On February 29, 2016, the U.S. Supreme Court denied a petition for a writ of certiorari in the case of Taylor v. Yee, in which the plaintiffs-appellants challenged the validity of California’s Unclaimed Property Law as it has been applied by the California State Controller. The petition followed the decision of the U.S. Court of Appeals for the Ninth Circuit dismissing the plaintiffs-appellants’ claims that the pre-escheat notice provided by the Controller was “constitutionally inadequate because the Controller does not attempt to locate property owners using the data sources required by [California’s Unclaimed Property Law].” Further, the plaintiffs-appellants claimed that the procedures used before and after the unclaimed property is transferred to the Controller are insufficient and violated the plaintiffs-appellants’ due process rights under the Due Process Clause of the Fourteenth Amendment.
Although the Supreme Court denied the petition, Justice Alito, in a concurring opinion, was critical of what he described as a recent trend of “combining shortened escheat periods with minimal notification procedures,” and took note of advances in technology that make it easier to identify and locate property owners. Although Justice Alito conceded that that the “convoluted history” of the case made it a “poor vehicle” for addressing due process issues raised by state escheat laws, he signaled that the constitutionality of current state escheat laws is a question that may merit review in a future case.
In a related development, the Uniform Law Commission continues to work on a Revised Uniform Unclaimed Property Act (last revised February 2016) that has received input from the mutual fund/investment management industry. A complete list of revisions and comment letters being considered by the Uniform Law Commission is available here.