Chris Taylor v. John Chiang
780 F.3d 928
9th Cir.2015Background
- Plaintiffs (a putative class) challenge California’s Unclaimed Property Law (UPL) as applied by State Controller Betty Yee, arguing pre‑escheat and post‑escheat procedures violate due process.
- Under the UPL, holders must give notice and report unclaimed property to the Controller; the Controller must mail pre‑escheat notice (and publish notice) and maintain a searchable website. Owners may reclaim property after escheat.
- In 2007 the Legislature amended the UPL after this litigation; the Ninth Circuit previously held the amended statute facially constitutional.
- Plaintiffs allege the Controller’s pre‑escheat notice is inadequate because she does not consult additional databases referenced in Section 1531.5 and uses private contractors with an alleged conflict of interest.
- Plaintiffs also challenge post‑escheat procedures (claim denial and review process) as violating Due Process and Takings protections.
- The district court dismissed the second amended complaint for failure to state a claim; the Ninth Circuit affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Controller must search databases listed in Cal. Civ. Proc. Code § 1531.5 before mailing pre‑escheat notice | Controller must consult all publicly available/state databases under § 1531.5 to locate owners and satisfy Mullane/ Jones | §1531.5 applies to post‑escheat notification and is permissive; pre‑escheat notice required by UPL is constitutionally sufficient | Court held plaintiffs misread §1531.5; it is post‑escheat and permissive; Controller’s pre‑escheat steps meet due process and Jones does not require exhaustive database searches |
| Adequacy of notice when Controller uses holder addresses, FTB lookup, publication, and website | These steps are insufficient; more proactive searches are required | The UPL and Controller’s practices provide notice reasonably calculated under Mullane/ Jones | Held that the amended UPL’s pre‑escheat notice satisfies due process; suggested additional database searches would exceed constitutional minimums |
| Conflict of interest from private companies administering notice | Companies receiving a portion of recovered value have a disqualifying conflict that undermines notice | Contractors perform ministerial tasks, are not decisionmakers, and plaintiffs do not allege failures in notice performance | Court rejected conflict claim as unsupported by law or pleaded facts |
| Post‑escheat remedies and ripeness of challenge to Controller’s claim‑denial process | Controller’s post‑escheat review and limitations period are unconstitutional | Plaintiffs must exhaust the statutory state‑court review under § 1541; facial adequacy was already upheld | Court held post‑escheat challenge unripe for federal review and/or foreclosed by prior facial ruling |
Key Cases Cited
- Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306 (1949) (due process requires notice reasonably calculated under the circumstances)
- Jones v. Flowers, 547 U.S. 220 (2006) (when mailed notice is returned unclaimed, additional reasonable steps are required if practicable)
- Taylor v. Westly (Taylor I), 402 F.3d 924 (9th Cir. 2005) (earlier decision in Taylor litigation addressing notice and jurisdictional issues)
- Taylor v. Westly (Taylor III), 525 F.3d 1288 (9th Cir. 2008) (amended UPL held facially constitutional)
- Suever v. Connell (Suever II), 579 F.3d 1047 (9th Cir. 2009) (cited for reiteration of Taylor III’s facial holding)