Property Rights Cases are Not "Pro-Business" vs. "Anti-Business" Cases:

One of my longstanding peeves is that property rights and economic regulation cases are often depicted as pitting "pro-business" interests against an "anti-business" or pro-consumer camp. Rarely does this frame accurately reflect the real issues at stake.

This recent New York Times article discussing Sonia Sotomayor's rulings in property rights and regulatory cases is just one of many examples of this fallacy. The article analyzes the decisions from the standpoint of trying to determine whether she falls into "a pro- or anti-business camp." In the process, author John Schwartz cites Sotomayor's ruling against property rights in the Didden case as an example of an anti-business ruling, while claiming that her pro-property rights decision in Krimstock v. Kelly cuts the other way.

The pro-business vs. anti-business approach to these cases makes little sense. In Didden, there were business interests on both sides. As I explained in this post, one businessman - politically connected developer Gregory Wasser - used the the threat of condemnation to try to force two other businessmen to pay him $800,000 or give him a 50% stake in their business. When they refused, the local government used the power of eminent domain to transfer their land to Wasser, as the latter demanded. Judge Sotomayor and her Second Circuit panel ruled that this taking was for a permissible "public use" under the Takings Clause of the Fifth Amendment. Since business interests were arrayed on both sides, describing the decision as "pro-business" or "anti-business" is misleading. Rather, the decision involved a clash between property rights and the power of government, which is sometimes exercised on behalf of locally powerful business interests such as Wasser against politically weaker landowners (some of whom are businesses themselves).

The pro-business vs. anti-business frame is even less relevant to Krimstock than Didden. Sotomayor's opinion in Krimstock struck down a New York City law that allowed the government to seize cars belonging to certain criminal defendants and hold them for years at a time without giving the owners any opportunity whatsoever to contest the seizures. I don't see any way in which Sotomayor's decision was somehow "pro-business," except in the trivial sense that some of the car owners might also have been businesspeople. Rather, this case too pitted the power of government against property owners, many of whom might have been poor or politically weak.

More generally, court decisions protecting property rights against government should not be viewed as "pro-business" because the Didden pattern of local government using eminent domain to benefit politically influential business interests is actually quite common. One of the most notorious examples is the 1981 Poletown case, where the City of Detroit used eminent domain to expel some 4000 people from their homes so that the land could be transferred to General Motors. The Supreme Court's famous decision in Kelo v. City of New London is another example, since those condemnations were in large part instigated by the powerful Pfizer Corporation, which expected to derive profit from them. For reasons I discuss in this article, eminent domain is often used to transfer to take the property of the politically weak for the benefit of the powerful (often including influential businesses).

But it would also be a mistake to view pro-property rights decisions as "anti-business." After all, many of the victimized property owners are themselves businesspeople, as was true in Didden, Poletown, Kelo, and many other cases. Small businesses are among the most common targets of Kelo-style "economic development" takings.

What is true for property rights cases is also true for many regulatory decisions, which also often pit different business interests against each other rather than an undifferentiated business class interest against other sectors of society.

I do not mean to be too critical of theTimes piece. To the contrary, I think Schwartz should be commended for making a genuine effort to consult experts from across the political spectrum; and of course I'm grateful that he cited the writings of two Volokh Conspirators, including myself. I also think he did a generally good job of summarizing a large number of cases in a short space. Unfortunately, the article exemplifies the ways in which even a skilled and fair reporter can fall into the error of using this misleading framework for analyzing property rights decisions.

UPDATE: I would like to briefly note two other minor, but unfortunate errors in the Times article. First, the article describes Richard Epstein, perhaps the leading libertarian legal scholar in the country, as a "conservative." Confusing libertarians with conservatives is a common mistake, but still a significant one, especially in an era of Bush-style "big government" conservatism when libertarians and many conservatives often diverge on the kinds of economic issues the article focuses on. Second, the author writes that Sotomayor's Didden ruling "followed" the Supreme Court's decision in Kelo. This is true to an extent, but it ignores the fact that Didden went even farther than Kelo in undermining property rights by allowing government to condemn property even in a situation where the stated rationale for the taking was a blatant "pretext" for the true purpose of benefiting a private party, a scenario the Kelo majority described as unconstitutional. It is possible, however, that Schwartz merely meant to say that Didden "followed" Kelo in the sense that it came later chronologically.