A winning hand for the Fifth Amendment

September 11, 2015 | By MARK MILLER

Last month, the Constitution won a hand in an Atlantic City Court. That’s a victory for all Americans.

The New Jersey Casino Reinvestment Development Authority (CRDA), a state agency, sought to take the Atlantic City family home of Charlie Birnbaum. Birnbaum’s family had owned the home for decades, but that didn’t matter to state bureaucrats. The CRDA admitted it wanted the property to benefit privately-owned casinos, saying that: “The state has recognized the economic engine is the casinos, and Atlantic City is vital to the success of the State of New Jersey. That’s the public purpose here.”

The Fifth Amendment to the Constitution says in part:  “nor shall private property be taken for public use, without just compensation.”  Taking Birnbaum’s private property to benefit a privately owned casino does not equate to a public use, and the CRDA’s contention that doing so serves a “public purpose” is both misleading and untrue.  Misleading because the Constitution does not allow property to be taken for public purpose, but rather public use—and untrue, since much of the public will never set foot in a privately-owned casino and thus never use the casino.  Instead of honoring the Constitution, the CRDA sought to transfer wealth from the little guy, Mr. Birnbaum, to the rich guy—the owners of the casinos.

Two decades ago, the CRDA played this same game in Atlantic City and lost.  In that case, the CRDA went after Vera Coking’s home to benefit Donald Trump and Trump Plaza casino.  The New Jersey courts said no dice and told the CRDA that taking a person’s private property to benefit a privately-owned casino does not amount to taking property for public use.
Birnbaum1Last year, despite that earlier loss (apparently, continuing to play a game after losing your shirt is not just a vice of casino customers), the state decided to try and take Birnbaum’s property. Initially, Judge Julio Mendez ruled that the CRDA could take Birnbaum’s property without a concrete, legislatively-approved plan in place for the property’s public use.

But last month, Birnbaum and his attorneys from the Institute for Justice, a public interest law firm, won a victory for all Americans. They convinced Judge Mendez to reconsider his earlier decision.

Looking at the case with “a fresh set of eyes,” Judge Mendez held that the government’s “awesome power” to take private property must comply with the Constitution. He concluded that the CRDA’s nebulous idea to remake Atlantic City by taking Birnbaum’s property without a concrete plan for how to use the property for the public, did not amount to sufficient protection for the private property rights we all possess. The government cannot take your property for public use unless it both spells out what public use it intends for the property, and a plan put forth to actually show that the government will follow through with the plan it proposed.

The judge did not mention the infamous Kelo v. City of New London decision of the United States Supreme Court in 2005, but he could have. In that case, the city of New London, Connecticut, authorized the New London Development Corporation, a private body, to take an entire neighborhood for private development. Susette Kelo, who lived in that neighborhood, fought the taking of her family property all the way to the Supreme Court—and lost. The Court held that economic development amounted to a “public use” under the Fifth Amendment and that the government could transfer private property to another private property owner via its eminent domain power.

Ten years later, the Kelo neighborhood taken for “economic development” is, in fact, a barren field. No development ever took place—family homes lost for no reason. The plans the government had failed to ever materialize.

Sound familiar?  It may have to Judge Mendez, who carefully deliberated on the Birnbaum case for nine months before changing his mind.  Ultimately, his ruling recognized that economic development can be a public use, according to the Supreme Court’s flawed Kelo decision. But, the government’s plan for economic use must actually appear likely to occur. Here, the government’s plan did not.

The Supreme Court got Kelo wrong.  Kudos to Judge Mendez for getting this case right.