Case: Goldstein v. Pataki, 488 F. Supp. 2d 254 (E.D.N.Y. 6/6/07)

The One Sentence Summary: District court in Brooklyn rejected property owners’ claim that condemnation of property for mixed-use development project consisting of sports arena for New Jersey Nets basketball franchise, housing units, offices, retail space, and a hotel violated public use requirement of eminent domain law.

What They Were Fighting About: Plaintiffs, owners and renters of real estate in Brooklyn on land intended for use in the Atlantic Yards Arena and Development Project, brought lawsuit against New York state’s urban development agency, developer Forest City Ratner Companies, city development agency, as well as business, city, and state officials. After the state’s urban development agency published its findings and determination to proceed with condemnation to acquire plaintiffs’ properties, plaintiffs sought judicial review before the federal district court and alleged constitutional challenges to the condemnation and violation of New York’s Eminent Domain Procedure Law (EDPL). Defendants moved to dismiss all of plaintiffs’ claims on grounds including that plaintiffs had failed to state a claim.

Court Holdings: In granting motion to dismiss, district court held:

  • The takings at issue did not violate the “public use” requirement of the Fifth Amendment’s Takings Clause.
  • Applying Supreme Court precedent including Kelo v. City of New London, 545 U.S. 469 (2005), district court concluded that a taking fails the public use requirement only if the uses offered to justify it are “palpably without reasonable foundation” such as (1) where sole purpose of taking is to transfer property to a private party, or (2) where asserted purpose of taking is a mere pretext for an actual purpose to bestow a private benefit.
  • District court found that neither category of impermissible “public use” justification applied to the Atlantic Yards Arena and Development Project. First, plaintiffs’ allegations disputed only the extent of the public benefit to be derived from taking their properties, not the existence of any public benefit. Second, plaintiffs’ allegations that the stated purposes of the project were dubious were not sufficient to plead “mere pretext” to bestow a private benefit. Thus, plaintiffs’ allegations did not suffice to state a claim for violation of the “public use” requirement of the Fifth Amendment’s Takings Clause.
  • The court also held that the takings did not violate equal protection or due process. Having dismissed the three federal constitutional claims over which it had original jurisdiction, the court then declined to exercise supplemental jurisdiction over the state law claim alleging a violation of the EDPL, dismissing that claim without prejudice to its being refiled in state court.
  • The district court’s decision is currently on appeal before the Second Circuit.