendment?

 


Additional Background:

The Takings Clause of the Fifth Amendment says “…nor shall private property be taken for public use without just compensation.”  In Calder v. Bull (1798), the the United States Supreme Court stated that a “law that takes property from A and gives it to B … is against all reason and justice”.  Professor Bernard H. Siegan, in his seminal work Property Rights: From Magna Carta to the Fourteenth Amendment  (2001), stated it has always been unlawful to abrogate an individual’s property rights for the advancement of purely private interests. 

In Kelo v. City of New London (2005), the Court held that “public use” could include economic redevelopment. Susette Kelo’s home was condemned by the City of New London and given to a private developer as part of a comprehensive redevelopment plan in the neighborhood.  The principal dissent in Kelo was issued by Justice O’ Connor who argued that the use of the taking power in this manner was a reverse Robin Hood – taking from the poor to give to the rich.  The beneficiaries of Kelo would likely be those with disproportionate influence and power in the political process such as large corporations and development firms.

ALF’s Amicus Brief:

In an amicus brief ALF argues that the Louisiana Supreme Court further erodes the right to private property by weakening the public use requirement established in Kelo, merely requiring some conceivable basis of public use. This would seemingly justify any taking, even if undisputed evidence of collusion were presented. Kelo forbids “mere[ly] pretextual” takings, but did not provide a clear standard for discriminating between merely pretextual and valid public uses. The Supreme Court should grant certiorari to clarify the standard so that it has at least some effect in preventing the largest private firms from capturing a local authority to use eminent domain to steal property from their competitors. The Supreme Court should also grant certiorari to consider overruling Kelo which is an assault on the American people’s deeply held belief that the government exists to protect their rights, including the right to property, and should not legitimize aconsensual takings for the benefit of massive private firms who purchase access to politicians and thereby shape public policy to fit their private interest.

 

Status:

The Supreme Court denied certiorari on October 15, 2018.

Date Originally Posted: July 11, 2018

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