Garza v. Woods

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

JESSICA GARZA, individually and No. 24-1064

on behalf of all persons similarly

D.C. No.

situated; KEVIN TERRELL,

2:22-cv-01310-

JJT

Plaintiffs - Appellants,

v.

OPINION

ROB WOODS, in his individual and

official capacities as Director of

Arizona Department of Revenue;

WILLIAM NAGEL, in his official

capacity as Unclaimed Property

Administrator of Arizona Department

of Revenue,

Defendants - Appellees.

Appeal from the United States District Court

for the District of Arizona

John Joseph Tuchi, District Judge, Presiding

Argued and Submitted February 5, 2025

San Francisco, California

Filed August 25, 2025

2 GARZA V. WOODS

Before: M. Margaret McKeown, Danielle J. Forrest, and

Gabriel P. Sanchez, Circuit Judges.

Opinion by Judge Forrest

SUMMARY *

Standing / Due Process

The panel affirmed in part and reversed in part the

district court’s dismissal of plaintiffs’ action alleging that the

Director of the Arizona Department of Revenue

(Department) and the Department’s Unclaimed Property

Administrator unlawfully took possession of plaintiffs’

unclaimed funds.

Plaintiffs assert that the Department possesses several

checks belonging to them issued by various

businesses. Under Arizona’s Unclaimed Property Act

(UPA), the Department may take “custody” of property that

is presumed abandoned. Arizona is required to operate a

website listing unclaimed property in its possession, but it is

not required to provide actual notice to apparent owners that

it is in possession of their property. Plaintiffs contend that

Arizona’s possession of their property is an unlawful taking,

in violation of the Fifth and Fourteenth Amendments, and

that they were deprived of their property without due process

of law, in violation of the Fourteenth Amendment.

*

This summary constitutes no part of the opinion of the court. It has

been prepared by court staff for the convenience of the reader.

GARZA V. WOODS 3

The panel held that plaintiffs had Article III standing—a

challenge raised for the first time on appeal—because they

sufficiently alleged that they have a legal interest in checks

that are being held without their consent and were deprived

of due process or just compensation. Sovereign immunity

did not protect defendants because plaintiffs sought

injunctive relief and alleged that the Department’s actions

concerning their property were unconstitutional.

On the merits, the panel held that plaintiffs’ takings

claim failed as a matter of law because where unclaimed

property is held in trust by the state, the property has not been

taken. However, plaintiffs stated a viable due process claim

because they plausibly alleged a property interest in the

unclaimed property and under Taylor v. Westly, 488 F.3d

1197 (9th Cir. 2007), they plausibly alleged that they were

deprived of that interest without receiving adequate

notice. Because plaintiffs’ due process claim survived

defendants’ motion to dismiss, the panel reversed, in part,

the district court’s dismissal and remanded for further

proceedings.

COUNSEL

Richard M. Paul III (argued), Laura C. Fellows, and David

W. Bodenheimer, Paul LLP, Kansas City, Missouri; Elliot

C. Stratton, Amy Sells, and William M. Fischbach III,

Tiffany & Bosco PA, Phoenix, Arizona; Christopher Ross

and Jonathan Greiner, Greiner & Associates PLLC, San

Antonio, Texas; for Plaintiffs-Appellants.

Hannah H. Porter (argued), Kevin E. O'Malley, and Mark A.

Fuller, Gallagher & Kennedy PA, Phoenix, Arizona; Scot G.

4 GARZA V. WOODS

Teasdale, Tax Unit Chief, Office of the Arizona Attorney

General, Phoenix, Arizona; for Defendants-Appellees.

Emily A. Ward, Fennemore Craig PC, Phoenix, Arizona, for

Amicus Curiae National Association of Unclaimed Property

Administrators.

OPINION

FORREST, Circuit Judge:

Every state has a law governing what to do with property

held by third parties that the owner has not claimed. This

case concerns the constitutionality of Arizona’s Unclaimed

Property Act (UPA). Plaintiffs Jessica Garza and Kevin

Terrell had unclaimed funds they were owed by various

businesses. They allege that Arizona unlawfully took

possession of their funds because the UPA does not provide

for constitutionally sufficient notice to property owners.

Plaintiffs sued the Director of the Arizona Department of

Revenue (Department)—the agency that manages the

unclaimed-property program—and the Department’s

Unclaimed Property Administrator, seeking the return of

their property, a declaration that the UPA is facially

unconstitutional, and an injunction preventing Defendants

from taking further unlawful action under the UPA, among

other things.

The district court dismissed this case, concluding that

Defendants are protected by the state’s sovereign immunity

and that Plaintiffs did not state a viable claim for relief. We

affirm in part and reverse in part. We conclude that Plaintiffs

have Article III standing, a challenge raised for the first time

GARZA V. WOODS 5

on appeal, and that sovereign immunity does not protect the

Defendants. On the merits, we conclude that Plaintiffs have

stated a viable due-process claim, but that their takings claim

fails as a matter of law.

BACKGROUND

I. Arizona’s Unclaimed Property Law

Under the UPA, the Department may take “custody” of

property that is “presumed abandoned.” Ariz. Rev. Stat.

§ 44-304; see also id. § 44-310(A). “Property is presumed

abandoned if it is unclaimed by the apparent owner” for a

defined period—usually one to three years, depending on the

type of property. Id. § 44-302(A). Property is “unclaimed” if

the apparent owner does not “indicate[] an interest in the

property” within the prescribed period. Id. § 44-302(C); see

also id. § 44-302(D) (outlining the ways in which an owner

may indicate interest).

The UPA establishes notice requirements and details

how unclaimed property must be delivered to the

Department. Generally, once property becomes

presumptively abandoned, the holder—the individual or

entity in actual possession of the property, see id. § 44-

301(8)—must “send a written notice to the apparent owner”

that the holder is in possession of property subject to the

UPA, id. § 44-307(E). After waiting at least 120 days

following such notice, the holder must send a report to the

Department that describes the property. Id. § 44-307(A), (B),

(E). When the report is filed, the holder must also deliver the

unclaimed property or pay it to the Department. Id. § 44-

308(A).

Arizona is required to operate a website that lists the

unclaimed property in its possession, and the website must

6 GARZA V. WOODS

be advertised via various media. Id. § 44-309(A); see also

id. § 44-309(B). But Arizona’s statute does not mandate that

the state provide actual notice to apparent owners that it is in

possession of their property.

The UPA also prescribes how Arizona must use the

unclaimed property it receives from holders. With limited

exceptions, the Department must deposit “in the state

general fund all monies received” under the UPA. Id. § 44-

313(A). But the Department must also “retain in a separate

trust fund at least one hundred thousand dollars from which

[it] shall pay claims” to unclaimed-property claimants. Id.

§ 44-313(D). Claims to unclaimed property must be made

within 35 years of the fiscal year in which the Department

received the property. Id. § 44-317(E).

II. Plaintiffs’ Unclaimed-Property Claims

Garza alleges that she lived in Arizona from 2008 to

2011, and again from 2014 to 2016. Terrell alleges that he

has lived in Arizona since 2010. Both Plaintiffs assert that

the Department possesses several checks belonging to them

issued by various businesses like healthcare providers,

financial institutions, and car dealers.

Plaintiffs claim that Arizona’s possession of their

property is an unlawful taking, in violation of the Fifth and

Fourteenth Amendments, and that they were deprived of

their property without due process of law, in violation of the

Fourteenth Amendment. Plaintiffs sued Defendants Rob

Wood, Director of the Department, and William Nagel, the

Unclaimed Property Administrator, in their official

capacities. Plaintiffs seek return of their property and

declaratory and injunctive relief. They also sought to

represent a purported class.

GARZA V. WOODS 7

The district court dismissed Plaintiffs’ claims, reasoning

that Defendants’ sovereign immunity barred Plaintiffs’

claim for retrospective relief and that Plaintiffs failed to state

a claim for prospective relief. Plaintiffs timely appealed.

DISCUSSION

I. Subject-Matter Jurisdiction

On appeal, Defendants make two jurisdictional

arguments: (A) that Plaintiffs lack standing; and (B) that

sovereign immunity bars Plaintiffs’ claims. “Dismissals

under Rule 12(b)(1) are reviewed de novo.” Thomas v.

County of Humboldt, 124 F.4th 1179, 1186 (9th Cir. 2024).

Although Defendants did not raise standing to the district

court, this challenge may be raised for the first time on

appeal. Laub v. U.S. Dep’t of Interior, 342 F.3d 1080, 1085

(9th Cir. 2003). And where Defendants facially attack the

adequacy of Plaintiffs’ jurisdictional allegations, we accept

the allegations as true and draw all reasonable inferences in

favor of Plaintiffs to determine whether subject-matter

jurisdiction has been plausibly alleged. Leite v. Crane Co.,

749 F.3d 1117, 1121 (9th Cir. 2014).

A. Standing

Article III standing requires Plaintiffs to allege an injury

in fact, caused by Defendants, that is redressable by the

court. Lujan v. Defs. of Wildlife, 504 U.S. 555, 560–61

(1992). Defendants argue that Plaintiffs have not suffered an

Article III injury.

An Article III injury is “an invasion of a legally protected

interest which is (a) concrete and particularized and

(b) actual or imminent, not conjectural or hypothetical.”

Lujan, 504 U.S. at 560 (citation modified). An injury is

“concrete” if it “actually exist[s],” but “concrete” is not

8 GARZA V. WOODS

“necessarily synonymous with ‘tangible.’ Although tangible

injuries are perhaps easier to recognize,” the Supreme Court

has confirmed that “intangible injuries can nevertheless be

concrete.” Spokeo, Inc. v. Robins, 578 U.S. 330, 340 (2016).

“[A] classic pocketbook injury” is both concrete and

tangible. See Tyler v. Hennepin County, 598 U.S. 631, 636

(2023) (holding that the plaintiff sufficiently alleged an

Article III injury when she alleged that a county “illegally

appropriated [a] $25,000 surplus” in a tax sale of her real

property).

Defendants suggest Plaintiffs have not alleged an injury-

in-fact because Plaintiffs did not possess or use the

unclaimed property at issue before Arizona took possession.

Similarly, Defendants assert that no injury was inflicted on

Plaintiffs by the transfer of possession from the holder to the

Department. Both arguments misunderstand Article III.

For purposes of standing, when someone—even the

government—possesses property lawfully owned by another

without the owner’s consent, an invasion of the owner’s

legally protected interest has occurred. See, e.g., United

States v. $133,420.00 in U.S. Currency, 672 F.3d 629, 638

(9th Cir. 2012) (“Article III’s standing requirement is

thereby satisfied because an owner or possessor of property

that has been seized necessarily suffers an injury that can be

redressed at least in part by the return of the seized property.”

(citation omitted)). Arizona law—including the UPA—

recognizes that Plaintiffs have a legally protected interest in

their unclaimed property irrespective of actual possession or

use. See, e.g., Ariz. Rev. Stat. § 44-301(13) (“‘Owner’

means a person who has a legal or equitable interest in

property that is subject to [the UPA].”).

GARZA V. WOODS 9

In their complaint, Plaintiffs allege that they have a legal

interest in their checks that are being held by the Department

without their consent. Those allegations state a concrete

invasion of a legally protected interest. 1 We do not

myopically focus on whether the transfer of the checks from

the holder to the Department itself inflicted a greater or

different invasion of the owner’s property interest than

existed when the checks were possessed by the holder. See,

e.g., Taylor v. Westly (Taylor II), 488 F.3d 1197, 1199 (9th

Cir. 2007) (per curiam) (recognizing plaintiffs’ Article III

injuries as “those attendant to having their property

escheated without notice,” among other things). 2

Defendants also suggest that Plaintiffs have not suffered

a concrete injury because they do not allege that they filed a

claim under the UPA for the return of their property.

Defendants point to no caselaw suggesting that an owner

1

Indeed, below we conclude that Plaintiffs have alleged a “deprivation”

of property under the Due Process Clause of the Fourteenth Amendment,

which is a cognizable Article III injury. See FDA v. All. for Hippocratic

Med., 602 U.S. 367, 381 (2024) (“An injury in fact can be a physical

injury, a monetary injury, an injury to one’s property, or an injury to

one’s constitutional rights, to take just a few examples.”); cf. Knellinger

v. Young, 134 F.4th 1034, 1042 (10th Cir. 2025) (holding standing and

takings claim “entirely overlap” since there was no “question that an

uncompensated taking of valuable property would be a ‘financial harm,’

indeed a ‘classic pocketbook injury,’ sufficient to confer standing”

(quoting Tyler, 598 U.S. at 636 ).

2

Although the plaintiffs in the Taylor cases suffered additional harms

under California’s Unclaimed Property Law, which required the state to

liquidate the plaintiffs’ securities after a brief period following transfer

to the state, our standing analysis in Taylor II was not limited to such

instances. See 488 F.3d at 1199‒200 (listing injuries that “include[d]”

“the permanent deprivation of their property subsequent to California’s

sale of that property”).

10 GARZA V. WOODS

must request that a government actor return property being

held before a cognizable injury to property interests can be

shown. Although the Supreme Court has outlined a “finality

requirement” for some regulatory-takings claims, that

requirement does not prevent a claim when the government

has already assumed physical possession of one’s property.

See Pakdel v. City & County of San Francisco, 594 U.S. 474,

478–81 (2021) (holding that “failure to properly pursue

administrative procedures may render a claim unripe if

avenues still remain for the government to clarify or change

its decision” and that “all a plaintiff must show is that there

is no question about how the regulations at issue will apply

to the particular land in question” (citation modified)

(citation omitted)); Williamson Cnty. Reg’l Planning

Comm’n v. Hamilton Bank of Johnson City, 473 U.S. 172,

187–93 (1985) (noting that “the finality requirement is

concerned with whether the initial decisionmaker has arrived

at a definitive position on the issue that inflicts an actual,

concrete injury” and compiling cases); see also Fuentes v.

Shevin, 407 U.S. 67, 85 (1972).

When the government assumes physical possession of

another’s unclaimed property, there is no ambiguity as to its

position on the status of that property. And when it does so

without providing due process or just compensation, the

owner has suffered sufficient injury to confer standing to

challenge the government’s action. Of course, that is not to

say the owner will prevail in claiming that the government

acted unlawfully, only that the owner has a sufficiently

concrete stake in the dispute to satisfy Article III. Cf. FDA v.

All. for Hippocratic Med., 602 U.S. 367, 381 (2024) (noting

that a concrete injury is required to “screen[] out plaintiffs

who might only have a general legal, moral, ideological, or

policy objection to a particular government action”). We are

GARZA V. WOODS 11

not alone in reaching this conclusion. The Tenth Circuit

recently rejected that an owner must “file an administrative

claim with [the state] prior to proceeding in federal court” on

a challenge to the state’s unclaimed property system. See

Knellinger v. Young, 134 F.4th 1034, 1044–45 (10th Cir.

2025).

A simple example illustrates the flaw in Defendants’

position. Imagine a plaintiff who realized that she never

received a check due from an insurance company and that

the insurance company was holding the funds. She would

have Article III standing to pursue legal recourse against the

insurance company because her right to the funds would

have been concretely injured by its failing to send her check

and retaining her money. It matters not, for Article III’s

purposes, that the plaintiff could just ask the insurance

company for the check. Nor does it matter that, if she did so,

the insurance company might simply hand over the money.

These practicalities counsel against the wisdom of filing suit,

but they do not undermine the plaintiff’s constitutional

standing to sue.

B. Sovereign Immunity

Sovereign immunity bars suit against a state official

when “the state is the real, substantial party in interest.”

Pennhurst State Sch. & Hosp. v. Halderman, 465 U.S. 89,

101 (1984) (citation omitted). Generally, the state is the real

party in interest where any “decree would operate against the

[state].” Id. One example of this is when a money judgment

would be paid from the state treasury. Id. at 101 n.11;

Edelman v. Jordan, 415 U.S. 651, 663 (1974). There are two

related exceptions to this rule that are relevant here.

First, under Ex parte Young, a claim challenging the

constitutionality of a state official’s action that is asserted

12 GARZA V. WOODS

against the official in their official capacity is not barred by

sovereign immunity so far as it seeks prospective injunctive

relief. See 209 U.S. 123, 159–60 (1908); see also Pennhurst,

465 U.S. at 102–03. Here, the parties agreed before the

district court that to the extent Plaintiffs’ claims seek

injunctive relief, they are not barred by sovereign immunity

under Ex parte Young. This is correct.

Second, when officials acting on behalf of the sovereign

hold others’ property, a suit seeking return of the property is

not barred by sovereign immunity when the plaintiff alleges

that “the taking of the property or the injury to it was not the

action of the sovereign because [it was] unconstitutional or

beyond the officer’s statutory powers.” Larson v. Domestic

& Foreign Com. Corp., 337 U.S. 682, 698 (1949) (footnote

omitted); accord Malone v. Bowdoin, 369 U.S. 643, 647–48

(1962).

We applied this rule in Taylor v. Westly (Taylor I) and

held that a suit against the California Controller to recover

stock certificates seized as unclaimed property was not

barred by sovereign immunity because the complaint alleged

that the seizure was an ultra vires act and that the Controller

violated due process. 402 F.3d 924, 926, 930–35 (9th Cir.

2005). We emphasized that Edelman did not apply because

in that case “the plaintiffs unquestionably sought money that

belonged to the government” rather than “seek[ing]

reinstatement of possession of property they owned,”

whereas the plaintiffs in Taylor I indisputably “own[ed] the

stock that the state took.” Id. at 935; accord Suever v.

Connell, 439 F.3d 1142, 1147 (9th Cir. 2006) (“[A]lthough

[sovereign immunity] ordinarily bars claims primarily

requesting funds held in the State’s coffers, sovereign

immunity does not apply to claims alleging such funds are

GARZA V. WOODS 13

individuals’ property that the State improperly seized

through ultra vires or unconstitutional acts.”).

Taylor I controls here. Plaintiffs allege that the

Department possesses their property, they seek its return,

and they allege unconstitutional acts led to its seizure. This

is sufficient to defeat Defendants’ motion to dismiss under

Rule 12(b)(1).

Defendants argue that Taylor I is inapplicable because

Arizona does not hold unclaimed property on behalf of

owners and instead deposits it into the state treasury. That

argument is unavailing. The UPA plainly requires the

Department to hold unclaimed property for the benefit of

owners for 35 years and to keep at least $100,000 available

to pay claims. See Ariz. Rev. Stat. §§ 44-304, -310(A), -

313(D), -317(E). Defendants concede as much at multiple

points throughout their briefing. Therefore, Defendants’

efforts to distinguish Taylor I are unpersuasive, and the

district court erred in dismissing Plaintiffs’ claims seeking

the return of their property.

II. Failure to State a Claim

Next, we address Defendants’ arguments that Plaintiffs

have failed to state a claim on either of their theories for

relief: (A) taking of property without just compensation and

(B) procedural due process. To overcome a Rule 12(b)(6)

“motion to dismiss, a complaint must contain sufficient

factual matter, accepted as true, to ‘state a claim to relief that

is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662,

678 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550

U.S. 544, 570 (2007)). A claim is plausible “when the

plaintiff pleads factual content that allows the court to draw

the reasonable inference that the defendant is liable for the

misconduct alleged.” Id. We review this question de novo.

14 GARZA V. WOODS

Faulkner v. ADT Sec. Servs., Inc., 706 F.3d 1017, 1019 (9th

Cir. 2013).

A. Uncompensated Taking

Plaintiffs’ takings claim is easily resolved under our

precedent. The Fifth Amendment guarantees that “private

property [shall not] be taken for public use, without just

compensation.” U.S. Const. amend. V. This guarantee is

enforceable against the states. Sheetz v. County of El

Dorado, 601 U.S. 267, 276 (2024) (recognizing that the

Takings Clause is incorporated against the states via the

Fourteenth Amendment). To state a takings claim, a plaintiff

must allege: (1) that the plaintiff owns “private property”;

(2) that the private property was “taken” for “public use”;

and (3) that the taking entity did not pay “just compensation”

for it. Zeyen v. Bonneville Joint Dist., No. 93, 114 F.4th

1129, 1139 (9th Cir. 2024). The district court held that

Plaintiffs did not allege the second element. We agree.

In Taylor I, we held that where unclaimed property is

“held in trust” by the state, the property “has not been taken

at all.” 402 F.3d at 936. Plaintiffs allege that the Department

holds their unclaimed property in custody for their benefit.

Therefore, per Taylor I, Plaintiffs have failed to state a

takings claim. 3

B. Due Process

The Fourteenth Amendment prohibits states from

“depriv[ing] any person of life, liberty, or property, without

3

We acknowledge the recent Tenth Circuit decision reaching the

opposite conclusion. See Knellinger, 134 F.4th at 1043–45. But we are

bound by Taylor I absent intervening higher authority that irreconcilably

conflicts with our circuit precedent. See Miller v. Gammie, 335 F.3d 889,

900 (9th Cir. 2003) (en banc).

GARZA V. WOODS 15

due process of law.” U.S. Const. amend. XIV, § 1. As

relevant here, a procedural due-process claim requires

allegations of: (1) a protected property interest; (2) a

deprivation of that interest by state action; and

(3) inadequate process for the deprivation. See Reed v.

Goertz, 598 U.S. 230, 236 (2023). The district court held that

Plaintiffs failed to allege the second element. On appeal,

Defendants challenge Plaintiffs’ pleading as to all three

elements.

1. Property Interest

Property rights are primarily created and defined not by

the Constitution but by “an independent source such as state

law.” Bd. of Regents of State Colls. v. Roth, 408 U.S. 564,

577 (1972). Defendants assert that Arizona law does not

establish a property interest “to insist that unclaimed

property be held by a third party for the rest of time.” This

argument misconceives both the Fourteenth Amendment

and Plaintiffs’ claim. Plaintiffs do not allege a property

interest in preventing a transfer from the holder to the

Department; they allege an interest in their unclaimed

property. To accept Defendants’ argument would turn the

analysis into a circular mess. Plaintiffs would be required to

allege a deprivation of their property interest in preventing a

deprivation of their property. Unsurprisingly, Defendants

cite no caselaw supporting this approach.

Next, Defendants argue that Plaintiffs lack a property

interest because “it is undisputed that [they] did not possess,

and were not using, the [presumptively] abandoned property

they may own.” But no authority suggests that possession

and use are prerequisites to a property interest under Arizona

law. Instead, as discussed previously, the UPA itself

recognizes that owners have a property interest in

16 GARZA V. WOODS

presumptively abandoned property, Ariz. Rev. Stat.

§ 44-301(13), and it allows owners to file a claim to that

property for 35 years after the Department takes possession,

id. § 44-317(E). Defendants themselves recognize that

Plaintiffs allegedly “own” property in the possession of the

Department. That is sufficient to plausibly allege this

element.

2. Deprivation

“Any significant taking of property by the State is within

the purview of the Due Process Clause.” Fuentes, 407 U.S.

at 86. This includes “temporary, nonfinal” deprivations. Id.

at 85. In Taylor II, we held that plaintiffs whose stocks had

been escheated to California and sold without notice were

likely to succeed on their due-process claim. 488 F.3d at

1201 ; see also Taylor I, 402 F.3d at 926–29 (explaining the

case background). Defendants argue that Taylor II

establishes a “deprivation” occurred only after California

sold the stocks at issue and that it did not address whether

mere transfer of custody requires notice. To the contrary, in

Taylor II we addressed this precise question and held that the

plaintiffs had been “deprived” of their property because their

“control” of the property was “disturbed.” Taylor II, 488

F.3d at 1201. Indeed, the final case in the Taylor saga

observed that “this Court’s focus in Taylor II . . . was on

notice being provided by the Controller before the property

was transferred to the State.” Taylor v. Yee (Taylor IV), 780

F.3d 928, 938 (9th Cir. 2015) (second emphasis added).

Therefore, Taylor II controls this question.

Next, Defendants argue that Plaintiffs have not been

“deprived” of their property because they can claim it within

35 years and only “final, irreversible” seizures trigger due-

process protections. This is incorrect. Again, the Supreme

GARZA V. WOODS 17

Court has held that even “a temporary, nonfinal deprivation

of property is nonetheless a ‘deprivation’ in the terms of the

Fourteenth Amendment.” Fuentes, 407 U.S. at 85. Indeed,

as an example, we have previously held that a deprivation of

a protected property interest occurred when a municipality

towed a car, notwithstanding that the owner could later

retrieve it. See Clement v. City of Glendale, 518 F.3d 1090,

1092–96 (9th Cir. 2008); Scofield v. City of Hillsborough,

862 F.2d 759, 762–64 (9th Cir. 1988). Defendants do not

make any persuasive argument that Fuentes or our own cases

do not apply.

Finally, Defendants direct our attention to two state

supreme court cases. First, in Dani v. Miller, the Oklahoma

Supreme Court held that “due process is not offended by the

automatic transfer of abandoned property into the custody of

the State Treasurer.” 374 P.3d 779, 796 (Okla. 2016). Dani

relies on Texaco, Inc. v. Short, 454 U.S. 516 (1982), for this

proposition. But Texaco resolved a different issue. There, an

Indiana statute established the period after which a mineral

interest would be considered abandoned and automatically

lapse to the surface owner. Id. at 518. The Supreme Court

held that no “deprivation” requiring due process had

occurred simply upon the passage of the statute or upon the

triggering of the conditions of abandonment. See id. at 531–

37. It first reasoned that the legislature “need do nothing

more than enact and publish the law, and afford the citizenry

a reasonable opportunity to familiarize itself with its terms

and to comply.” Id. at 532. And while “no specific notice

need be given of an impending lapse . . . [i]t is undisputed

that, before judgment could be entered in a quiet title action

that would determine conclusively that a mineral interest has

reverted to the surface owner, the full procedural protections

of the Due Process Clause . . . must be provided.” Id. at 533–

18 GARZA V. WOODS

34. Texaco, therefore, does not answer whether a

“deprivation” has occurred where the state requires a third-

party holder to transfer presumptively abandoned property

to the state itself.

Moreover, where a transfer to the state occurs in as little

as a year’s time of non-activity, individuals may go about

their daily lives without any indication that their property has

changed possession. The 20-year duration of abandonment

required under the Indiana statute at issue in Texaco stands

in stark contrast to the timelines prescribed by Arizona in the

UPA. See Ariz. Rev. Stat. § 44-302. Thus, Texaco’s use-it-

or-lose-it reasoning is far less applicable to situations, such

as here, where the non-use of one’s property can easily occur

without any neglect or implied intent of abandonment. See

454 U.S. at 526 (recognizing states long had “the power to

permit unused or abandoned interests in property to revert to

another after the passage of time” (emphasis added)); see

also id. at 535 n.28 (leaving open whether states may adopt

background principles of abandonment with shorter periods

of nonuse).

Second, in Hall v. State, the Supreme Court of Minnesota

held that Minnesota’s unclaimed property act “does not

deprive [the plaintiffs] of a protected property interest

because it merely results in the substitution of the

[government] as the holder of their unclaimed property.” 908

N.W.2d 345, 358 (Minn. 2018). This reasoning was based

on Anderson National Bank v. Luckett, 321 U.S. 233 (1944).

There, the Supreme Court rejected a due-process challenge

to a Kentucky unclaimed-property law that required pre-

deprivation notice and a judicial determination of

abandonment. See id. at 236–38, 240–47. Although the

Court suggested that substituting the state for the holder did

not deprive owners of their property, it made clear that the

GARZA V. WOODS 19

transfer of accounts to the state remained “subject to the

requirements of procedural due process.” Id. at 241–42; see

also id. at 240 (observing that a state “may compel the

surrender to it of” presumably abandoned bank accounts “by

a procedure satisfying constitutional requirements”). Indeed,

in addressing whether the plaintiff bank could allege a due

process violation, the Court concluded that the pre-transfer

procedure the state utilized to take possession of the funds at

issue “was upon adequate notice to [owners] and opportunity

for them to be heard.” Id. at 243. Thus, despite its suggestion

that the deprivation element was not satisfied as to the

property owners, Anderson, consistent with Taylor II,

suggests that the transfer of property from holder to the state

must be accompanied with constitutionally sufficient

process.

And in any event, we are bound by Taylor II. We have

no power to overrule a prior decision of this court absent

“intervening higher authority” that “undercut[s] the theory

or reasoning underlying the prior circuit precedent in such a

way that the cases are clearly irreconcilable.” Miller v.

Gammie, 335 F.3d 889, 900 (9th Cir. 2003) (en banc). Taylor

II post-dated both Texaco and Anderson National Bank, and

state supreme court decisions—though persuasive at

times—obviously are not “higher authority” on issues of

federal law. Defendants point to no other cases that undercut

Taylor II’s reasoning, so it remains the law of this circuit.

Plaintiffs have therefore plausibly alleged that they were

deprived of a protected property interest.

3. Adequacy of Process

As a general matter, in determining what process is due,

courts must balance the public and private interests involved.

See Mathews v. Eldridge, 424 U.S. 319, 335 (1976). Pre-

20 GARZA V. WOODS

deprivation notice typically is required absent “a strong

justification” from the government. Clement, 518 F.3d at

1094. And if notice is required, it must be “reasonably

calculated, under all the circumstances, to apprise interested

parties of the pendency of the action and afford them an

opportunity to present their objections.” Mullane v. Cent.

Hanover Bank & Tr. Co., 339 U.S. 306, 314 (1950); see also

Jones v. Flowers, 547 U.S. 220, 226 (2006). Put succinctly,

“Mathews governs the question of whether and when due

process requirements, including notice, [are] required, but

Mullane governs [the] adequacy of notice.” Grimm v. City of

Portland, 971 F.3d 1060, 1067 (9th Cir. 2020).

In Taylor II, we held that California’s unclaimed-

property law likely did not provide adequate process because

notice by publication and notice provided by a third party,

such as the holder, are insufficient in this context. 488 F.3d

at 1201. Defendants’ only arguments on this point amount to

an effort to overrule Taylor II. But as discussed, we lack that

power. See Miller, 335 F.3d at 900.

Plaintiffs allege that the notice was inadequate here

because the UPA does not require pre-deprivation notice

sent by Arizona and post-deprivation notice by newspaper

publication is insufficient. Indeed, Arizona’s law only

requires that pre-deprivation notice be given by the holder:

at least 120 days before the holder files an unclaimed-

property report and transfers the property to the Department,

it must, subject to some exceptions, “send a written notice to

the apparent owner that states that the holder is in possession

of the [unclaimed] property.” Ariz. Rev. Stat. § 44-307(E).

And after the Department receives unclaimed property, the

UPA requires only that the Department “publish a notice at

least semiannually . . . directing the public to the

department’s website regarding abandoned property . . . .”

GARZA V. WOODS 21

Id. § 44-309(A). The Department’s website must list the

apparent owner’s name and last known address and describe

the property. Id. Under Taylor II, Plaintiffs have plausibly

alleged that they did not receive adequate process.

Accordingly, we conclude that they have sufficiently stated

a due-process claim to survive a motion to dismiss. 4

AFFIRMED IN PART, REVERSED IN PART, AND

REMANDED. 5

4

To the extent that Plaintiffs are facially challenging the UPA, that

challenge also survives because Plaintiffs plausibly alleged that the

statute’s notice provisions fail to meet the minimum constitutional

standard in all cases. See Moody v. NetChoice, LLC, 603 U.S. 707, 724

(2024) (“A plaintiff cannot succeed on a facial challenge unless he

‘establishes that no set of circumstances exists under which the law

would be valid,’ or he shows that the law lacks a ‘plainly legitimate

sweep.’” (citation modified) (quoting United States v. Salerno, 481 U.S.

739, 745 (1987); Wash. State Grange v. Wash. State Republican Party,

552 U.S. 442, 449 (2008))).

5

Defendants shall bear the costs on appeal. Fed. R. App. P. 39(a)(4).