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Atlantic Yards/Pacific Park graphic: what's built/what's coming + FAQ (pinned post)

In eminent domain appeal, plaintiffs say illegitimate sequence means case deserves discovery

The plaintiffs challenging the use of eminent domain for Atlantic Yards have a high-stakes argument Tuesday before the U.S. Court of Appeals for the Second Circuit, hoping for a second chance to move the case to trial.

U.S. District Judge Nicholas Garaufis already dismissed their case for a failure to state a claim, ruling that presence of some measure of public benefits—mass transit improvements, the removal of blight, subsidized housing, a sports facility, open space—trumped any allegation that the project might primarily confer a private benefit on developer Forest City Ratner.

There’s a difference, the plaintiffs argue in a final reply brief, and it has to do with process. Precedential cases, which drew on more egregious fact patterns—severe blight in Washington, DC (Berman), and a land oligopoly in Hawaii (Midkiff)—lead courts to defer to legislative determinations, as the Supreme Court in 2005 did in its narrow Kelo v. New London decision, upholding the use of eminent domain for economic development.

The brief says the courts must “resolve the obvious tension between and among” the three cases, which call for courts to defer to “a legislative determination that a taking serves a public purpose” but, as reaffirmed in Kelo, must look carefully at “plausible allegations that ostensibly ‘public’ purposes are pretextual and that the real purpose of a taking is to benefit a private developer.”

The plaintiffs--13 homeowners, business owners, residential and commercial tenants--suggest that, in this case, no deference is warranted, because “all of the indicia of legitimate public decisionmaking are absent, and most or all of the indicia of illegitimate private decisionmaking are present.”

Wrong standard

The plaintiffs argue that Garaufis was wrong to dismiss the case, given that certain facts “strongly suggest an unlawful purpose to confer a private benefit on a private party,” among them that Forest City Ratner, unlike in other cases, “was identified as the beneficiary even before the decision to take Plaintiffs’ properties was made.”

They note that some facts—like a mass transit upgrade—“could be consistent with a lawful intent to benefit the public,” but say plaintiffs “need only plead facts that plausibly raise an inference of improper intent” to move the case forward.

And, they argue, while Garaufis found their allegations “entirely conclusory,” his opinion itself was conclusory, because it ignored the sequencing issues.

Only for economic development?

The plaintiffs criticize the defendants’ claim that, in Kelo, the Supreme Court intended that an analysis of pretext is limited to cases in which eminent domain is justified by economic development.

The issue requires some textual analysis, but it can get murky. The Supreme Court opinion stated:
We granted certiorari to determine whether a city’s decision to take property for the purpose of economic development satisfies the “public use” requirement of the Fifth Amendment.

On the other hand, it later noted:
There is, moreover, no principled way of distinguishing economic development from the other public purposes that we have recognized.

The plaintiffs point to the Court's longtime proposition that the government can't take a person’s land "for the purpose of conferring a private benefit on a particular private party” and point to the following sentence:
Nor would the City be allowed to take property under the mere pretext of a public purpose, when its actual purpose was to bestow a private benefit.

Their point: this is a broadly encompassing rule, not limited to cases involving economic development.

Pretext objective?

The plaintiffs argue:
…Finally, Defendants simply ignore the most obvious shortcoming of their argument that a court screening for pretext must make an “objective” inquiry: they do not explain how this could possibly be done. Virtually all pretexts, after all, have some degree of “objective” facial legitimacy. Otherwise, they would not be pretexts.

After all, if Governor George Pataki admitted he made a deal to help Bruce Ratner—a law school friend, the plaintiffs say, quoting a Washington Post article— it wouldn’t matter, according to the defendants’ theory, “because as an “objective” matter, the specter of increased taxes, jobs or affordable housing would benefit the public.”

How much benefit?

Courts have never grappled with the amount of public benefit necessary to sustain legitimacy. At a first hearing in February, U.S. Magistrate Judge Robert M. Levy challenged lawyers to suggest rules for determining when the balance of public and private purposes behind a project is so wrong that a court must intervene.

Forest City Ratner attorney Jeffrey Braun said, “I think the standard is de minimis,” or of such minimum importance that the court should ignore it, a reference to Justice Anthony Kennedy’s statement in his Kelo concurrence that “the projected economic benefits of the [New London] project cannot be characterized as de minimis.”

When Levy asked if that required more fact-finding, Braun said that “would be torturing the defendants.” Garaufis said the benefits were sufficient, but didn't grapple with the sequence issue.

What’s legit

The plaintiffs’ acknowledge that no court has expressly delineated how much legitimacy must be established to trigger deference, they suggest case law points to several factors that “indicate that the decision was driven by a desire to benefit the public.” (Actually, they rely significantly not on the controlling Kelo opinion but Justice Anthony Kennedy's concurrence, which does not have the same weight.)

Among the factors:

--decision by an elected legislative body
The brief notes that the lawsuit alleges that Pataki and Bloomberg are behind the transfer, and even if the ESDC made (as opposed to rubber stamp) the eminent domain decision, it is not a legislative body but “an unelected, quasi-governmental corporation, wholly controlled by the Governor.” The defendants, however, would say that legislatively authorized agencies can pursue eminent domain.

--the identification of a public purpose before eminent domain is considered
Defendants first touted new jobs and tax revenues, the affordable housing, then the removal of blight. The defense has said that the 1968 creation of the Atlantic Terminal Urban Renewal Area, or ATURA, is a precursor for blight removal, but the plaintiffs argue, “Instead of commissioning an open-ended examination of the areas surrounding the MTA’s Vanderbilt Rail Yards or the ATURA, the ESDC directed [consultant] AKRF to examine only the Project footprint as designated by Ratner.”

--a comprehensive plan developed by a legislative body
The only plan was Ratner’s plan, the plaintiffs say. The defense likely will point to the ATURA precursor.

--consideration of multiple plans or options before choosing the plan that maximizes public benefit
“There is no dispute,” the brief states. “Defendants considered one plan and one plan only – Ratner’s plan.” Indeed, former New York City Economic Development Corporation President Andrew Alper told City Council in 2004: “So, they came to us, we did not come to them. And it is not really up to us then to go out and find to try to a better deal.”

--the legislative body draws the map or properties needed
In this case, the takings map was drawn by the developer, the plaintiffs say, though the defense has said it's the ESDC's responsibility.

--the private beneficiaries to whom the seized property will be transferred are unknown when the plan is developed and the map drawn
The brief states that, “at every turn, every government employee and entity involved in the Project, including ESDC, knew that it was Ratner’s Project and that he would reap the benefits of the proposed land transfers.”

--a competitive bidding process for the parties that will conduct the redevelopment
While there was a “supposedly competitive” bidding process for the MTA’s property, the Vanderbilt Yard would take up less than 40% of the footprint, and, the brief states, “there was no competitive bidding for the Project as a whole or for the privilege of receiving Plaintiffs’ properties after they are seized by eminent domain.”

--public funds are committed before the private beneficiaries are known
In this case, the developer was announced before public funds were committed.

--“elaborate procedural requirements” that allow inquiry into government purposes
The plaintiff’s say that the state Eminent Domain Procedure Law, or EDPL, doesn’t match the requirements in Kelo, though the defense says it does.

What's the model?

“This case is not close,” the plaintiffs argue. “None of the factors giving rise to a presumption of validity is present.”

The defense, however, argues:
The Public Use Clause, however, is concerned not with Plaintiffs’ proffered model of good government, but rather with whether a taking of private property serves a conceivable public purpose. Because the proposed taking here plainly does so, the district court’s decision should be affirmed.

Should a court pursue it?

Without indicia of legitimacy, the Court, the plaintiffs' brief states, quoting Kennedy’s concurrence, is therefore “confronted with a plausible accusation of impermissible favoritism to private parties” and should “treat the objection as a serious one and review the record to see if it has merit, though with the presumption that the government’s actions were reasonable and intended to serve a public purpose.”

The brief states that this case most closely resembles Aaron v. Target Corp., a Missouri case in which officials from Target told a city official they’d abandon the store unless they got new property through eminent domain; Target was designated as the city’s “chosen redeveloper only days after soliciting alternatives from the public.”

While there may be some procedural similarities, the complicating difference, unmentioned, in that the public benefits in Brooklyn, at least as identified by the ESDC, are more wide-ranging and significant than those in the Target case.

Question of benefits

Garaufis wrote:
Because Plaintiffs concede that the Project will create large quantities of housing and office space, as well as a sports arena, in an area that is mostly blighted, Plaintiffs’ allegations, if proven, would not permit a reasonable juror to conclude that the 'sole purpose' of the Project is to confer a private benefit... Neither would those allegations permit a reasonable juror to conclude that the purposes offered in support of the Project are 'mere pretexts' for an actual purpose to confer a private benefit on FCRC.

The plaintiffs say that Garaufis mischaracterizes their concessions. Indeed, I think Garaufis overstated the case.

Still, plaintiffs may have an easier time arguing the sequence issue than the measure of benefits. In today's New York Sun, Develop Don't Destroy Brooklyn legal chair Candace Carponter said, "We believe it was a completely private benefit, and the public benefit was added after Kelo was decided."

However, Kelo was decided on on 6/23/05, after, for example, the Affordable Housing Memorandum of Understanding was signed. Still, the main justification for the use of eminent domain--the removal of blight--was not announced until 2006.

More sunshine?

The plaintiffs argue that the case should move forward:
The tenacity with which Defendants seek to avoid discovery leaves one wondering what it is that they are so afraid of. Notwithstanding the District Court’s entirely unexplained belief that Plaintiffs have pled no facts whatsoever suggesting that improper motive was afoot, the Complaint is teeming with allegations plausibly suggesting that the Project was intended primarily to benefit Bruce Ratner. Although nobody (except Defendants) knows whether discovery will reveal still more evidence that the taking of Plaintiff’s properties is animated by unconstitutional motive, there can be no doubt that discovery should proceed.

Then they argue that everyone would benefit from such an examination; if the defendants’ motives are beyond reproach, then that would instill public confidence.

On the other hand, as the defendants likely will argue, such an examination would delay the project (and the fulfillment of public benefits) further and could set a precedent for stalling other projects.


  1. Norman, The length and legalese ("conclusory") of this makes it hard to follow. A shorter version that is less step by step through the legal process would be appreciated.


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