And They’re Off!

If it isn’t one thing, it’s another. No sooner did the ink dry on our celebration of the 25th anniversary of the erstwhile Baltimore Colts’ midnight departure to Indianapolis (How the Baltimore Colts Became the Indianapolis Colts, April 1, 2008), when those wonderful folks in Maryland have provided us with more material. It seems that horse racing isn’t what it used to be, and Magna Entertainment Corporation, the owner of the Preakness horse race has filed for bankruptcy, so it’s only natural that its assets, including not only Pimlico where the Preakness is run, but also the intellectual property in the Preakness name will have to be disposed off by the bankruptcy court. But the Marylanders are concerned that these iconic assets may thus fall into the hands of another horse racing promoter who may decide to run the Preakness in another state. Bummer. Evidently, though the Preakness hasn’t done much for Magna, it does attract many free-spending visitors to Maryland and is thus highly valued by the state, to say nothing of the PR and emotional attachment that tends to go with these things. So Maryland, understandably, wants to keep those visitors coming for the Preakness. Not only that, but there are some folks in Maryland, who would like to buy the Pimlico race track from the trustee in bankruptcy, tear it down and develop it into a shopping center or something like that, and that is not a happy prospect.

And so, the locals (who are evidently still smarting from the Colts’ long ago midnight departure for Indianapolis) have decided that they mustn’t let the rights to the Preakness and the right to the Pimlico name leave the state, and have come up with the brilliant idea that these assets should be taken by eminent domain. So would the State of Maryland go into the horse racing business? Of course not. It would only act to gain title to these properties, thus preventing Magna or its vendee from spiriting these horsy crown jewels out of the state, and make sure that whoever buys them stays put in Maryland. Pimlico would thus be sold or otherwise turned over to another race track operator who would presumably be committed to staying in Maryland. So the purpose of it all would be to prevent Magna or its vendee from leaving the state. If the company leaves the state, it would mean a loss for the general public and the horse racing (and betting) enthusiasts. With sports betting gaining a considerable amount of momentum, horse races, too, have made a place in this arena too, along with NFL and NBA. Although it is advised for racing and betting buffs to read up on sports betting tennessee, Maryland, etc, guides and articles, it would only be possible for them to place a bet if the horse racing company stays in the state!

Although, whether or not this sort of taking would comply with the Public Use constitutional limitation remains an open question. True enough, the California Supreme Court held back in 1981 that it could be a public use for the city of Oakland to condemn the Oakland Raiders’ NFL franchise to keep them from moving to Los Angeles, and that court decision constitutes a precedent of sorts, albeit one that is not binding on the courts of Maryland. On the other hand, that Oakland Raiders ruling was greeted with widespread ridicule, and eventually California courts backed down, though they saved face by denying Oakland the right to condemn the Raiders’ franchise on a different legal theory.

After the Kelo case, this controversy would be an interesting spectacle. On the one hand the U.S. Supreme Court has held that when it comes to interpreting the Fifth Amendment’s “public use” limitation on takings, anything goes and indeed, that “public use” doesn’t mean “public use,” but rather “public purpose.” But on the other hand, Kelo also made clear that the states are free to construe their own constitutions in ways that are more respectful of property owners’ rights. In fact, in the past decade, some half-dozen state supreme courts, give or take, have construed their own “public use” taking limitations in a more restrained fashion than the U.S. Supreme Court did in the Kelo case.

So what happens now? We are disinclined to assume the role of an Etruscan haruspex and predict the future. If nothing else, a haruspex had something to work with, to wit, the entrails of sacrificial sheep. But what do we have to aid our predictions? True enough, the Maryland supreme court (which those folks call the Court of Appeals) has been a reasonable tribunal as far as eminent domain law is concerned. Unlike in some other jurisdictions, members of that court do not stand up and salute when a condemnor walks into their courtroom – they have a good track record of impartiality.

And so, instead of speculating on Maryland’s judicial interpretation of the by now sorely mangled phrase “public use,” we propose to take a look at another obstacle to this proposed taking that has not received the judicial attention that it deserves.

One of the constitutionally protected freedoms is that Americans may freely travel from state to state. Back in the days of the Great Depression, California tried to stem the flow of poverty-stricken Oakies fleeing the Dust Bowl, and to keep them from entering California in search of work, but the Supreme Court made it clear that this was a constitutional no-no. That being the case, how can the state of Maryland forbid local property owners from traveling to another state, on pain of being penalized by the loss of their property? This doesn’t sound right to us.

So stay tuned and see how this one turns out. You may also want to do some field studies by going to Maryland and sampling some of their superb crabs. After all, if a haruspex could work with sheep’s entrails to ascertain the future, why can’t we do the same by using lump crab meat?

Update: reports that:

“The [Maryland] state Senate passed a bill from Gov. Martin O’Malley 32-14 yesterday to purchase or exercise eminent domain to acquire the Maryland assets of Magna, which declared bankruptcy in March. Those properties include Laurel Park in west county, the Bowie Race Course Training Center, Pimlico Race Course in Baltimore and all rights and events associated with the Preakness Stakes.”

Second update. The Maryland House of Delegates has now passed the bill authorizing condemnation of the Preakness, etc. by a vote of 93 to 43. And by the way, that “etc.” now also includes the Laurel Park race track and the Bowie Race Course Training Center, as well at the Woodlawn Vase, the Preakness trophy. The bill is now going to the governor for his signature.

Correction. It turns out that the part of the story about a developer wanting to raze Pimlico and build a shopping mall is not true. The New York Times reports that the developer in question, Carl Verstandig only wants to develop the excess land surrounding Pimlico. As the Times put it:

“Mr. Verstandig, . . . insisted that he had been misunderstood, and that he had never planned to raze Pimlico. He said he wanted only to develop excess land there, and had been talking with companies interested in running the track.” Theo Emery, NY Times, April 14, 2009, Bankruptcy Fuels Fear Over Preakness.

Third Update: The pertinent text of the new Maryland legislation (Chapter 3 of the 2009 Legislative Session) effective April 14, 2009. SB 1072 authorizes “the State to acquire by purchase or condemnation the private property rights relating to the Pimlico Race Course, the track known as Laurel Park, the Bowie Race Course Training Center, the name, copyrights, service marks, trademarks, trade names, contract rights, business entities, stocks and horse racing events that are associated with the Preakness Stakes and its trophy, the Woodlawn Vase, and certain other private property.” Wonder what that “certain other property” could be.

For our published comment on this case, see Gideon Kanner, Maryland’s Bad Track Record, Los Angeles Daily Journal, April 17, 2009, at p. 6. It also discusses the implications of the constitutional right to travel, and its application to this controversy in which Maryland wishes to prevent owners of the Preakness from moving out of state, or would permitt them to do so on condition that they surrender their property before crossing the state line.

Fourth Update. A Washington Post Editorial (Maryland Ponies Up, April 21, 2009) has come out against the Maryland eminent domain legislation authorizing the condemnation of the Preakness-Pimlico assets, calling it “pointless and possibly unhelpful.”