Suit Over CA’s Unclaimed Property Law Wraps Up

SAN FRANCISCO (CN) - California's state controller need not face claims of transferring unclaimed property to the state prematurely, the 9th Circuit ruled Wednesday.

Chris Taylor led the would-be class action, which accused controller Betty Yeeof unconstitutionally applying California's Unclaimed Property Law, which provides for the conditional transfer to the state of unclaimed property such as savings accounts or shares of stock.

Taylor and the other plaintiffs with assets in California claimed that Yee violates due-process rights by not providing adequate notice to the potential owners of certain property before transferring it to the state.

The case has been bouncing around the courts since 2001, and the 9th Circuit noted Wednesday that it already produced amendments to the law's notice procedures.

One key change was that potential owners are now notified before the state transfers the unclaimed property, not after, according to the ruling.

California now mails a notice to potential owners' homes and publishes another notice in a generally circulated newspaper deemed most likely to reach the owners, the court said.

Those newspaper notices direct potential owners to a searchable website where they can perform a search to determine whether they may own any unclaimed property.

Taylor and the others still claimed, however, that the controller could take additional steps to locate the owners prior to transfer.

They wanted the court to have the controller "consult 'all' publicly available databases," pointing to a section of the Unclaimed Property Law mandating that "the Controller shall establish and conduct a notification program designed to inform owners about the possible existence of unclaimed property received pursuant to [the law]." (Emphasis in original.)

The trial court shot Taylor down, however, and the 9th Circuit affirmed Wednesday.

Writing for a three-judge panel, Judge Paul Huck noted simply that the class's "interpretation is incorrect."

The section in question does not apply to notification procedures that precede the property's transfer, since the additional information available under that section is not available until after the controller receives the property, according to the 24-page opinion.

California's current pre-transfer procedures are sufficient measures to locate potential owners, the court found.

"Appellants' suggested requirement that the Controller utilize additional governmental databases may, of course, lead to more claims being filed, but it exceeds the minimum due process requirements," Huck wrote.

The panel also affirmed dismissal of the claims that "related companies" have failed to carry out the law's notice procedures.

Affirming dismissal of the action for failure to state a claim, the appellate panel deciding that the matter at hand is "not ripe."

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