Supreme Court Declines to Hear Unclaimed Property Case, But Fires a Shot Across the Bow of “Cash-strapped States”

by admin

Today, the Supreme Court of the United States issued an order declining to hear the case of Taylor v. Yee.  In Taylor, the United States Court of Appeals upheld a federal court’s dismissal of a case challenging the methods used by California to notify owners that there property is about to be, or has been, escheated to the state. Specifically, the Taylor plaintiffs alleged that California violated the constitutional rights of unclaimed property owners by failing to, among other things, access databases of other California government agencies for information relating to the whereabouts of unclaimed property owners.

The Supreme Court’s review of lower court decisions is mostly discretionary, so the decision not to review a particular case is not an approval by the Supreme Court of the decision reached below.  In fact, that seems to be especially the case here, as Justices Alito and Thomas agreed with the decision to deny review the Ninth Circuit’s decision in Taylor, but warned that the “constitutionality of the current state of escheat laws is a question that may merit review in a future case.”

In making that determination, the Justices noted that the combination of “shortened escheat periods with minimal notification procedures” raised “important due process concerns.”  Among the notable points of the concurrence:

  • a critique that some states’ notification procedures “rely on old-fashioned methods that are unlikely to be effective.”  (citing Delaware’s newspaper publication statute); and
  • affirmation of the view that the Constitution requires states to provide “preescheat notice” before property is taken by the state; and
  • a recognition that “[a]s advances in technology make it easier and easier to identify and locate property owners, many States appear to be doing less and less to meet their constitutional obligation to provide adequate notice.”

While the states may have avoided review of their escheat practices in Taylor, the Alito/Thomas concurrence suggests that they may want to take a long hard look at their notification procedures before the Supreme Court does so.

*Editor’s Note: The author of this post was one of the co-authors of an amicus brief urging the Supreme Court to review the Taylor case.