After all, the brief submitted to the Supreme Court on behalf of the Empire State Development Corporation (ESDC) and municipal respondents notes that Atlantic Yards “has the support of a host of elected state and local officials... local leaders, affordable housing advocates and union officials.”
On Thursday, June 12, the justices will meet to decide whether to accept the appeal in the case, known as Goldstein v. Pataki, in which 11 residential and commercial property owners and leaseholders are challenging the state’s plan to use eminent domain to take their properties for Atlantic Yards.
The justices’s decision to accept the case or not should be made public next week. Their decision will be based not on an evaluation of errors in the lower court decisions but on whether they think there are doctrinal differences nationally regading interpretations of the Supreme Court's 2005 Kelo v. New London eminent domain case that must be resolved.
The crux of the Brooklyn case (briefs here), which now involves an amicus curiae (friend of the court) brief from the libertarian Institute for Justice, can be seen through two lenses. If the government can claim that there are public benefits from the use of eminent domain, the plaintiffs contend, that shouldn't shut off any inquiry into governmental decisionmaking. By contrast, the defendants argue that if evidence of pretextual benefits appear flimsy and eminent domain would produce public benefits, such a case shouldn't proceed.
A long shot
Any Supreme Court appeal is by definition a long shot; the court takes fewer than 2% of cases brought (though perhaps 4% of cases brought by paid counsel as opposed to cases filed by indigents, according to this 1999 article).
Keep in mind that, while rejection of the appeal means the federal case is over—and the plaintiffs likely would file an even longer-shot case in state court—acceptance of the appeal would be the beginning, not the end.
If four members of the Supreme Court vote to grant certiorari--to hear the argument--that means the case would be further briefed, likely with many other friends of the court briefs from stakeholders in the eminent domain issue. Oral argument would be held, most likely in the fall.
More often than not a vote to "grant cert" means the court is prepared to overturn the lower court decision. However, were the case to be accepted and the plaintiffs to prevail, they still wouldn’t have stopped eminent domain in this case. Rather, the Supreme Court would allow them to present evidence in trial court that the project is a “pretext” to enrich the developer—a contention dismissed before trial by U.S. District Judge Nicholas Garaufis and upheld by the Second Circuit Court of Appeals.
Such a trial could go either way. Then again, the delay involved --perhaps a year until final decision by the Supreme Court, then potentially months more for a trial--could make government officials and Forest City Ratner more wary of the project. The could lead to further back-channel talks with operators of the Prudential Center in Newark, given that the Nets are steadily losing money.
In April, I wrote about the central arguments in the plaintiffs’ appeal, which argued that the Second Circuit Court of Appeals ignored an important argument.
The initial appeal noted, “The court of appeals did not address petitioners’ argument that the only way to harmonize this Court’s precedents was to allow pretext claims to proceed past the pleading stage in those rare circumstances where, as here, the traditional indicia of a legitimate taking decision are plainly absent—e.g., inter alia, where (1) a legislative body plays no role in determining public purpose, (2) the properties slated for condemnation are selected by the private beneficiary in the first instance, rather than as part of a comprehensive government-initiated plan, (3) no alternative development sites are ever considered (i.e., sites that would not require condemnation at all, or sites that would burden those who the developer spared when he drew an oddly shaped, non-contiguous takings map), (4) the sole beneficiary of the land transfer is known before the decision to condemn, (5) no competitive process for selecting the private beneficiary is employed, (6) only a single plan (the developer/beneficiary’s plan) is ever considered, (7) the public benefit justification is identified after the decision to condemn, and (8) the normal process for approving massive zoning variances and assessing public benefit (here, review by the local legislature, the New York City Council) is bypassed entirely.”
The amicus brief
The amicus brief from the Institute for Justice (IJ) which brought the Kelo case on behalf of Susette Kelo and other homeowners, argues, “the Court should grant certiorari to confirm the continued invalidity of takings made in bad faith or for pretextual reasons, and the importance of factual development in making those determinations.”
Or, as stated more colloqually in the IJ’s press release, “IJ's brief urges the Court to defend a citizen's right to have a judge examine whether a city's claim of ‘public use’ is actually public use or merely a pretext for transferring property from one private entity to another for the latter's benefit, as is the case in Brooklyn.”
The standard established in Kelo, the brief states, depends on three characteristics: a carefully considered development plan, a fully-developed factual record that indicated no reasons to suspect questionable purpose, and the fact that the plan was adopted before the identity of private beneficiaries was known. Since then, a number of states and localities saw “Kelo as a blank check to use eminent domain for private-to-private transfers,” one this Brooklyn case would exacerbate, the IJ argues.
While plaintiff Kelo lost in a 5-4 decision that upheld the use of eminent domain for economic development, the decision has been a lightning rod for IJ and ideological allies to argue for state restrictions on eminent domain. They have not been successful in New York. Interestingly enough, in Goldstein v. Pataki, the IJ is, along with the plaintiffs, not asking for Kelo to be overturned but to be clarified.
Standard of review
The IJ says that the Brooklyn case is simple. The plaintiffs said the government’s purpose is a pretext. The defendants said that was false. The standard of review, however, is that courts should draw “every reasonable inference in favor of a plaintiff,” the IJ brief states. That didn’t happen.
“Simply put, the question presented in the petition is whether the presence of some degree of public purpose serves to end the judicial inquiry in a Public Use claim or whether citizens are entitled to present evidence that the purported public purpose is merely a veneer cast over a broader scheme to convey a windfall on a private individual,” the brief states. A pretext, according to Black’s Law Dictionary, is a “false or weak reason,” not necessarily a wholly imaginary one, the brief notes.
The effect of Franco
There are not a lot of cases based on Kelo, but the plaintiffs and their allies have seized on a 2007 District of Columbia Court of Appeals case called Franco v. National Capital Revitalization Corporation. In Franco, the appeals court reversed the eminent domain decision and sent the case back to trial court..
In Brooklyn, however, “rather than deference, the Second Circuit has adopted a rule of abdication,” the IJ states. The question in Goldstein is not whether a court’s scrutiny should be deferential, the IJ says, it’s whether “a court may engage in any scrutiny in the first place.” Thus the Supreme Court should harmonize the two cases.
As I’ve written, none of the parties have cited the single most comprehensive explanation for the decision to choose Ratner’s plan, which suggests less an active effort to assist the developer—though of course that’s happened—but a lack of rigor in evaluating the plan. It was given by Andrew Alper, then president of the New York City Economic Development Corporation, at a 5/4/04 City Council hearing:
The developer came to us with what we thought was actually a very clever plan. It is not only bringing a sports team back to Brooklyn, but to do it in a way that provided dramatic economic development catalyst in terms of housing, retail, commercial jobs, construction jobs, permanent jobs.
So, they came to us, we did not come to them. And it is not really up to us then to go out and try to find a better deal. I think that would discourage developers from coming to us, if every time they came to us we went out and tried to shop their idea to somebody else. So we are actively shopping, but not for another sports arena franchise for Brooklyn.
Then again, sports teams are a very limited commodity, which means communities nationally are faced with take-it-or-leave-it deals.
The defense responds
The defendants include former Gov. George Pataki, Mayor Mike Bloomberg, and other officials, along with the developer, but Forest City Ratner defers to the ESDC's brief.
The defense brief emphasizes longstanding claims of blight: “The allegations in Petitioners’ complaint do not refute, and both courts below unequivocally found, that the Project will remove blight that has plagued more than half the footprint of the Project for at least four decades.”
“The Project will also accomplish multiple other, well-established public purposes: construction of a $120 million platform over the Vanderbilt Yard," the brief states, adding, " a new sports arena designed by renowned architect Frank Gehry containing a 10,000-square-foot public atrium"--the Urban Room would be publicly-accessible but not publicly operated, I suspect--"and pedestrian passageway to the subways; office buildings; 6,680 housing units (2,250 of which will be below-market rate); significant mass transit improvements, including a new state-of-the-art railyard... and eight acres of publicly accessible open space.”
“[E]ven if a pretext claim was theoretically cognizable in the face of multiple, concededly quintessential public uses, the speculative and conclusory allegations in Petitioners’complaint could not support a claim of pretext,” the brief states.
Note that the lawsuit addresses the project as approved, so it's unclear whether the court would get a chance to consider the fact that some of the promised benefits, such as the open space--all designated for Phase 2, for which there is no governmental deadline--might be severely delayed or nonexistent.
Eminent domain & blight
The brief notes that the power of eminent domain is one of the ESDC’s most important powers, given the difficulty of assembling “diversely-owned parcels necessary for large-scale projects.” It notes that New York's Eminent Domain Procedure Law (EDPL) establishes comprehensive procedures for extensive public review and input followed by expedited judicial review. (Note below that the plaintiffs have a very different view of the fairness of the process.)
The 22-acre AY footprint “has suffered from physical deterioration and relative economic inactivity for at least four decades,” the brief states, noting that the petitioners have never disputed that the 63% of the site—petitioners only admit about half—is blighted because it falls into the Atlantic Terminal Urban Renewal Area (ATURA). The blight study ESDC commissioned in early 2006, the ESDC brief says, confirmed that the blight extended beyond the ATURA into the zone where the plaintiffs own or occupy property (the Takings Area), and that “one or more blight characteristics were present on most lots within the Takings Area.”
An interesting footnote
The brief also asserts that the petition “contains numerous factual assertions that were shown to be false” by the record or by the state court in the environmental review case, or that were not properly preserved for consideration by the Supreme Court, including assertions of a deal between Forest City Ratner and Newswalk developer Shaya Boymelgreen to exclude his building, charges that Extell’s cash bid of $150 million was more valuable than Forest City Ratner’s $100 million, charges that the Hudson Yards RFP was superior to the Vanderbilt yard RFP, and that the displacement of area residents would offset the affordable housing promised.
Should the case move forward, the ESDC says, “Respondents reserve the right to present a more comprehensive rebuttal of these and other erroneous factual assertions.…”
Complaints or conspiracy
The ESDC argues that the plaintiffs charges are gripes rather than real evidence: “The ‘facts’ identified to support this conspiracy theory consisted, in essence, of complaints about the process and sequence by which the Project was first proposed and developed—a process and sequence that comported fully with the procedures enacted by the legislature directing ESDC to cooperate with—indeed, 'encourag[e] maximum participation by'—private entities. Not a single paragraph in the entire complaint alleged any fact demonstrating that the public Respondents had or could have had any reason to abdicate their professional and public responsibilities in order to collude for the sole purpose of enriching the private developer.”
(Note that “maximum participation” meant something very different when the law establishing the ESDC was passed in 1968; here's my look at the ESDC's circular logic.)
As the brief points out, first, Magistrate Judge Robert Levy recommended that the federal court should stay out of the case, leaving the decision to state courts. Judge Garaufis overruled Levy on that issue, but dismissed the case, concluding that the plaintiffs had failed to state a claim for relief.
The Second Circuit affirmed that, recognizing, as the defense brief states, that “the primary mechanism for enforcing the public-use requirement has been the accountability of political officials to the electorate, not the scrutiny of the federal courts,” and thus deferred to the ESDC as a legislatively-authorized agency.
Unanswered is how exactly the electorate could hold the ESDC accountable. (Here's some skepticism from affordable housing analyst David A. Smith.)
As did Garaufis, the appeals court found that the issue was not whether the project would bring no benefit, but a debate about the extent of the benefit. An examination of the pretext claim would require subjective inquiries, “fraught with conceptual and practical difficulties,” into the motivations of governmental officials, the court ruled.
Need for harmony
While in their appeal, the plaintiffs cited three cases under which pretext claims have been litigated, the ESDC says that “sparse and undeveloped case law” means the court should stay away--presumably until more cases present significant conflicts--and, anyway, there’s no real conflict among the cases.
While in Franco, the D.C. Court of Appeals did reverse a trial court’s dismissal of a pretext claim, it “did so under very different circumstances,” the defense argues, notably that the draft bill authorizing the condemnation “did not explain why the properties were ‘necessary’ or to what ‘public use’ they would be devoted.” Later, another bill was passed but relied on no public hearing or study to assert the properties were blighted.
Also, the brief notes that the appeals court rejected claims that it should overturn the decision because “the identities of the benefiting private parties were known before the taking was authorized by the legislature and that there is no comprehensive plan for redeveloping the area”—issues the plaintiffs in Brooklyn have raised, given that they were apparent guidelines from Kelo.
In Brooklyn, the defense points out, “the Petitioners’ allegations on their face concede multiple undisputed public purposes served by the Project. It is only the subjective motivation of officials that Petitioners seek to challenge as impure and pretextual. Other lower courts have refused to recognize a pretext claim in the face of much less support for valid public purposes than presented here.”
Courts are not supposed to second-guess the condemnor about the efficacy of the plan or the boundary of the development, according to the lower court decisions. The amicus brief, the petition notes, warns against a rule “that would limit the ability of plaintiffs to develop a actual record to support suppositions of illicit motive.” But that would require subjective inquiries “fraught with conceptual and practical difficulties,” as stated by the appeals court.
Local reforms and Burford
The defense also argues against Supreme Court review because reforms of eminent domain “are being vigorously debated and resolved in the political and judicial branches of state and local governments, where they are best resolved.”
That may be true, in general--"42 states have changed their eminent domain laws since Kelo was decided”--but is not true in New York, despite the introduction of at least 17 bills in the state legislature. (A New York State Bar Association task force has called for a reform commission.)
Still, concludes the defense, “Intervention by the Court at this time would risk curtailing the vibrant discussion of policy choices occurring at the state level.”
Finally, the petition suggests that federal courts should stay out and let the challenge proceed in state court, a decision recommended by Magistrate Judge Levy last year, based on a case known as Burford, but rejected by Garaufis and the appellate court.
Last word from the petitioners
In their reply brief, the petitioners argue that the Second Circuit’s decision was at odds with Franco and because the Court should resolve the tension between saying that the pretextual taking of property is illegitimate while “at the same time adhering to the principle that near absolute deference must be paid to legislative public use determinations.”
So, how should “a pretext-based Public Use Clause claim be evaluated given that condemnors can always posit a conceivable public benefit to justify a taking?” The petitioners note that, in the case of Atlantic Yards, blight was raised as a public purpose “nearly three years after the decision to seize petitioners’ homes” and that the blight study had been challenged “because it defined blight as the existence of ‘weeds’ or ‘underutilization.’”
Are the defendants right in claiming there’s no conflict with Franco? The plaintiffs say no, given that the justification of blight was raised much later. (In New York, however, the ESDC followed established state procedures, thin as they may be compared to some in other states.)
Fighting back on pretext
The plaintiffs get the final word on how courts might evaluate pretext: “Respondents do not explain how a court screening for pretext could do so on an ‘objective’ basis. Virtually all pretexts, after all, have some degree of ‘objective’ facial legitimacy. Otherwise, they would not be pretexts. As respondents would have it”—this came up during the oral argument last October before the appellate court—-it would not matter if petitioners produced a video of former Governor Pataki making a deal with his old law school friend and top political supporter, Bruce Ratner, to seize and transfer petitioners’ properties in exchange for Ratner’s fundraising support for Pataki’s presidential campaign. The tape would be irrelevant because, as an ‘objective’ matter, the pretext of ‘addressing blight’ would benefit the public.”
While the appellate court in Franco was hesitant to order the trial court to consider subjective intent because of “formidable barriers to discovering the motives and intentions of individual legislators,” nevertheless it did so, the plaintiffs point out.
Also, the legislative body in the District of Columbia enjoys privileges and immunities that “the ESDC, an unelected, quasi-governmental corporation,” should not have, the plaintiffs state, in another argument for intervention in the Brooklyn case.
The petitioners say that it's false for the defense to assert that the plaintiffs concede AY would provide numerous public benefits: “The complaint expressly avers that the public will not benefit. Acknowledging respondents’ contention is not the same as conceding its truth, or as the Second Circuit put it, ‘effectively’ acknowledging a public benefit.”
In one of the claims, that project would not create more jobs, the complaint is obviously out of line. But if the Supreme Court takes the plaintiffs' claims at face value, as they and the IJ said is the standard, then the plaintiffs will not have conceded benefits.
Pursuing eminent domain in New York State
The brief points out that, in New York, condemnors hold a distinct advantage over those in other states: “Had petitioners had the fortune to own homes and businesses in the District of Columbia, they, like Mr. Franco, would now be conducting civil discovery in advance of presenting their case to a fact finder. Indeed, if petitioners lived in any state but New York, the state condemnation process would afford them an opportunity to present evidence and cross-examine witnesses….Where property owners have successfully challenged the taking of their property in recent years, it has been done based on an adversarial fact-finding.”
In its brief, the IJ adds in a footnote, “It is worth noting that the Second Circuit encompasses both New York and Connecticut, two of the country’s worst offenders when it comes to the use of eminent domain for private-to-private transfers.”
In other words, if the Supreme Court, with its national focus, decides to pass on this case for whatever reason—including the argument that not enough years have passed for different interpretations of Kelo to clash—New York will remain a state where it’s unusually tough to challenge the use of eminent domain.
There's a very nostalgic moment in the defense brief. While listing the public benefits provided by the project, it states that a "new sports arena—home to a major-league professional sports team in Brooklyn for the first time since the move (heartbreaking for many residents) of the Brooklyn Dodgers in 1957—will be built on the Project site..."
Still, it's unlikely that those whose hearts were broken in 1957 define Brooklyn today, however much Borough-President-to-be Marty Markowitz, at 12, "cried like a baby."