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Saturday, June 25, 2005
The Kelo Dog That Didn't Bark: The Inadequacy of "Just" Compensation
Kelo | Posted by Marty Lederman at 04:12 PM
Thanks so much to Nicole, Eric and David for their very thoughful responses. I think there is a great deal of truth in much of what they write and, in fact, Nicole and Eric have each identified matters about which I was going to post separately, so . . . here goes with the first one.
The common public reaction to this cases has been: "How can that be constitutional? It's outright theft!" The oddity of this analogy, of course, is (as David Barron notes in an Op-Ed tomorrow) that (i) thieves do not ordinarily seek and receive permission from the city council to burgle from homeowners and (ii) the Constitution does not require the state to provide "just compensation" when one is victimized by a thief. My focus here is on the latter distinction: You'd hardly know it from popular and blogospheric accounts that New London is prepared to provide compensation for the value of the homes. Why doesn't that fact have much salience?
Nicole is right on the money in suggesting that the visceral public reaction is a reflection of the fact that we're talking about homes and community here. If the only properties at issue in the case had been the five that were being "held for investment properties," the public reaction would have been considerably muted. But what got the blood boiling was that New London is condemning the home in which Wilhelmina Dery has lived for her entire 87 years -- and what's worse, they're doing so at the bidding of a faceless, mega-corporation, in the hopes that Pfizer's presence will lead to the influx of homeowners (residents/taxpayers) of a very different social and economic stripe.
Justice Thomas thus was onto something very important in his dissent when he wrote that "no compensation is possible for the subjective value of these lands to the individuals displaced and the indignity inflicted by uprooting them from their homes." Nicole and Tom have both written thoughfully on this problem (71 G.W.L. Rev. at 945-49, 952-53, and 72 Corn. L. Rev. at 82-85, respectively). And the canonical treatments continue to include both Peggy Radin's work to which Nicole referred and Frank Michelman's landmark 1967 article (80 Harv. L. Rev. at 1255), in which he wrote:
"How do you translate into dollars the shock of changing neighborhoods and the damnable inconvenience of moving, or appraise the educational damage inflicted by midstream changes in schools? All these problems are multiplied a hundred or a thousandfold where large scale programs scatter large numbers of families. The imponderable and idiosyncratic nature of the losses involved, and the interminable wrangling over amounts which would result from imposing a legal requirement of 'just compensation,' furnish a classic instance in which compensation claims are defeated largely because of sheer impenetrability. Yet the violent unfairness of many such operations is manifest. The social gains hoped for from some urban redevelopment programs, while plausible enough to override any 'public purpose' objection, nevertheless depend on a still controversial conception. Easily identified, relatively small numbers of people are being handed a distinctly disproportionate and frequently excruciating share of the cost of whatever social gain is involved. . . . There is no palpable reciprocity; the sufferers rarely double as special gainers, and they must submit to the spectacle of private land developers (or new residents) moving in for what looks like a publicly subsidized benefit. Those dislocated are likely to be members of a social class which comes increasingly to be identified as a faction—'the urban poor.' Yet their influence and organization is not so great, certainly less than their numbers might indicate; and so the sense of having bargained for compensatory concessions probably brings little satisfaction. Altogether, the spectacle of uncompensated dislocations under these circumstances is an oppressive one."
But why should this problem be addressed by distorting the "public use" analysis? After all, if the transfer to Pfizer is a "public use" for purposes of the investment properties whose owners do not suffer from the same sorts of injuries, how can the "public use" calculus be different for Susette Kelo? Isn't the better solution to reassess the way in which "just compensation" is calculated?
Although the Court once hinted that alternative standards of just compensation might be appropriate when application of the fair-market-value test “would result in manifest injustice,” United States v. Commodities Trading Corp., 339 U.S. 121, 123 (1950), in recent years the Court has resisted the notion that the state is obliged to compensate for nonpecuniary losses. See Brown, 538 U.S. at 236-37 (it is “clear that, given ‘the liability of all property to condemnation for the common good,’ an owner’s nonpecuniary losses attributable to ‘his unique need for property or idiosyncratic attachment to it, like loss due to an exercise of the police power, is properly treated as part of the burden of common citizenship’”) (quoting Kimball Laundry Co. v. United States, 338 U.S. 1, 5 (1949)).
At oral argument, however, both Justice Kennedy (pp. 22-23) and Justice Breyer (pp. 47-50) expressed great concern about the adequacy of "just compensation" in the case of homowners, which led many (myself included) to predict that perhaps we'd see a separate cocnurring opinion presaging a possible reconsideration of what compensation is "just" in cases such as Kelo and Poletown.
But there's nothing of the sort in the opinions. Any ideas why not? Perhaps the reason for the Court's reluctance to start down the road of compensation for subjective or idiosyncratic losses is that, in Professor Merrill's words, a “principle of full indemnification would pose difficult valuation problems, for subjective value is inherently difficult to measure.” (Recall Michelman: "The imponderable and idiosyncratic nature of the losses involved, and the interminable wrangling over amounts which would result from imposing a legal requirement of 'just compensation,' furnish a classic instance in which compensation claims are defeated largely because of sheer impenetrability.")
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Comments
I'm not so sure the public reaction would have been muted if the properties were investment holdings. I can't point to anything definitive, but I think the public reaction is coming from a deeper place. For many, there's no confidence in the local politicians to do what's "just" -- for them, it's all about money and influence. I suspect for many, the courts represented the last bastion of justice, at least an attempt at justice. Kelo, on the surface, to a lay person, doesn't even appear just. Forget your finer legal points, to a lay person it just seems wrong. So, for the highest court in the land to have abandoned -- or at least appeared to have abandoned -- any pretense of justice, particularly over something so important as one's home, sends a real shockwave through people at a very, very visceral level. At least that's my take.
Posted by: Don Bagwell at June 25, 2005 08:48 PM
You've come close to discussing a missing point. Humans, left in their "natural" state, become territorial. There is rarely any discussion of proper compensation for either disruption of the territorial instinct or the social constructs for it that you mention.
On the other hand, I have little patience for "investors" whose sole goal is to disrupt development in order to obtain vastly excessive payments for property. I've seen enough of those, people who have purchased a mineral rights remainder that covers five inches by two hundred yards of a ski resort and who want five million dollars for it.
Too bad they didn't find a more complete middle way.
BTW, I think the poster above misses the point when you discuss theft and compensation.
Posted by: Stephen M (Ethesis) at June 25, 2005 09:46 PM
The oddity of this analogy, of course, is (as David Barron notes in an Op-Ed tomorrow) that (i) thieves do not ordinarily seek and receive permission from the city council to burgle from homeowners
Well, from a libertarian perspective, it seems as if thieves generally do in fact do that. Only the penny-ante thieves neglect that step.
Posted by: David Nieporent at June 25, 2005 10:21 PM
....Hmmm, how does one reliably calculate 'just compensation' for a government taking of real estate ?
"Market Value" of specific property would seem at least minimally fair.
However, once the government announces its intent to take a property -- the "market' for that property no longer exists .... since it may be only be 'transferred' to one 'buyer' with that buyer dictating the terms. In economics it's called monopsony.
Competition is what constitutes a 'market'.
There is no 'market price' after a 'takings' announcement.
Some government officials in some situations might be generous in compensating the private owner, but others might well be frugal. The private owner has virtually no negotiation leverage to get what he considers a fair price for his property.
It all seems to end up as a very subjective 'political' decision.
Posted by: mariton at June 27, 2005 08:24 AM
Now matter how one defines just compensation, it ought to allow the compensated to buy a comparable property in the region. The New London Day had a graphic on Friday which included the offers (when known) to the various property owners. Most were offered around $125K per property, though one woman was only offered $88K.
As someone who lives in New London County, I can safely say that there is NO WAY these people will be able to find anything approaching similar properties in the area for that sum. The cheapest house listed on the web at the Eastern Connecticut Multiple Listings Site right now in New London is $135K, the next least expensive is at $160K; there is virtually nothing for sale in the entire eastern half of the state for less than $150K.
Posted by: LibraryGryffon at June 27, 2005 12:17 PM