Petition for Writ of Certiorari — Jennifer Sykes, et al., Petitioners v. Office of the California State Controller, et al.

No. _____

In the Supreme Court of the United States

JENNIFER I. SYKES AND ALEXANDER COTE,

Individually and on Behalf of All Others Similarly Situated,

Petitioners,

v.

OFFICE OF THE CALIFORNIA STATE CONTROLLER; BETTY T.

YEE, in Her Official Capacity as California State Controller,

Respondents.

On Petition for a Writ of Certiorari to the

United States Court of Appeals for the Ninth Circuit

PETITION FOR A WRIT OF CERTIORARI

MARK C. RIFKIN

WOLF HALDENSTEIN ADLER

FREEMAN & HERZ LLP

270 Madison Avenue,

New York, NY 10016

(212) 545-4600

ARTHUR SUSMAN

LAW OFFICE OF ARTHUR

SUSMAN

1540 N. Lake Shore Drive

Chicago, IL 60610

(847) 800-2351

Counsel for Petitioners

-iQUESTION PRESENTED

Every State has enacted laws requiring unclaimed property

to be held by the states and used for public purposes until it is

reclaimed by the property owners. Under the California

Unclaimed Property Law, Cal. Civ. Proc. Code § 1540(c), like

virtually every other state’s unclaimed property law, when

unclaimed property is returned, no just compensation is paid

to the property owners.

The Takings Clause of the Fifth Amendment, made

applicable to the States by the Fourteenth Amendment,

requires that just compensation be paid whenever private

property is used for public purposes. See Cedar Point Nursery

v. Hassid, 141 S. Ct. 2063, 2074 (2021); Murr v. Wisconsin,

582 U.S. 383, 392 (2017); Webb’s Fabulous Pharmacies, Inc.

v. Beckwith, 449 U.S. 155, 164 (1980). Just compensation must

be paid whether the public use of private property is permanent

or merely temporary. See Cedar Point Nursery, 141 S. Ct. at

2074 (citing United States v. Dow, 357 U.S. 17, 26 (1958));

Tahoe-Sierra Preservation Council, Inc. v. Tahoe Regional

Planning Agency, 535 U.S. 302, 322, 122 S.Ct. 1465 (2002);

Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419,

436-37 (1982). Here, the court of appeals reached a contrary

conclusion.

The question presented is:

Does the Ninth Circuit’s decision that California’s

Unclaimed Property Law does not require the payment of just

compensation for the temporary taking of unclaimed private

property it puts to public use conflict with the Takings Clause?

-iiLIST OF PARTIES TO THE PROCEEDINGS

Petitioners Jennifer I. Sykes and Alexander Cote were the

plaintiffs in the district court and the appellants in the court of

appeals.

Respondents Office of the California State Controller and

Betty T. Yee, in her official capacity as California State

Controller, were the defendants in the district court and the

appellees in the court of appeals.

RELATED PROCEEDINGS

This case arises out of the following proceedings:



Sykes v. Office of the California State Controller,

No. 23-15375 (9th Cir. Mar. 14, 2024)



Cote v. Office of the California State Controller,

No. 23-15377 (9th Cir. Mar. 14, 2024)



Sykes v. Office of the California State Controller,

No. 22-cv-04133-HSG (N.D. Cal. March 13,

2023)



Cote v. Office of the California State Controller,

No. 22-cv-04056-HSG (N.D. Cal. March 13,

2023)

This case is related to Cole-Kelly v. Office of the California

State Controller, et al. (9th Cir. March 14, 2024) (No. 2315413), reh’g denied (9th Cir. April 23, 2024).

-iiiTABLE OF CONTENTS

Question presented .................................................................. i

List of parties to the proceedings ............................................ii

Related proceedings ................................................................ii

Table of authorities ................................................................. v

Introduction ............................................................................ 1

Opinions Below ...................................................................... 3

Jurisdiction.............................................................................. 3

Statutory Provisions Involved ................................................ 3

Statement ................................................................................ 4

I.

Statutory and regulatory background ..................... 4

II. Factual and procedural history ............................... 5

Reasons for Granting the Petition ........................................... 6

I.

The decision below creates a clear circuit split on

an issue of fundamental importance to private

property rights ........................................................ 6

A. The decision below creates a circuit split ....... 6

B. This case presents issues of exceptional

importance to the States' unclaimed

property system............................................. 11

-ivII. This case is a suitable vehicle .............................. 13

III. The Ninth Circuit’s decision contradicts this

Court's Precedent and lacks any constraining

principle ............................................................... 14

Conclusion ............................................................................ 19

-vTABLE OF AUTHORITIES

Cases

Albert v. Franchot,

No. 1-22-CV-01558-JRR, 2023 WL 4058986

(D. Md. June 16, 2023), on reconsideration in part,

2024 WL 308937 (D. Md. Jan. 26, 2024) ........................ 8, 9

Azure Ltd. v. I-Flow Corp.,

46 Cal. 4th 1323, 210 P.3d 1110 (Cal. 2009) ....................... 4

Barron v. Baltimore,

32 U.S. 243 (1833) ............................................................ 12

Burlington & Quincy R.R. Co. v. Chicago,

166 U.S. 226 (1897) .......................................................... 12

Brown v. Legal Foundation of Washington,

538 U.S. 216 (2003) ............................................................ 5

Cedar Point Nursery v. Hassid,

594 U.S. 139 (2021) .............................................. 2, 4, 5, 14

Cerajeski v. Zoeller,

735 F.3d 577 (7th Cir. 2013)................................................ 7

Clark v. Strawhorn,

184 S.W.3d 906 (Tex. App. Ct. 2006) ........................... 9, 11

College Savings Bank v. Fla. Prepaid Postsecondary

Education Expense Board,

527 U.S. 666 (1999) .......................................................... 15

Cwik v. Giannoulias,

237 Ill. 2d 409 (Ill. 2010) ............................................ 10, 11

-viDani v. Miller,

374 P.3d 779 (Okla. 2016) ............................................. 9, 11

Department of Agriculture Rural Development

Rural Housing Service v. Kirtz,

601 U.S. 42 (2024) ............................................................ 15

DeVillier v. Texas,

601 U.S. 285 (2024) .......................................................... 19

First English Evangelical Lutheran Church

of Glendale v. Los Angeles Cty., Cal.,

482 U.S. 304 (1987) .............................................. 15, 18, 19

Hooks v. Kennedy,

961 So. 2d 425 (La. Ct. App. 2007) ............................... 9, 11

Jacobs v. United States,

290 U.S. 13 (1933) ............................................................ 19

Knick v. Township of Scott,

139 S. Ct. 2162 (2109)....................................... 5, 15, 18, 19

Kolton v. Frerichs,

869 F.3d 532 (7th Cir. 2017)...................................... 1, 7, 11

Light v. Davis,

No. 22-cv-611, 2023 WL 6295387

(D. Del. Sept. 27, 2023) ................................................... 7, 9

Loretto v. Teleprompter Manhattan CATV Corp.,

458 U.S. 419 (1982) ...................................................... 2, 14

Maron v. Patronis,

No. 4:22CV255-RH-MAF, 2023 WL 11891258

-vii(N.D. Fla. Sept. 5, 2023)...................................................... 9

McKenzie v. Fla. Dep’t of Fin. Servs.,

No. 04 CA 755 (Fla. Cir. Ct. Apr. 27, 2005) .................. 9, 11

Murr v. Wisconsin,

582 U.S. 383 (2017) ............................................................ 4

Phillips v. Washington Legal Foundation,

524 U.S. 156 (1998) ............................................................ 5

Simon v. Weissmann,

301 F. App’x 107 (3d Cir. 2008) ...................................... 8, 9

Ruckelshaus v. Monsanto Co.,

467 U.S. 986 (1984) .................................................... 15, 16

Sogg v. Zurz,

121 Ohio St. 3d 449 (Ohio 2009) ...................................... 10

Suever v. Connell,

579 F.3d 1047 (9th Cir. 2009)............................ 6, 15, 16, 17

Tahoe-Sierra Preservation Council, Inc. v.

Tahoe Regional Planning Agency,

535 U.S. 302 (2002) .................................................. 2, 5, 14

Texaco, Inc. v. Short,

454 U.S. 516 (1982) .......................................... 9, 10, 12, 17

Turnacliff v. Westley,

546 F.3d 1113 (2008) .................................................. passim

United States v. Gener4al Motors Corp.,

323 U.S. 373 (1945) ............................................................ 5

-viiiUnited States v. Petty Motor Co.,

327 U.S. 372 (1946) ............................................................ 5

Webb’s Fabulous Pharmacies, Inc. v. Beckwith,

449 U.S. 155 (1980) ...................................................... 5, 14

Whole Woman’s Health v. Jackson,

595 U.S. 30 (2021) ............................................................ 15

Statutes

28 U.S.C. § 1254(1) ................................................................ 3

Florida Disposition of Unclaimed Property Act ..................... 9

California Unclaimed Property Law (“UPL”)

Cal. Civ. Proc. Code § 1500, et seq. .......................... passim

§ 1501.5(a) ...................................................................... 14, 18

§ 1501.5(c) ............................................................................ 14

§ 1532(a) ............................................................................... 18

§ 1540 ................................................................................. 3, 4

§ 1540(c) ............................................................................... 16

§ 1560(a) ................................................................................. 4

§ 1564(a) ................................................................................. 5

§ 1564(c) ........................................................................... 5, 14

Pennsylvania Disposition of Abandoned and Unclaimed

Property Act ......................................................................... 8

Revised Uniform Unclaimed Property Act ............................. 2

U.S. Const. amend. V .................................................... passim

U.S. Const. amend. XI .......................................................... 15

U.S. Const. amend. XIV ......................................................... 6

Cal. Const. art. I, § 19 ............................................................. 6

-ixOther Authorities

Robert Meltz, Cong. Research Serv., Takings Decisions of

the U.S. Supreme Court: A Chronology, Rpt. No. 7-5700 (July

20, 2015) ................................................................................. 2

-1INTRODUCTION

California holds unclaimed private property – typically

stocks, bonds, uncashed checks, insurance benefits, and

dormant accounts held by banks and other financial institutions

– that it uses for public purposes until the proceeds are returned

to the property owners. When the unclaimed property, or the

cash proceeds therefrom, is returned to the owners,

California’s Unclaimed Property Law (“UPL”) prohibits the

payment of interest to the owners. In practice, only the value

of the property itself is returned, and no just compensation is

paid to the property owners. Nearly every State has a similar

unclaimed property law that likewise prohibits (or makes no

provision for) the payment of just compensation to the owners

of property used for public purposes.

In the decision below, the Ninth Circuit held that a State’s

public use of unclaimed private property, which it holds in

custody for safekeeping, is not a taking that requires just

compensation under the Takings Clause of the Fifth

Amendment. The Seventh Circuit has reached the opposite

conclusion, holding that the Takings Clause requires States to

pay just compensation to the owners of unclaimed property for

the time their property is in the State’s possession and used for

public purposes. See Kolton v. Frerichs, 869 F.3d 532, 533 (7th

Cir. 2017). The result is a growing circuit split that already has

produced divergent decisions by district courts in two other

circuits as well as conflicting decisions in various State courts.

The constitutional question presented here is indisputably

important. The Takings Clause plays a crucial role in

protecting property rights and setting the boundaries of

government authority in the United States. It strikes an

important balance between the States’ power to pursue public

works and the constitutional rights of private property owners.

The Takings Clause prevents the government from abusing its

-2authority by taking property without just compensation. For

those reasons, as the Congressional Research Service has

noted, since the late 1970s, the Court “has turned its attention

to the takings issue with vigor.” Robert Meltz, Conf. Research

Serv., Takings Decisions of the U.S. Supreme Court: A

Chronology, Report No. 7-5700 (July 20, 2015).

The Ninth Circuit’s decision that the Takings Clause does

not require just compensation even though the unclaimed

private property is liquidated and transferred to the California

General Fund, the principal operating fund for the majority of

State’s activities, where it is used for public purposes leaves

the States uncertain about whether they must pay just

compensation to the property owners. The Ninth Circuit’s

decision risks exempting not just unclaimed property in

California, but in nearly every State that has enacted a similar

statute based upon the Revised Uniform Unclaimed Property

Act.

This Court repeatedly has held, most recently in Cedar

Point Nursery, that “a physical appropriation is a taking

whether it is permanent or temporary; the duration of the

appropriation bears only on the amount of compensation due.”

594 U.S. at 140 (citing Dow, 357 U.S. at 26). See also TahoeSierra Preservation Council, 535 U.S. at 322; Loretto, 458

U.S. at 436-37. California’s UPL, like the unclaimed property

laws in most other States, prohibits the payment of interest or

just compensation on unclaimed property for the time it is held

by the State Controller and used for public purposes, and the

California Controller pays no just compensation to the owners

of the property when it is returned to them. The Ninth Circuit’s

decision upholding California’s UPL is squarely at odds with

this Court’s prior holdings.

This case is a suitable vehicle for resolving this important

issue, and there is no need for the Court to delay review of this

case. The petition presents a legal question able to be resolved

-3without awaiting further factual development. Unclaimed

property laws do not vary materially from State to State.

Whether the Takings Clause requires the States to pay just

compensation to the owners of unclaimed property is not

dependent on any particular facts and will not vary materially

from State to State. Therefore, this case offers the Court an

opportunity to cleanly and definitively resolve a circuit conflict

that is of vital importance. The Court should grant the petition

to do so.

OPINIONS BELOW

The Ninth Circuit’s decision (App. 1a) is unreported. The

district court’s decision (App. 6a) also is unreported.

JURISDICTION

The court of appeals entered judgment on March 14, 2024.

The jurisdiction of this Court is invoked under 28 U.S.C. §

1254(1). Petitioners timely sought a 45-day extension of

deadline for making this Petition on June 3, 2024, which was

granted on June 6, extending the deadline to July 28, 2024. On

July 18, 2024, Petitioners timely sought an additional 15-day

extension of the deadline for making this Petition, which was

granted on July 23, 2024, extending the deadline to August 12,

2024.

STATUTORY PROVISIONS INVOLVED

Cal. Civ. Code § 1540. Filing of claim; form; consideration;

interest; “owner” defined; state or local agency property

(a) Any person, excluding another state, who claims to have

been the owner, as defined in subdivision (d), of property paid

or delivered to the Controller under this chapter may file a

claim to the property or to the net proceeds from its sale. The

claim shall be on a form prescribed by the Controller and shall

be verified by the claimant.

-4...

(c) Interest shall not be payable on any claim paid under this

chapter.

STATEMENT

A. Statutory and regulatory background

1. Enacted in 1959 and substantially amended in 1968 to

conform to the Uniform Disposition of Unclaimed Property

Act promulgated by the National Conference of

Commissioners on Uniform State Laws, California’s UPL,

Cal. Civ. Code § 1500, et seq., “establishes the conditions

under which certain unclaimed personal property escheats to

the state.” Azure Ltd. v. I-Flow Corp., 46 Cal. 4th 1323, 1328,

210 P.3d 1110, 1111-12 (Cal. 2009) (quoting Harris v. Westly,

116 Cal.App.4th 214, 219, 10 Cal.Rptr.3d 343, 346 (Cal.

2004)). The UPL “gives the state custody and use of unclaimed

property until such time as the owner claims it.” Azure Ltd. v.

I-Flow Corp., 46 Cal. 4th 1323, 1328 (2009).1 California’s

UPL serves two important purposes. First, it “protect[s]

unknown owners” of unclaimed property “by locating them

and restoring their property to them.” See id. Second, it

“give[s] the State . . . the benefit of the use” of the unclaimed

property until the owners are reunited with their property. Id.

While in its possession, California uses unclaimed property

“for the public good” until the owners are reunited with their

property. Id. at 1328.

2. The Takings Clause mandates that “just compensation”

must be paid to the owners of private property whenever their

property is put to public use. Cedar Point Nursery v. Hassid,

1

Cal. Civ. Code § 1560(a) provides that “the state shall assume

custody and shall be responsible for the safekeeping of the

property.” Ownership of unclaimed property is not transferred

to the State.

-5141 S. Ct. 2063, 2074 (2021); Murr v. Wisconsin, 582 U.S. 383,

392 (2017); Webb’s Fabulous Pharmacies, Inc. v. Beckwith,

449 U.S. 155, 164 (1980). This requirement applies whether

the taking is permanent or only temporary. See Cedar Point

Nursery, 141 S. Ct. at 2074 (citing United States v. Dow, 357

U.S. at 26); Tahoe-Sierra, 535 U.S. at 322; Webb’s Fabulous

Pharmacies, 449 U.S. at 162-65; United States v. Petty Motor

Co., 327 U.S. 372, 66 S.Ct. 596, 90 L.Ed. 729 (1946); and

General Motors Corp., 323 U.S. 373, 65 S.Ct. 357. The

Takings Clause protects the time value of money or property

as much as it protects the money or property itself. Brown v.

Legal Foundation of Washington, 538 U.S. 216, 235 (2003);

Phillips v. Washington Legal Foundation, 524 U.S. 156, 16572 (1998).

A Fifth Amendment taking occurs as soon as private

property is used by the state for public purposes without paying

for it. Knick v. Twp. of Scott, Pennsylvania, 139 S. Ct. 2162,

2170 (2019) (Takings Clause is violated “as soon as a

government takes [private] property for public use without

paying for it”).

B. Factual and procedural history

Plaintiffs Jennifer I. Sykes and Alexander Cote are

California residents and are owners of unclaimed property held

by the California Controller pursuant to the California

Unclaimed Property Law. App. While their private property

has been in the Controller’s custody, it has been used for public

purposes. Unclaimed property in California is “deposited in

the Unclaimed Property Fund in an account titled ‘Abandoned

Property.’” Cal. Civ. Code § 1564(a). The balance remaining

in the Unclaimed Property Fund at the end of each month is

transferred to the California General Fund. Id. § 1564(c).

In accordance with the UPL, when the plaintiffs’ property

is returned to them, the Controller will not pay them interest or

-6any other compensation for the time it has been used for public

purposes. App. 8a-9a.

The plaintiffs asserted taking claims under the Fifth and

Fourteenth Amendments of the United States Constitution and

Article 1, Section 19 of the California Constitution in two

related cases in the Northern District of California. App. 7a n.1.

The defendants moved to dismiss both cases, arguing that the

State’s use of unclaimed property is not a taking under the Fifth

Amendment Takings Clause or the California Constitution. See

id.

The district court granted the defendants’ motions to

dismiss in a single decision, following two prior Ninth Circuit

decisions, Turnacliff v. Westly, 546 F.3d 1113 (9th Cir. 2008),

and Suever v. Connell, 579 F.3d 1047 (9th Cir. 2009). App.

13a-14a. Those cases involved a prior version of California’s

UPL. Unlike the current version of the UPL, which prohibits

the payment of interest to the owners of unclaimed property,

the prior version of the statute required the Controller to pay

interest to the owners when the property was returned.

The Ninth Circuit panel affirmed the dismissal in a short

decision, concluding it was bound by the prior Ninth Circuit

decisions in Turnacliff and Suever. App. 3a.

REASONS FOR GRANTING THE PETITION

I.

The decision below creates a clear circuit split on an

issue of fundamental importance to private property

rights.

A. The decision below creates a circuit split.

1. Both the Seventh and Ninth Circuits have considered

whether a state’s public use of unclaimed private property is a

taking that requires just compensation under the Takings

Clause of the Fifth Amendment. Although the unclaimed

-7property laws before the courts were virtually identical, they

reached different conclusions. The Seventh Circuit held that

the Takings Clause requires a state to pay just compensation to

the owners when it uses unclaimed private property for public

purposes while in its possession. The Ninth Circuit held that

California’s virtually identical law, which prohibits the

payment of interest and does not provide for the payment of

just compensation on unclaimed property it uses for public

purposes, does not violate the Takings Clause. The result is a

clear and irreconcilable circuit split that only this Court can

resolve.

2. On one side of the split is the Seventh Circuit, which

twice has held that even the temporary taking of unclaimed

private property is subject to the Fifth Amendment Takings

Clause. In Cerajeski v. Zoeller, 735 F.3d 577, 583 (7th Cir.

2013), and again in Kolton, 869 F.3d at 533, the Seventh

Circuit held that a state’s temporary use of unclaimed private

property for public purposes imposes a duty to pay just

compensation when the property is returned to its owner. Like

the plaintiffs here, the plaintiffs in Cerajeski and Kolton were

owners of unclaimed property who, under the laws of Indiana

and Illinois, respectively, were entitled to receive only the

property or its principal value when the property was returned

to them.

3. The Ninth Circuit below reached the opposite

conclusion as to California’s indistinguishable UPL. The Ninth

Circuit made no attempt to distinguish the Seventh Circuit’s

contrary decisions, holding only that it was bound by prior

Ninth Circuit authority to preclude relief in this case. App. 3a.

4. Absent this Court’s intervention, this circuit split on

whether the Fifth Amendment Takings Clause applies to

unclaimed personal property used for public purposes will only

deepen. For example, the District of Delaware recently sided

with the Ninth Circuit in upholding Delaware’s unclaimed

-8property law against an identical Fifth Amendment challenge.

See Light v. Davis, et al., No. 22-cv-611-CJB, 2023 WL

6295387 (D. Del. Sept. 27, 2023). Delaware’s law, like the

California UPL and the virtually identical laws in Indiana and

Illinois, requires unclaimed property to be used for public

purposes while in the State’s possession, but prohibits the

Delaware State Escheator from paying interest or any other

compensation when the unclaimed property is returned to its

owners.

Light is currently on appeal in the Third Circuit. Light v.

Davis, et al., appeal docketed, No. 23-2785 (3d Cir. Sept. 28,

2023). That appeal may not succeed because the Third Circuit

previously held in Simon v. Weissmann, 301 F. App’x 107, 112

(3d Cir. 2008), that a state does not “take” the interest earned

on unclaimed property while in its possession within the

meaning of the Takings Clause. In any event, the Third Circuit

can only take sides in the split; it cannot resolve it.

5. A second appeal also is pending in the Third Circuit.

Dillow v. Treasurer of the Commonwealth of Pennsylvania,

appeal docketed, No. 24-2004 (3d Cir. June 4, 2024). Citing

Simon, the district court dismissed the plaintiff’s claim that

Pennsylvania’s Disposition of Abandoned and Unclaimed

Property Act, which does not permit interest or just

compensation to be paid to the owners of unclaimed property,

violates the Takings Clause.

6. In Albert v. Franchot, No. 1-22-CV-01558-JRR, 2023

WL 4058986 (D. Md. June 16, 2023), on reconsideration in

part, 2024 WL 308937 (D. Md. Jan. 26, 2024), the District of

Maryland recently reached the same conclusion as the Seventh

Circuit, but differed from the Ninth Circuit’s holding in this

case and the District of Delaware’s holding in Light, upholding

an unclaimed property owner’s claim that he is owed just

compensation for the Maryland’s public use of his private

property. As California did in 2005, when Maryland amended

-9its unclaimed property statute in 2004, “the amendment

deleted language requiring the Comptroller to pay claims for

unclaimed property ‘plus interest at a rate equal to that earned

by the State Treasurer each year on invested state funds.’”

2023 WL 4058986 at *10 (quoting 2004 Md. Laws Ch. 110

(2004)). The district court also noted that the 2004 amendment

“deleted language requiring claims of unclaimed property in

the form of interest-bearing securities upon delivery to the

State to be paid out with interest accrued on the security while

in State custody.” Id. (repealing Section 17-314).

The district court’s decision in Albert is currently on appeal

in the Fourth Circuit. Albert v. Lierman, appeal docketed, No.

24-1170 (4th Cir. Feb. 23, 2024).

7. In Maron, et al. v. Patronis, No. 4:22CV255-RH-MAF,

2023 WL 11891258, *4 (N.D. Fla. Sept. 5, 2023), the district

court upheld the constitutionality of Florida’s Disposition of

Unclaimed Property Act. The Florida statute permits owners of

unclaimed property to recover only the principal; it does not

allow interest or just compensation to be paid “for the State’s

retention or use of the property prior to its return.” Id. at *1.

Citing this Court’s decision in Texaco, Inc. v. Short, 454 U.S.

516 (1982), Simon, and Turnacliff, as well state court decisions

in Dani v. Miller, 374 P.3d 779, 793-94 (Okla. 2016), Hooks v.

Kennedy, 961 So. 2d 425, 432 (La. Ct. App. 2007), Clark v.

Strayhorn, 184 S.W.3d 906, 911-15 (Tex. App. Ct. 2006), and

McKenzie v. Fla. Dep’t of Fin. Servs., No. 04 CA 755 (Fla. Cir.

Ct. Apr. 27, 2005), the district court held that “the

constitutional issue is controlled by who technically holds title,

rather than by substantive considerations.” Id.

The district court’s decision in Maron is currently on

appeal in the Eleventh Circuit. Maron v. Patronis, appeal

docketed, No. 23-13178 (11th Cir. Sept. 28, 2023).

8. The appeals in Light, Dillow, Albert, and Maron,

however, cannot resolve the circuit split, they can only add to

-10it. The lower court decisions have not varied based upon any

factual differences or any minor differences in the statutes.

Rather, the lower courts have reached different results based

on fundamentally different understandings of whether the

Takings Clause protects unclaimed property and applies to

temporary takings.

Two circuits, the Seventh and Ninth Circuits, each have

reached opposite conclusions on two occasions. The district

courts are following their respective circuits. The pending

appeals in the Third and Fourth Circuits may add weight to one

side of the circuit split or the other, but they will not resolve

the split. There is no reason for this Court to await further

development in the lower courts before resolving this already

entrenched split over these fundamental constitutional

questions.

9. State courts decisions add to the conflict. For example,

in Sogg v. Zurz, 121 Ohio St. 3d 449, 452-53 (Ohio 2009), the

Ohio Supreme Court upheld a claim that Ohio’s unclaimed

property law violated the analogue to the Fifth Amendment’s

Takings Clause in the Ohio Constitution. Like the California

UPL, the Ohio statute provides that title remains with the

property owner “in perpetuity” and it requires Ohio to make

public use of the unclaimed property while in state custody. Id.

at 451. The Ohio Supreme Court held that the state could not

control and use earnings on the unclaimed property without

justly compensating the property owner. Id. at 452-53.

In Cwik v. Giannoulias, 237 Ill. 2d 409, 419 (Ill. 2010), the

Illinois Supreme Court upheld the constitutionality of the

Illionis Uniform Disposition of Unclaimed Property Act.

Applying Texaco, the Illinois Supreme Court reasoned that if a

state may “constitutionally enact a statute that divests a

neglectful owner of all rights in certain property absent the

performance of specified activities evincing a continued and

possessory interest in the property . . . it could take the less

-11drastic measure of enacting a statute that operates to divest

those owners of only certain incidents of ownership, without

mandating divestiture of all rights in the property.” Id.

(emphasis original).

Cwik reached the opposite conclusion than the 7th Circuit

reached seven years later in Kolton on the constitutionality of

the Illinois statute.

The state court decisions in Dani, 374 P.3d at 793-94,

Hooks, 961 So. 2d at 432, and Clark, 184 S.W.3d at 911-15,

and the unreported state court decision in McKenzie, all of

which upheld the constitutionality of their respective state

unclaimed property laws, do not help clarify the important

question presented in this case.

B. This case presents issues of exceptional

importance to the States’ unclaimed property

system.

1. The issue in this case is of exceptional importance to the

nation’s unclaimed property system. Whether states must pay

just compensation on unclaimed property they hold and use for

public purposes affects most States. Only four States, Indiana,

New Jersey, Ohio, and Wisconsin, provide for or permit any

compensation to be paid to the owners of unclaimed property

when it is returned to them.

Given the ubiquity of unclaimed property, the circuit split’s

immediate impact is huge. According to the National

Association of Unclaimed Property Administrators,

approximately 33 million people collectively have more than

$70 billion worth of unclaimed property held by States across

the country. See https://trustandwill.com/learn/us-unclaimedproperty (last visited Aug. 12, 2024). State treasurers return

more than $5 billion of unclaimed property to millions of

people annually. See https://unclaimed.org/who-we-are/ (last

visited Aug. 12, 2024). In nearly every State, when the

-12unclaimed property is returned, no just compensation is paid

to the owners, which amounts to billions of dollars of cost-free

financing for those States that preclude the payment of just

compensation.

The split is particularly intolerable because it creates

disparate treatment for private property owners in different

States. Currently, the owners of unclaimed property in Illinois

and Maryland enjoy the protection of the Takings Clause, but

unclaimed property owners in California and Delaware do not.

The Takings Clause has long been held to apply to the States

through the Due Process Clause of the Fourteenth Amendment.

See Chicago, Burlington & Quincy R.R. Co. v. Chicago, 166

U.S. 226, 239 (1897); Barron v. Baltimore, 32 U.S. 243, 25051 (1833)). A private property owner’s right to just

compensation when his unclaimed property is taken for public

use should not depend upon where he lives or where her

property is located.

The cases that have upheld the constitutionality of a taking

of unclaimed private property for public use without paying

just compensation misunderstand or misapply the Court’s

decision in Texaco. Texaco was not a Taking case. Property was

transferred from one private party to another private party.

Texaco, 454 U.S. at 518 (unused lease to mineral rights

reverted to current surface owner of the property). The mineral

rights in question never passed into the State’s custody, and

they were never used for any public purpose. The question

presented here, whether a State must pay just compensation for

making public use of private property, even if the property

came into the State’s custody because of the owner’s neglect,

was not presented in Texaco.

Now that a clear split exists over this constitutional

question, there is no reason for the Court to stay its hand.

2. Even setting aside the need for certainty, the question

presented has enormous stakes for State treasurers across the

-13country. More than $70 billion worth of unclaimed property is

held by State treasurers across the country. See

https://trustandwill.com/learn/us-unclaimed-property

(last

visited Aug. 12, 2024). It is used for public purposes in nearly

every State. As importantly, more than $5 billion of unclaimed

property is returned to millions of people annually. See

https://unclaimed.org/who-we-are/ (last visited Aug. 12,

2024).

The value of access to the unclaimed property – both what

is returned and what remains in the hands of the States – is

enormous. It is important for State treasurers across the

country to have uniformity in the application of their laws.

Until this Court decides whether the Takings Clause applies to

the public use of unclaimed property, there will be no

uniformity in whether the States must pay just compensation

for the public use of that private property.

II. This case is a suitable vehicle.

A. This case gives the Court an opportunity to cleanly and

definitively resolve an irreconcilable circuit split on an

important issue of State power. The decision below, like all the

decisions in the circuit courts, the district courts, and the State

courts, addresses whether the States’ use of unclaimed private

property is a “taking.” The outcome of these decisions is not

dependent on differences in the facts or material differences in

the law. The arguments for and against applying the Takings

Clause to unclaimed property will be thoroughly set forth by

the parties to this case in the arguments they make on their

respective sides of the issue.

While not addressed in the Ninth Circuit’s terse opinion,

the parties below addressed ripeness, standing, exhaustion of

administrative remedies, and the applicability of the Takings

Clause to unclaimed property. They can and will do so in this

appeal. If the Court grants certiorari, no pertinent arguments

-14will have been waived by any party. In addition, given the large

size of California’s Unclaimed Property Fund, as well as its

large population and extensive economic activity, California

likely has a large portion of the nation’s unclaimed property.

B. In addition, there are no ancillary issues or factual

disputes in play. The question is thus squarely presented by this

petition. To avoid considerable uncertainty in the unclaimed

property regime in every state, this Court should take this

opportunity to answer it.

III. The Ninth Circuit’s decision contradicts this Court’s

Precedent and lacks any constraining principle.

The Ninth Circuit’s decision squarely conflicts with a

plethora of prior decisions of this Court, most notably Cedar

Point Nursery, Tahoe-Sierra, Webb’s Fabulous Pharmacies,

and Loretto. For that reason, it is clearly erroneous and should

be overruled.

With scant analysis, the Ninth Circuit panel held that the

Takings Clause does not apply to unclaimed property because

the property is “abandoned” by its owners. The panel did not

consider that unclaimed property does “not permanently

escheat to the state.” Cal. Civ. Code § 1501.5(a). It is not

abandoned2; rather, it is merely held temporarily by the State

subject to a statutory obligation to return the property to its

owners. See id. § 1501.5(c) (declaring “intent of the

Legislature that property owners be reunited with their

property”). While in the State’s custody, without any transfer

of ownership, unclaimed property is deposited in the

California General Fund, where it is used to pay for the State’s

2

Indeed, the California Controller admits that unclaimed

property is merely “lost or forgotten property.” See

https://www.sco.ca.gov/search_upd.html (last visited Aug. 12,

2024).

-15general operation. Cal. Civ. Code § 1564(c). Nonetheless, the

Ninth Circuit’s decision insulates California’s public use of

unclaimed private property from the Takings Clause. The panel

simply concluded it was bound by two prior Ninth Circuit

decisions, Turnacliff v. Westly, 546 F.3d 1113 (9th Cir. 2008),

and Suever v. Connell, 579 F.3d 1047 (9th Cir. 2009). App. 3a.3

In Suever, the Ninth Circuit held that the plaintiffs’ claim to

recover anything more than the original principal amount of

their “escheated” property was barred by sovereign immunity.

579 F.3d at 1059.

Although not discussed at length in the Ninth Circuit’s

opinion, States are generally immune from suit under the terms

of the Eleventh Amendment and the doctrine of sovereign

immunity. Whole Woman’s Health v. Jackson, 595 U.S. 30, 39

(2021) (citing Alden v. Maine, 527 U.S. 706, 713 (1999)).

However, the Court has long recognized a state’s ability to

waive sovereign immunity. Coll. Sav. Bank v. Fla. Prepaid

Postsecondary Educ. Expense Bd., 527 U.S. 666, 670 (1999)

(citing Clark v. Barnard, 108 U.S. 436, 447-48 (1883)).

Importantly, the Court has held that sovereign immunity “may

be waived even without a separate waiver provision.” Dep’t of

Agric. Rural Dev. Rural Hous. Serv. v. Kirtz, 601 U.S. 42, 43

(2024) (citing Fin. Oversight & Mgmt. Bd. for Puerto Rico v.

Centro de Periodismo Investigativo, Inc., 598 U.S. 339, 347

(2023)). The sovereign immunity defense was waived when

private property was used for public purposes and the duty to

pay just compensation was incurred. Otherwise, the duty to

pay just compensation would be a nullity.

“Because of ‘the self-executing character’ of the Takings

Clause ‘with respect to compensation,’ a property owner has a

constitutional claim for just compensation at the time of the

taking.” In Knick v. Township of Scott, 588 U.S. 180, 192

(2019) (quoting First English Evangelical Lutheran Church of

Glendale v. Los Angeles Cty., Cal., 482 U.S. 304, 318 (1987)).

3

-16The current version of California’s UPL, enacted in 2005,

prohibits the Controller from paying interest when unclaimed

private property is returned to its owners. Section 1540 of the

UPL states, “Interest shall not be payable on any claim paid

under this chapter.” Cal. Civ. Code § 1540(c). Unlike the

current version of the UPL, the prior version of California’s

unclaimed property law at issue in Turnacliff and Suever,

enacted in 2002, required the Controller to pay interest when

returning the unclaimed property: “The Controller shall add

interest at the rate of 5 percent or the bond equivalent rate of

13–week United States Treasury bills, whichever is lower, to

the amount of any claim paid the owner under this section for

the period the property was on deposit in the Unclaimed

Property Fund.” Suever, 579 F.3d at 1051 (quoting UPL then

in effect); Turnacliff, 546 F.3d at 1116 (same).

The narrow issue in Turnacliff was whether the Controller

correctly computed the amount of interest owed on unclaimed

property that had been returned to its owner. 546 F.3d at 1115.

The issues in Suever were whether the plaintiffs received

sufficient notice of their unclaimed property, whether the

Controller mishandled their property while it was held by the

State, and (like the issue in Turnacliff), whether the State’s

miscalculation of interest under the prior version of the UPL

was itself another taking. 579 F.3d at 1050-51.

Here, the panel followed the decisions in Turnacliff and

Suever with no analysis of this Court’s precedent. Instead, the

In Knick, the Court relied upon its prior decision in

Ruckelshaus v. Monsanto Co., 467 U.S. 986, 1016 (1984), that

a “suit for compensation can be brought against the sovereign

subsequent to the taking.” The holding in Monsanto

acknowledges that a state’s sovereign immunity does not

protect it from a claim for just compensation under the Takings

Clause.

-17panel found “no principled difference to be drawn between the

statutes those decisions considered” and the current version of

California’s UPL. App. 3a-4a. Contrary to the decision below,

the prior version of California’s UPL at issue in both Turnacliff

and Suever, unlike the current version of the statute, required

the payment of interest when unclaimed property was returned

to its owners. The narrow questions presented in those cases

concerned the application of the prior version of the statute,

not whether California’s UPL denies the payment of just

compensation to the owners of unclaimed private property.

More importantly, the panel misapplied this Court’s

decision in Texaco. There, the Court held that States could

enact laws providing for the transfer of abandoned property

from one private owner to another. 454 U.S. at 526. The

Indiana Mineral Lapse Act at issue in Texaco provided that “a

severed mineral interest that is not used for a period of 20 years

. . . reverts to the current surface owner of the property.”

Texaco, 454 U.S. at 518. The case involved the transfer of

property rights between private citizens, not rights transferred

to the State.

The Court held in Texaco that States may create property

interests of limited duration, conditioned on the owners taking

“reasonable actions imposed by law,” and that “the State may

treat a mineral interest that has not been used for 20 years and

for which no statement of claim has been filed as abandoned.”

454 U.S. at 530. However, the Court carefully distinguished

temporary property rights from those property rights that are

subject to the Takings Clause: “We have no doubt that, just as

a State may create a property interest that is entitled to

constitutional protection, the State has the power to condition

the permanent retention of that property right on the

performance of reasonable conditions that indicate a present

intention to retain the interest.” 454 U.S. at 526. The facts

before the Court in Texaco were materially different than the

-18facts before the Ninth Circuit here, in Turnacliff, and in Suever

because Texaco did not involve an unclaimed property statute

nor a taking of property by the government for public use.

The Ninth Circuit’s decision conflicts with this Court’s

decisions in other, more relevant Takings cases which hold that

even a temporary physical taking, as occurs with unclaimed

property used for public purposes, requires just compensation.

For example, in Cedar Point Nursery, 141 S. Ct. at 2074, the

Court held that a “physical taking” occurs “when the

government physically takes possession of property without

acquiring title to it.” Here, the UPL provides that California

does not acquire title to the unclaimed property; it merely takes

temporary custody of the property. Cal. Civ. Code § 1501.5(a)

(“property received by the state under this chapter shall not

permanently escheat to the state”). But California undeniably

takes possession of the property. Indeed, Cal. Civ. Code §

1532(a) requires the holders of unclaimed property to deliver

the property to the Controller and specifies the timing and

means of delivery of the property to the Controller. Thus, the

UPL falls squarely within the meaning of a “taking.”

Once a taking of private property has occurred, the duty to

pay just compensation arises if the property is put to public

use. “[G]overnment action that works a taking of property

rights necessarily implicates the ‘constitutional obligation to

pay just compensation.’” First English Evangelical Lutheran

Church of Glendale v. County of Los Angeles, 482 U.S. 304,

315 (1987). In so holding, the Court recognized “that the Fifth

Amendment right to compensation automatically arises at the

time the government takes property without paying for it.”

Knick, 588 U.S. at 191-92. In Knick, the Court added that a

“property owner acquires an irrevocable right to just

compensation immediately upon a taking” “[b]ecause of ‘the

self-executing character’ of the Takings Clause ‘with respect

to compensation.’” 588 U.S. at 192 (quoting First English, 482

-19U.S. at 315).

The State’s duty to pay just compensation under the

Takings Clause “arises at the time of the taking, regardless of

post-taking remedies that may be available to the property

owner.” Knick, 588 U.S. at 181 (citing Jacobs v. United States,

290 U.S. 13 (1933)). In Jacobs, the Court held that “the

compensation must generally consist of the total value of the

property when taken, plus interest from that time.” 290 U.S. at

17 (quoting Seaboard Air Line R. Co. v. United States, 261 U.S.

299, 306 (1923)).

As the Court just held, “‘a property owner acquires an

irrevocable right to just compensation immediately upon a

taking’ ‘[b]ecause of “the self-executing character” of the

Takings Clause “with respect to compensation.”’ DeVillier v.

Texas, 601 U.S. 285 (2024) (quoting Knick v. Township of

Scott, Pa., 588 U.S.180, 192 (2019) (quoting First English

Evangelical Lutheran Church of Glendale v. County of Los

Angeles, 482 U. S. 304, 315 (1987)).

In sum, there is no basis for concluding, as the Ninth

Circuit did, that a state’s public use of unclaimed private

property is not a taking that requires just compensation under

the Takings Clause of the Fifth Amendment. This Court should

resolve the circuit split by reversing the Ninth Circuit’s

contrary conclusion.

CONCLUSION

This Court should grant the petition for a writ of certiorari.

Respectfully submitted,

/s/ Mark C. Rifkin

MARK C. RIFKIN

Counsel of Record

WOLF HALDENSTEIN ADLER

FREEMAN & HERZ LLP

270 Madison Avenue, 9th Floor

-20New York, NY 10016

(212) 545-4600

rifkin@whafh.com

ARTHUR SUSMAN

LAW OFFICE OF ARTHUR

SUSMAN

1540 N. Lake Shore Drive

Chicago, Illinois 60610

(847) 800-2351

arthur@susman-law.com

Counsel for Petitioners