The Louisiana Supreme Court heard oral arguments Monday over whether St. Bernard Parish port officials trampled on Louisiana's eminent-domain laws when they seized a privately run port operation along a mile of Mississippi River frontage in 2010.
The case, a new test of the government's power to wrest private property in Louisiana, surrounds the port's use of eminent-domain laws and $16 million in state funds to take the facility from Violet Dock Port, which had amassed riverfront land and developed five deepwater berths there over decades.
Violet Dock Port serviced U.S. Navy ships there and had recently renovated to accommodate bulk cargo operations. Now, the property is under port control, leased to a firm, Associated Terminals, that also runs publicly owned port facilities in Chalmette.
At stake, potentially, are tens of millions of dollars.
Violet's lead attorney, Randy Smith, told the seven Supreme Court justices that if they don't agree to overturn a split appeals court decision and return the property to Violet, they should force the port to pay a replacement value pegged at $41 million or more.
Smith argued that the plan from port officials all along was to swipe Violet's lucrative business at a bargain price and hand it to a competitor.
As evidence, he pointed to the U.S. Navy contract, which Violet lost and the port adopted.
"It was very clear their intention was to take over these docks, this property, and operate the same (type) of business and service the same Navy ships that Violet was doing," Smith said.
He portrayed the port's stated plans to expand the facility for bulk cargo operations as Violet's own business plan for the property.
State law says that "no business enterprise or any of its assets shall be taken for the purpose of operating that enterprise or halting competition with a government enterprise."
Smith said that's exactly what the public port did when it took the property after negotiations over a sale with Violet fell through. Smith likened it to a government entity eyeing a lucrative gas station, for instance, and taking it over.
"Once you start taking people's private property, where does it stop?" he asked. "This constitution has some express prohibitions on the exercise and the extraordinary power of eminent domain."
Violet's argument has drawn support from national groups such as the libertarian Institute for Justice and the Pacific Legal Foundation, a pro-property-rights group, as well as the Louisiana Association of Business and Industry.
But attorneys for the port have noted that Louisiana law specifically singles out ports and airports when it comes to the kind of "public purpose" that justifies eminent domain, citing the need "to facilitate the transport of goods or persons in domestic or international commerce."
James Garner, an attorney for the port, argued that the takeover of the facility was designed to meet that goal, and that Violet's purported plans to expand into bulk cargo were speculative at best.
In short, he said, the public port needed space to expand.
Justice John Weimer and Chief Justice Bernette Johnson both zeroed in on the question of the port's stated purpose in seizing the facility, noting that the port has since taken over the Navy business as well.
Weimer also quizzed Garner over Violet's claim that it was gearing up to do bulk cargo.
"Didn't they change how their facilities were arranged -- they added a dock and did those things in order to get into the cargo business?" Weimer asked.
"I would say no," Garner responded.
"Because you are the public entity, you have the right to take over a private entity that's in the same business?" Johnson asked.
"That's right, but I will say, they were not in the same business," Garner replied.
The case reached the Supreme Court following a 2-1 split decision by a panel of the 4th Circuit Court of Appeal.
There, Judges Roland Belsome and Terri Love agreed that 34th Judicial District Judge Jacques Sanborn acted appropriately in deciding the case in the port's favor and setting the price of the seized property at $16 million.
"Although the authority granted to the ports in Louisiana in the expropriation of private property is exceptionally broad, it is supported by the constitution and the statutes of the State," Belsome wrote.
But Judge Joy Cossich Lobrano issued a scathing dissent that described the port taking as "clearly unconstitutional."
She argued that the evidence shows that the St. Bernard port planned to have Associated Terminals operate Violet's facility in the same exact way its private operators had for eight to 10 years, while the port generated enough revenue to expand into bulk cargo.
"Should the majority's interpretation stand, a public port convinced that it can make better use of a private business enterprise's assets will be empowered to usurp that private business enterprise and fashion it into a revenue maker for the government," she wrote.