 Welcome to Free Thoughts from Libertarianism.org and the Cato Institute. I'm Trevor Burrus, a research fellow at the Cato Institute Center for Constitutional Studies. I'm Aaron Ross Powell, editor of Libertarianism.org and a research fellow here at the Cato Institute. Our guest today is Scott Bullock, senior attorney at the Institute for Justice. Approximately 10 years ago, I think in February. February 22nd, I think, is if we remember correctly. I think that might be right. You argued, I didn't look it up, so it wasn't just stuck in my mind. You argued a case in front of the Supreme Court called Kilo vs. City of New London, which has become kind of famous. As Supreme Court cases go, it's become relatively famous. Can you tell us what that case was about? Well, the Kilo case was about an attempt by a group of neighbors in the Fort Trumbull neighborhood of New London, Connecticut, to try to save their homes. Their homes were sought by the City of New London and a private development corporation that wanted to take them, bulldoze them and turn their former neighborhood into a high-end mixed-use development where there was going to be a five-star hotel, luxury condominiums, office space, originally a health club, and other private development projects. When a group of seven of the property owners who owned 15 parcels of property refused to sell to the city, the city invoked its eminent domain power to take those properties to hand over to a private developer in the name of economic development. And eminent domain is, for our listeners, not familiar with that. Sure, eminent domain is a long-standing power of the government. It's been called, from the earliest days of America, the despotic power of government because it is one of the most serious and threatening things a government can do to its citizens. Short of taking your life or maybe throwing you in jail to take away your home, your business, your land is about as potentially draconian as it gets. So in the U.S. Constitution and virtually every other state constitution, the framers were so concerned about abuse of that power that they put important limitations on it. And that's in the Fifth Amendment to the U.S. Constitution that says, nor shall private property be taken for public use without just compensation, placing two important limits on the eminent domain power. If the government takes your property, they have to pay you for it. And there's a whole dispute about what constitutes just compensation. But the more fundamental limitation is that the government can take your property, can only take your property if it is for a public use. And most people know what that is. That's a road, a bridge, a public building, sometimes public utilities, something that either the public owns or that everybody has a right to use. Members of the public have a right to use. But over the past 50 or 60 years at the Supreme Court and in many states, that clause, that public use requirement has been watered down and it led to the Kilo case where public use was transformed in the Berman case in the 1950s and in the 1980s into public purpose. And then eventually in the Kilo decision from 2005, the Supreme Court said, well, let's read that to mean public benefit. And what are the public benefits? Well, it was supposedly going to be more tax revenue and more jobs created by the New Development Project in New London. I guess what's wrong with that? In the sense that, I mean, broadly speaking, taking some property from some people in order to benefit other people is what, I mean, is like more or less everything that our government does, right? I mean, that's, you know, healthcare subsidies. Or taking some money from some people to give it to others. We do it all the time. So what's wrong with taking someone's house to turn into tax dollars? Right. Well, the most important thing, I mean, all those you could question as well. And that might even be a broader discussion as to what constitutional limits there are on federal and state governments beyond the public use provision. But this is an absolutely an essential part of the Constitution. It's in the text of the Constitution that says that property can only be taken for public use, which almost by its very definition disqualifies what was really going on here, which was private use. That is what happened in the Kilo cases that they were taking land from one private owner and turning it over to another private owner in the hope that that new private owner would produce more tax revenue. And that's just textually contrary to the Constitution. And it is something too that it's a view of eminent domain without really any sort of limitation whatsoever. And that was the real problem with the Kilo decision is any piece of property would produce more tax revenue and more jobs if it were a business. Because all the government has to do, as we can talk about what happened in the aftermath of the Kilo case, is project that this new project will create X number of jobs and X amount of tax revenue. And somebody could always come up with a higher and better use of your property than you were making it. And that was the real danger in the Kilo decision. It's still the real danger in the Kilo decision. And that's what we were asking the Supreme Court to do was to at least place some outer limits on the eminent domain power. That seems particularly dangerous for poor people. Well, that's one of the big problems with eminent domain. And there are so many, but one of the big ones is that this unquestionably falls hardest on the poor and minority groups as well. That's been historically true and it's true up to this day as well. I mean, a domain is typically targeted at neighborhoods that are long-standing neighborhoods. There might be a lot of elderly folks there, poor individuals. And cities want to do it because they have the lure of more tax dollars. Developers love it because they don't have to sit down and negotiate one-on-one with property owners the way, thankfully, most land deals are done in this country. So it really turned into this unholy alliance between big developers, big businesses like big box retail stores and local governments desperate for tax revenue. And it falls hardest to this day on the poorest individuals in society. When we hear about these kinds of just on their face absurd actions by government like we're going to steal someone's house and give it to this rich guy. I'm always curious about the motivations or the thinking of the public officials involved. I mean, it's easy to picture them as like sitting in a dark smoke-filled room with these business leaders and like saying, yes, this is vile but we're going to do it because we want to scratch your back and then you'll give me money or a job when I get out of office. But is that really how it looks or do they think that they're actually doing something in the public good? It's a great question. And one of the problems with having this in court and allowing these types of takings to take place is that it's very difficult to get into the minds of the folks that are making these decisions. Typically in court you don't have the smoking gun moment, the Jack Nicholson versus Tom Cruise moment in the courtroom where you have a breakdown and you get a city official to say, I did it all for Pfizer. I did it all for Costco. That typically doesn't happen. That's what you dream about at night. Exactly. You can dream about it but usually it doesn't happen that way. And so what you're left with is scant evidence about what they're doing. Oftentimes you have city officials that like what happened in New London molding their development plans exactly to what a private company wanted. But I think for most city officials there's mixed motivations as a way a lot of people behave. That they doing the bidding of a certain company, but they ultimately think well yes it's going to be good for them but it will also be good for our city. And that was the approach I think in New London they thought what is good for Pfizer is good for New London. So you had a lot of mixed motivations trying to and trying to separate that out is very difficult to do. But I'll make one other point about this though too is that what I think was one of the real problems and frankly tragedies in the majority's opinion is they had a very pristine view of how municipal decision making is done. Where they think that well and Justice Stevenson, his majority opinion talked a lot about the planning process that the city went through. And they had studies and they listened to everybody and they got approvals from various agencies step by step and he thought well this is really impressive. And then you had somebody like Justice O'Connor who wrote the dissenting opinion, a very passionate opinion and what I would call a very real world opinion as well. And she had been an elected official. Exactly right. Because that's something where debate is good to have political officials or elected officials on the Supreme Court. I think in something like this it was a real benefit certainly to her opinion being a state official she knows how these deals go down. Usually they're decided before the public hearings and most of the kind of approvals that they go through are dog and pony shows because all the very important people got together in town and wired it from the get-go. And I think she saw that in a way that many members of the Supreme Court who I don't even know when the last time they ever attended a city council meeting did not really understand. So going back as you kind of mentioned the story a little bit but the interesting thing on these cases especially from you as a litigator side and also what the Institute for Justice does generally is how did you find Suzette Kilo? What happened in the beginning when you first got your hands dirty when did you bring it up to the court? When did you start thinking maybe we could bring the Supreme Court? Did that ever hit you or is it just always a surprise kind of? Well, absolutely. I mean from the very beginning of our cases we designed them to try to maximize the ability for us and for the clients to win the case but then also to set a long-term precedent that will benefit other property owners, other Americans that find themselves in similar situations. So we're always looking for those cases that present those opportunities for a cutting-edge legal issue, sympathetic clients, outrageous facts and quite frankly evil villains then as well and there was no shortage of those in the New London case or in any eminent domain case that we've ever been involved in. Were you guys keeping an eye out too on the public use part of the fifth amendment? Absolutely. I mean we got involved in this in the mid-90s and our goal as a public interest organization was try to change the law in this area. We thought it was an essential part of the Constitution. It was something that was clearly being ignored and courts for a long time were just rubber stamping whatever governments wanted to do in this area and so we set out with a long-term mission of fundamentally changing the law and changing the climate of public opinion to make these sorts of takings unacceptable so we were looking for cases that would further that agenda and also challenging the outer limits of eminent domain. We also, one of the areas that we were looking at is so-called blight cases and that stems from a lot of the cases in the 1950s where governments declared certain areas blighted and used that as an excuse for taking property and we wanted to challenge that but then governments were also just taking land because they said like in New London we need more tax revenue, more jobs, more economic growth that's good enough justification. That's what they were doing in New London and that's one of the reasons why we picked it. It came to our attention by one of the local activists in the area writing me a letter and I read it and said this sounds outrageous and I called them up, gathered more information and then I traveled up to New London and met the folks there and brought in other colleagues at the Institute for Justice in particular Dana Berliner who was a co-counsel with me on this case and we decided that this would make a fantastic vehicle for both challenging the use of eminent domain for economic development purposes and also trying to save these people's homes. And there's even more to Suzette Kilo's story about her house and how she bought it and her life beforehand. Yeah, I mean it was a really an amazing story of people who were really tied to their property and it was for different reasons. Up the street from Suzette Kilo was the dairy family. They had lived in New London in Fort Trumbull since 1905. Will Amina Dairy lived in one of the homes. She was born in that home in 1918 had never lived anywhere else and she was in her 80s when the case started. She wanted to die in the home that she had lived in. She got married in the 1940s. Her husband moved in there with her. Her son and his family lived right next door. They owned two smaller homes on this nice little smaller parcel of land that other family members lived in and sometimes they would rent them out. So their ties to the community were very deep and their ties to this property were extremely deep and that meant so much to them. Suzette Kilo was in a different boat. She had actually a pretty rough life growing up. She was very poor. She grew up in Maine. She got pregnant when she was 16 years old. She got married shortly after that. She had and raised five children before she was 40 and she was trapped in a marriage that was problematic and so about around the age of 40 she decided that I'm going to start out on my own and she went to school. She became an emergency medical technician that eventually went to school to become a nurse and she said, I want to have a place on my own. I've never owned a piece of property in my entire life and so she found this little place when she was out on an ambulance run in Fort Trumbull that was run down. The house was, it hadn't been lived in for I think over a year but she looked at it, looked at the view of the Thames River out onto the Long Island Sound and said, this is going to be mine and that it was just a great demonstration of the importance of property rights to a broad range of people, especially those who have never owned anything really in their entire lives and a year after she had bought it, fixed it up, painted it, her favorite color of pink or she would call it salmon and moved in. There was a knock on the door from the real estate agent telling her that they wanted her house and if she didn't sell, they were going to use him in a domain against him. When you started looking into, so the first thing was to, your standard file, file a suit or file a claim and then ask for discoveries or looking into the documents about who was behind this and there's a little bit of Pfizer involvement and all of these different things to just keep getting deeper and deeper and deeper for you. Yeah, I mean it was, we did a deep dive into the documents and we were able to demonstrate in court too that the, I think as Justice Thomas put it in his dissent in Kilo that the development plan was suspiciously amenable to the Pfizer corporation and what they wanted in their development plan as well. They told the city would like to have a five-star luxury hotel for our employees and guests would like to have private office space, would like to have a health club, would like to have condominiums for scientists that might be working in our facility for six months or a year or something like that and lo and behold, the development plan had a luxury hotel, private office space, condominiums and so forth. But again, it's hard to separate out what was their true motivation for doing this and again it was probably a combination of wanting to of course benefit Pfizer which was seen as their economic savior and thinking and maybe even believing or at least certainly justifying to themselves that this was going to be for the good of all the citizens of New London. You've told a story of a very sympathetic woman who went through hardships and this gross unfairness was done to her by the city but you're an attorney whose job is to advocate for your client so we can have this and of course you're going to present her sympathetically but is it possible that said we could look at it like here's a woman who if she were just willing to move would create all of this by doing that she create all this good for the community around her. I mean these hotels and health centers and facilities this is enormous amount of jobs this could like completely turn around a town you know give it a bright future and here she is she just she won't I mean they're going to compensate her like why won't she just move. It's the holdout problem. Right yeah well and this is something that you know of course the other side had tried to make that point but they could not make it with a straight face and I've never seen a case really in the economic development context where you can make this argument in a serious sort of way. The interesting thing about the about Suzette Kilo and her other neighbors is that they weren't NIMBY people. You know they were not really their goal to say we don't want anything new in our neighborhood we want it to be exactly the same way. They said listen we want to be a part of this. You know is the Fort Trumbull neighborhood has it had better times? Absolutely. Is the city of New London suffering economically? Sure it is. They knew that but they wanted to really be a part of this too. You know they said listen you have a lot of other land I mean this was a 90 acre project and the properties amounted to a little bit more than 1.5 acres of property and they were confined to two separate areas so you had these vast swathes of property and guess what they wanted to do a mixed use development in this neighborhood too. They wanted to have homes there at least condominiums residential and offices and that sort of thing. So they were saying listen you know let us keep what we have it so important to us and let us be a part of any economic revitalization that occurs. I mean one of the outrageous things about they didn't get too much attention during the case and it was an issue in the lower courts but not at the Supreme Court is that the city and the New London Development Corporation said everybody has to go the whole neighborhood has to be cleaned out. Well there happened to be a very popular private men's social club located in the Fort Trumbull neighborhood called the Italian Dramatic Club and this is a gathering spot for prominent people in New London and political leaders every time they came to New London and Connecticut and elsewhere they would always meet at the dramatic club and when those powers that be found out that the Italian Dramatic Club was going to be torn down they said well this is outrageous we have to save the dramatic club and lo and behold the New London Development Corporation found a way to save the Italian Dramatic Club as a part of the overall development plan even though the plan did not call at all for a social club certainly not an exclusive private men's only social club as well because Matt Derry whose family was Italian and lived in the neighborhood for years to quip that the approach of the city was that the Italian Dramatic Club can stay just all the Italians have to leave. Now the dramatic club though that's the key here because that is the smoke filled room where they planned it all I imagine. No question Ace, well they certainly I'm convinced that they made the plans to save the club in the smoke filled dramatic club. So how did the lower courts rule on this? Well lower courts it was very divided that we got a I think it was about 150 page decision from the trial judge in New London we had a seven day trial in New London there was a it was really a split the baby type of decision there were two parcels that I had mentioned where the homes were located and he said the one where four homes were located could be taken because he agreed that economic development was a public use but where Susette Kiehl's home was and the Derry homes and actually most of the 11 the homes were he said it was unconstitutional to take them because the city had no idea what it was going to do with this parcel they had no development plans really in place they said it was going to be it could be parking it could be retail it could be something known as park support which nobody really even knew what that really was except for the fact that there was a park located across the street from it and they said his ruling was you can't take people's homes without at least having some idea as to what is going to happen with it how can you determine whether the takings are necessary whether it's for a public use so that was a split decision that went up to the Connecticut Supreme Court the Connecticut Supreme Court in a four to three decision reversed will reversed in against the property owners and on all counts and so they said it was a public use and then reverse the ruling of the judge with regards to where Susette Kiehl's home was saying well who cares if they don't have any specific plans for this and that was actually part of you had to file in state court first this is a little bit legal mumbo jumbo maybe but it's an important point something where we're trying to fight because you had to deal with the exhaustion of in state court with the Williamson County precedent exactly it was just because they had filed it Connecticut's a little odd because they they had filed them in the domain actions in state court and then you you have to file a lawsuit in Connecticut in state court to raise the the constitutional issues and others and so yeah a vast majority of of eminent domain decisions come from the state courts we did raise federal constitutional arguments in addition to state constitutional arguments and that's what allowed us then to get up to jump out up to the Supreme Court then as well the Connecticut Supreme Court that the dissenters in that case wrote a very a very prescient dissent where they complained about the lack of detail or plans in the area and even calling their approach a field of dreams approach where it wasn't if you build something people will come but if you tear everything down then you hope that people and then you hope that people will come to to new London and that issue wasn't really the Supreme Court really didn't care about that but as you know you might mention as we can discuss what happened in the wake of the kilo decision that dissent really as I said was prophetic in what it had it's currently empty I mean at last I checked I haven't checked recently there is no new development in the Fort Trumbull neighborhood whatsoever now 10 years after the Supreme Court's decision was handed down 15 years since the development plan was approved 17 years since the project was first discussed there is no development in Fort Trumbull the place is a barren field it is sometimes used as a dump for storm debris when serious storms move through there there is a nice fair colony of feral cats that live in Fort Trumbull they benefit yeah they have new homes I for themselves I and the all the homes are gone and the city has absolutely nothing to show for this no new tax revenue has been produced and Pfizer who was supposed to be the savior of new London was the linchpin of this whole project in I believe it was 2009 announced and the Pfizer facility was next door to Fort Trumbull it wasn't actually the takings were not for the Pfizer facility itself it was next door in 2009 Pfizer announced that it was closing its new London facility and leaving new London just as its tax abatements were expiring now if I recall correctly was it one of the majority in the Connecticut Supreme Court decision who later apologized to his in person when he when he met her that's right and that was that that did occur and he said that you know if I would have known then what I know now and this was several years after the opinion and the outrage and the backlash and the lack of development projects then he said he would have ruled in a different way too late unfortunately for the folks in new London and the Fort Trumbull neighborhood but the great legacy that they've left is that the fact that they waged this battle that they stood up for their rights and in the process have made a very serious transformation of the law in on eminent domain where you've had very serious changes to the law because of the backlash and outrage that occurred as a result of the kilo decision and the fight that they so that was a great legacy for the Fort Trumbull property owners to have even though they themselves lost their homes home owners in many states are much better protected as a result of their fight the Supreme Court ultimately ruled against that kilo and I'm wondering did in the oral argument did you know then that it was lost first of all did you go up on appeal were you losing when you went up or did you want we lost four to three at the Connecticut Supreme Court but the issue was framed very well that the dissent had talked about how the Supreme Court did not really address this issue and it really framed a lot of state Supreme Courts had come to differing conclusions on it so it was the time was right for it there was growing public awareness and concern about this a year ago to the day that the Supreme Court agreed to accept kilo there was this big piece on 60 minutes that Mike Wallace did was kind of an expose of eminent domain abuse and that I think really raised for the first time the issue to national level that got so many people's attention and then we got up to the Supreme Court question I I thought it was going to be 5-4 but I just did not know which way it was going to go because the questions were all over the map there were two justices that weren't there Justice Rehnquist was sick at the time and so he wasn't there and Justice Stevens ironically enough who wrote the opinion had missed his flight from Florida coming back to the Supreme Court after the break right before President's Day to attend the argument so I didn't know where he was going to stand on this issue and there was a lot of justices that seemed like Justice Breyer for instance looking for some type of middle ground between saying that there was no economic development could never be a public use but maybe it could not be a public use in certain instances so I thought maybe it could be a very fractured decision where it would be hard to even find what the rule of law might be on this because it would be divided depending on how far the court was willing to go so I thought it was going to be very close 5-4 I was of course hoping for 5-4 in favor of Suzette and her neighbors but it went exactly the other way. The one frustrating thing I think the most frustrating thing for us and certainly for me in arguing the case is that Justice Kennedy just did not seem very sympathetic to our arguments and that proved to be true because he ultimately was the fifth vote on the court and I just didn't understand why that was the case. He had been a pretty strong advocate for property rights he had written in a case, a forfeiture case actually in the early 1990s that individual freedom finds tangible expression in property rights and he just did not seem to be very sympathetic and that was surprising and of course very concerning to us. And the day that the decision came out obviously first a ton of disappointment but then an immediate new plan to or it had already been discussed I'm sure to we have new our quiver is not empty we have new things to do. Absolutely and you know that's one of the great things about public interest law is that if you lose you don't just say well we lost we can move on to something else we were determined to take this loss and turn it in to a victory in the other areas in which we both litigate in state courts and also through public awareness and grassroots activism and legislative efforts as well so you're right we put together a plan within a weeks time we devoted significant resources both with our people and financially to it and we were going to take what was genuine outrage about this decision and turn it in to something productive as well and that was something that you know when I read especially justice O'Connor's dissent and how fiery it was and how passionate it was it wasn't a you know very measure justice O'Connor dissent it was clear that she was upset about this and she wrote in a way that was going to get a lot of people's attention and you know I would be walking down the street you know and I'd hear people talking about it you know the night of the decision asked Arnold Schwarzenegger about it and people just thought how could this possibly take place how could the Supreme Court just the polling on it was off the charts it didn't matter you know what political party you were in or where you lived in the country we thought this was a real opportunity to try to change the law Do you see anything going forward of that precedent possibly being shaky is IJ pursuing pursuing anything making it might be a little shaky now possibly you know the backlash was significant it wasn't there were certain problems with the legislation you know now if you count both state Supreme Court decisions and legislative and constitutional changes 47 states have changed their law in some ways and about half of those states their excellent protections they basically shut down eminent domain abuse not just the kilo style takings but a lot of states went even further the blight laws that we were talking about which is even more than we would have gotten out of a positive decision in kilo which was fantastic the other about half of them though they were watered down versions of it developers and legislators were able to take out some of the strongest provisions they're better than what they were before not in every state but in most instances some of them are vague and haven't been interpreted so you don't know what they really mean I'm concerned that 10 years out from now even though we've seen these sweeping changes we've been very encouraged by that that you're going to see pressure to change back the law and we're already starting to see that we have some cases now that we're involved that we're looking into because memories fade and you know the commercial real estate market starting to come back now too that was another thing that factored into the decline is that commercial real estate market had tanked and so there wasn't much need for these types of takings that comes back we can the laws and cities and developers once again talking about the need to do this so 10 years after kilo IJ is now dealing with another form of the government taking people's property although I think that they've been dealing with the whole time this is Aaron's transition question but it's working it's okay and it happens to be one that's in the news a lot right now which is civil asset forfeiture yes that was something that you know we've been involved in certainly for a few years but our intent really was to take this issue sort of like what we did with eminent domain we really do with all of our issues but especially I think the analogy is very appropriate for the eminent domain context when we first got involved in this in the mid 1990s very few people had heard about this most people were not aware that the government could take your home and give it to Costco or take a business and give it to a condominium developer and we started a long-term project to try to change the law raise awareness about this and get the public up to speed on this and get courts more involved in this and that's exactly what we wanted to do with civil forfeiture as well to take an issue that most people probably even fewer people had heard about this power than they had heard about eminent domain some people have this idea oh yeah eminent domain is that when they take your property to build a road most people have no idea that under civil forfeiture laws the government can take your property and are going to buy a margarita right exactly and they can take your property regardless of whether you have been convicted or even charged with a crime and then law enforcement gets to keep that property to buy better equipment go to law enforcement conventions buy football tickets or even in certain instances to buy margarita machines so I'm going to ask you to step back here and do a little role playing with me because it's so absurd it is so absurd the civil asset forfeiture stuff but I can imagine a list being like it can't be that simple so now you're a cop or you're an advocate on the other side and you're explaining how important civil asset forfeiture so what are these arguments of like why they need to be doing this sure well I mean they're going to say it's used to stop crime it helps us catch the bad guys that it's necessary to fight the war on drugs or fight the war against financial fraud or environmental crimes or any number of things for it is that not true do you think well it is of course effective in some ways for law enforcement because it's very easy for them to obtain property what they leave out of that equation is the fact that in America you cannot have an ends justifies the means approach to law enforcement or really any type of government activity I would argue that civil forfeiture in fact is not effective even in stopping those crimes because when you have civil forfeiture laws the way they are now where law enforcement gets to keep all or most of their proceeds you see very perverse law enforcement decisions for instance say if you're a proponent of the drug war and you think the government should be fighting the war on drugs stopping the dealing of drugs what you'll find out is under civil forfeiture laws there are certain highways in the country that are known as drug corridors and there's a lot of places especially interstates that are long and crisscross the country you'll find that law enforcement does stings on these highways well studies have shown that on these highways there's one side of the highways called the drug side of the highway the other is the money side of the highway so the drugs come in typically on the east coast the cars are load or on the west coast and they're distributed out there they're loaded up and they're then distributed throughout the country and then when the dealers come back they are coming back through there and that's the money side of the highway they have all of their cash well guess what side of the highway the cops overwhelmingly favor when doing sting operations oh let me think think about that if you want to role play a lot of the place that looked at this 90% of them on the money side of the highway and so even if you're concerned that you think that the government should be fighting the drug war it shows that what they're really what these laws are really about is revenue raising and trying to get money so you're coming back in on the money side of the highway you're driving in a car you just get pulled over you don't really know why let's just say you have $10,000 in your car because you're going to give your dad any of these down payment on a new thing and so you how can they possibly take this what is the procedure here a typical question that most people encounter now if they're pulled over and especially if you meet a certain profile you know it could be a rental car it could be out of state car it might be how you were driving or sometimes even though they're not supposed to do it ethnicity or race some of the questions they'll ask you most people have encountered it do you know why I pulled you over do you have your driver's license and then a new question that's being asked much more frequently are you carrying any large amounts of cash on you today how is that an appropriate question in America who cares whether you got your carrying a large amount of cash on you but this has become standard fare for law enforcement to do especially when you're pulled over on an interstate and the reason for that is because they are looking for cash and under civil forfeiture laws they can seize the currency regardless of whether they have found any sort of illegal activity in your car so they could seize your currency even if you have no drugs on you if you don't have any warrants out for your arrest if you have no other problems whatsoever they could say this is a suspiciously a large amount of cash we think you might be dealing drugs we think you might be laundering money so therefore we're going to seize it and under civil forfeiture laws the burden then switches to you to try to get your property back and you wage a civil litigation with the government where the name of the case is something like United States of America versus $6,400 in U.S. current so it's quite literally true that the presumption of innocence usually we have in these cases flips away from you and now you have to prove your innocence as soon as the officer is suspicious absolutely it's probable cause to seize the currency and then the government merely has to show preponderance by preponderance of the evidence some connection between the property and illegal activity and then which is a very light burden to meet and then the burden switches to the property owner in 44 states and at the federal government under the federal standard the burden then switches to you to prove your innocence rather than for the government to prove your guilt but really who's driving around with large sums of money in their car unless it's drugs or money laundering I mean Trevor mentioned you're going to give your dad a down payment so you could draw $10,000 but who's going to hand him a bag of cash if it's legitimate you'll give him a check or a money order or something like that but the pull point the lots of cash just screams like well I mean that's true in some instances of course you know some people that are up to no good deal in cash but there's a lot of legitimate reasons that people have cash some people that's the way they've always done it some people get insurance payments some people purchase certain things and if you're buying from somebody you know online they don't want to deal with checks they want cash that's a way of doing it it's often a cultural thing to where certain cultures still love dealing in cash and it's very common for them to do so and it's also again getting back with what happens with them in a domain is it something that poor people do and people who don't have bank accounts and people who can't get bank accounts and they oftentimes will have cash on them too for legitimate reasons but that's you know doesn't stop the government and law enforcement from from taking it you know the thing is there is an alternative to this and this is what law enforcement doesn't want to talk about is they go say well you know then we can take people's property we'll let people benefit from their illegal activity but there is something called criminal forfeiture and criminal forfeiture is tied to someone being convicted of a crime and the government showing that the property was the result of that illegal activity demonstrating in a court the same way you have to deprive somebody of their liberty you should have to do that with depriving somebody of their property as well now is that more burdensome for the government of course that's what freedom means that's why we have a constitution is the government has to meet certain standards so in all those instances there's the prospect of criminal forfeiture that would allow the government still to deprive people from laundering money or dealing drugs or some other nefarious purpose and also like something like financial crimes as well you know obviously you know somebody's defrauded investors out of millions of dollars and then bought properties with all that money yeah you don't want the person to you know then be able to still keep their property if you show that this is because they stole money from people bring him it off yeah bring him it off you know somebody forfeiture not civil forfeiture but civil forfeiture is preferred because there's money available and the burden is so much lighter one of the weirder things about the civil asset forfeiture is the fact that the cops get to keep the money which seems I mean it would be one thing if it was you know they seize your drugs um then they have to put those in a locker somewhere destroy them they don't turn around and resell them or use them themselves or whatever um when do they get to spend this money yeah um because it's you know you could make a case for they take it they think it's suspicious they're going to hold on for a while and if there isn't a case against you they give it back um but do they is there some timeline there can they spend it immediately do they have to hold it for a certain amount of time yeah they typically can't spend it immediately they can use it often times if it's a car or something they can use they can actually hold on to it and often times use it and these would be the cards you see this say it's usually after it's been I mean one of the numerous problems with civil forfeiture is the fact that because it's a civil proceeding the government can just file a claim against the give you a notice and then file a forfeit your action not against you but against the property and if you don't come in and defend yourself in civil litigation with the government then the government can win by default so if you miss the deadline or you don't know how to do this or you can't afford a lawyer to fight it or you think this is just too much I don't want to deal with this the government can just get a default judgment against you and then the property automatically becomes theirs and then they can spend it under the broad rubric of law enforcement so typically they have to wait some period of time before they're able to spend it but then they can spend it as they see fit and that was really the fundamental transformation of forfeiture law this happened in the mid 1980s at the federal level a lot of states followed suit with that before 1984 and went into effect in 1985 but before 1984 the federal level forfeiture revenue went into the treasuries general fund that was changed in the mid 1980s to give a financial incentive directly to law enforcement they said we get to keep everything that we sees and another quiz guess what happened as soon as that law was changed did civil forfeiture revenue go up or did it go down it not only went up but it skyrocketed in use and it has exponentially increased every year since that occurred and that's why they're doing this it's not about fighting crime it's about raising money I can imagine a police officer with this incentive who is an unsavory person especially if it's like $10,000 $10,000 is about a little lawyer would probably cost you to it's right on the edge of whether that's worth fighting so they say we're going to take $10,000 we're going to keep it there's of course this video that went around of the police officers talking about the musical gear did you see this one who gets the drum because they raided a music studio and they found some marijuana and said who gets the drum set I think Bob's kid wants a new guitar literally that level of piracy essentially our point in this we like to emphasize over and over again this is not a case of a couple of rogue cops or prosecutors that are doing this this is a problem with the system itself it's about the incentives you know every economist will tell you as I'm sure you've interviewed numerous that incentives matter and that's true for no matter who you are and if you give people the wrong incentives it's not surprising that you're going to see law enforcement behavior skew in the way that's going to favor what opportunities do we have to make money rather than thinking about how are we going to fairly enforce the law today and and let's think about which cases should crime should be should be a priority so that's the inevitable result the behavior that you're talking about in that video and several others of giving people the exact wrong incentives and it's just incredible going back and looking when these laws were passed everybody thought that this was a great idea this would be wonderful you know let the drug dealers and others will have to pay you know they have to pay for their own enforcement and nobody thought about very few people it seems like thought about the unintended consequences of doing this but we've seen it play out now over a 30 year period and now you had another case where the incentives were interesting in the last couple years they got some news too about a motel that was interestingly found free and clear and had a the case is this is an idea for what they're called the United States vs. 434 Main Street, Tuxbury, Massachusetts can you tell us a little bit what that case is? Sure, well that was a case that just summarized everything that is wrong with civil forfeiture laws it was a case filed against the property rather than the property owner and it was a case that was brought about because a DEA agent was looking for forfeiture opportunities online and he saw Is there a clearing house for these? How do you possibly do this? He was looking online at crime reports and news stories and that sort of thing and he saw news and read reports of the motel Caswell in Tuxbury, Massachusetts which is a budget motel it's been in the Caswell family that's who the owners of the property were although they were just vener veners in the case Russ Caswell and his family it had been in the Caswell family since the 1950s Russ bought it from his father in the early 1980s and his family has run it and shockingly enough at a budget motel there was occasionally drug activity occurred at the motel in addition to fights and drunkenness but of course that happens at budget places these very crimes also occur at the Ritz-Carlton at the Four Seasons and other types of accommodations as well but they certainly occur and probably more frequently at a budget place like the motel Caswell there was no allegation whatsoever that Mr. Caswell or his family was involved in any of these crimes the record showed that Mr. Caswell did what he could to try to put a stop to it when the police asked him to cooperate with them he always said including the cops saying hey we think somebody's dealing drugs out of one of the rooms at the motel we'd like to do some surveillance and Russ said sure why don't you just take a room for free next door to that room to do so so this was kind of his level of involvement in this but under civil forfeiture laws it did not matter it was the property was involved in illegal activity so the federal government teamed up with the local police department the US Attorney's Office did so in Boston and Russ stood to lose his entire motel because of the actions of independent third parties his guests who he had no control over whatsoever and so then that led to a showdown in federal court in Boston are there limits to I mean so this case you won but before that were there limits to like the size of the property I'm wondering cause like this in this case you can steal a whole hotel because one room was used for drugs so if I owned like thousands of acres of farmland and some guy trekked across it to sell drugs to someone else could they come along and take all my farm well they could certainly make that argument and there have been cases a couple things that has happened and one of the good things that we were able to establish in the Caswell case is that the law was changed back in 2000 at the federal level to add language it said there had to be a substantial connection between the illegal activity in the property so sort of this like you were talking about fortuitous uses of of property that should not be a substantial connection we were able to get good law established on that in the Caswell cases courts have generally been pretty good on that although some courts have not been so good and that needs to be that needs to be reinforced also thankfully the supreme court but only in a five to four decision has said that the excessive fines clause of the eighth amendment applies to civil forfeiture and it's a multi-factor test that they use to try to determine that so you're not supposed to have situations where you know you could lose your boat because there was pot residue in your in your ashtray but those are hotly contested cases there's a huge amount of law surrounding what might be considered an excessive amount of forfeiture and is the reason they haven't gone I mean like you could I'm imagining it would be quite lucrative for a police department if they could somehow seize one of the major Vegas hotels that's worth more than this little motel lawyers that haven't done that they don't do it is and that's they typically favor I mean a lot of these little forfeitures add up and and you were saying to look with ten thousand dollars you take six thousand dollars you're right a lawyer's not going to crack open a book for under ten thousand dollars and people realize they have to either settle and a lot of forfeiture cases are in fact settled and that's what the way most if you make a fuss and you go to the government and you get a lawyer involved and pay the lawyer to do it the oftentimes the prosecutors are right you know let's stop fighting about this we took ten thousand I will keep five great deal to you you know it's outrageous you haven't done anything wrong but you have to take it because you know you're going to quickly exceed the value of the property and that's one of the you know clearly every budget motel has these problems we were able to show in the case of the motel six right up the street from the motel Caswell and Toogsbury had identical problems at some different times even worse problems in the motel Caswell the parking lots of big box retail stores also are tens of criminal activity especially low level drug dealing they don't go after Walmart they don't go after motel six they don't go after the Fairfield Inn the reason for that is because they have to deal then with the big corporate law firms oftentimes commercial properties are heavily mortgage so you can have all these people in court saying we didn't do anything wrong we want a piece of this you know if you sell it we want our cut of it the motel Caswell was a family owned mortgage free business that was about a million and a half dollars on the open market was a big piece of property it was commercially zoned so it was worth a lot of money and that's why the cops and the government wanted it and unlike even in eminent domain cases where at least the property owners get some compensation it's rarely just compensation you get nothing so if Ross and his family would have lost this case he would have been left with absolutely nothing except a big legal bill and that was his retirement that's how most small businesses are they retire they sell the property and that's their pension well if if part of the reason that the cops don't go after bigger players to seize their properties because they're afraid those people are willing to take it to court and then they would lose the cops would lose then what does winning cases like this one accomplish if you still because you still are going to even if the court say yes they're not allowed to do this and then they do it you're still going to have to use the courts to say no you this was actually a violation of what we've said it's a no I mean it gives property owners weapons that that they have you know and it established precedence and this is the Caswell case is a great precedent for property owners to use and they have used it it's been cited in several other cases and certainly some property owners can fight it one change in the law that occurred in 2000 at the federal level is that you can now at least get attorneys fees if you're successful in fighting a forfeiture so that's that was a great change in the law that at least incentivizes people to do it but you're right you know even with great precedent other changes have to be made and that's why we're working to change the law in a much more comprehensive way not just through litigation which is essential but also through public awareness and activism and then ultimately legislative change then as well and that's what we're doing in civil forfeiture right now we started an initiative in 2010 to fight these laws to raise public awareness of this to do of course the cutting edge litigation we've issued several studies that document the problems with civil forfeiture Kato's also done great work in showing the very real issues with civil forfeiture and they've been doing that for for a number of years and even in the last six to seven months we've seen this great wave of awareness and outrage building about civil forfeiture which is leading hopefully to changes both in the behavior of law enforcement which we've seen even in our cases with where they've been backing down and returning property that they've unjustly that they've unjustly taken and hopefully that will lead once again to really fundamental changes in the law and just very recently we saw attorney general Holder make some announcements about reforming this what did what is he changing right well that was something that was a result I think of all the public pressure that's been building about this and no small part by by instant for justice because your your Philadelphia case for example there's been a lot of pressure a lot of pressure we've been doing that we have a class action in Philadelphia we've been doing several cases against against the federal government we've been working closely with reporters and they've done great work there was a whole series in the Washington Post document especially highway seizures of of currency and other sorts of property that led to serious concern and pushback from also legislators and the like there was also it's gotten into popular culture and there was a great piece that probably you guys saw with John Oliver which it did you know a basically a 15 20 minute rant against civil forfeiture that's now gotten I think the last time I checked close to four million views on on YouTube again raising awareness of this one of these things where people hear about they say how could this possibly exist how could they do this and so that's been been fantastic sort of holder fix it no he did not fix it not I mean and there was some unfortunately some news reports that have said all you know civil forfeiture is basically ended or at least a certain type of civil forfeiture that's been ended now he did take and we have to give him some credit for for curtailing for the first time on his own you know for law enforcement agency to curtail its own powers is pretty unusual and so what he did was that he addressed a certain problem in the law called adoption and that is when basically a local police might pull somebody over sees a certain amount of currency and then because they'd rather have the feds do it because it's easier for them or they want to bypass potentially state laws that might give greater protections for property owners or might not allow the money to go back to the court the cops they will give it to the federal government will adopt that sounds great you know sounds very pleasant adopt a forfeiture and continue on and the federal government keeps 20% 80% goes back to state local officials so that was a good change but unfortunately that only addresses a certain problem and we don't quite know the figures yet but exact figures with it but there was an exception in the law and the in the holder policy that allowed for the creation and the ability to still do these types of seizures under joint state and local task forces so as long as the feds in the states were working together then they could still continue to engage in these types of seizures and that is a big loophole and one that has to be closed now the Justice Department has said this is not the first and this is not the last thing that they're going to be doing this is just the first thing they're going to be doing so hopefully there will be further steps for it but it also and what our concern is is that it not be used as an excuse for Congress and other legislative officials to say oh problem solved we don't have to do anything about this they desperately have to do something about that and hopefully that will that will continue and and we'll see more fundamental changes the law so this has been a interesting sort of tour between two parts of a dangerous to property rights including my elegant transition including that elegant transition are you optimistic going forward you know I am given what we've been we're seeing even in as little as the last six months you know we've seen great changes in the law in eminent domain and that's been wonderful to see I but as Jefferson once said and as I'm sure about all of your listeners are aware of eternal vigilance is the price and that you cannot just say well it looks like this problem solved we can we can move on and and you know stop watching this you have to stay on this because these can be very fragile gains if if you're not out there always making sure that constitutional rights are protected with what's happening in civil forfeiture it's been very encouraging to see the movement on in the momentum building now it's a question of what's going to change I think you're seeing courts more willing to look at these seizures in the same way that courts after years of neglect started looking more carefully at eminent domain takings and you're seeing the public being concerned about this legislators now seeing that public pressure said we've got to start taking a look at this one encouraging thing too about this is that it seems to unite people across ideological divisions and you're seeing republicans democrats certainly libertarians that are on board with with doing this but it might be an opportunity to put together a true bipartisan effort that would actually be used to curtail government rather than to curtail liberty so so that's been very encouraging to the challenge of course is what we also faced on eminent domain we face here which is a very powerful and very organized opposition to this as well law enforcement knows legislators very well, legislators are very afraid to be on the wrong side of law enforcement in political debates and once you especially start talking about taking away funds you're going to get a lot of pushback on this too so that's something that I don't think the battle has not been fully engaged yet on that but the progress has been encouraging and we've just got to keep the momentum going on this thanks for listening if you have any questions or comments about today's episode you can find us on twitter at freethoughtspod that's freethoughtspod freethoughts is a project of libertarianism.org and the Kato Institute and is produced by Evan Banks to learn more you can find us on the web at www.libertarianism.org