Dennis O'Connor v. Rachael Eubanks, 83 F.4th 1018

Background

Michigan’s Uniform Unclaimed Property Act (UUPA) permits the State to take custody (not ownership) of unclaimed property, liquidate it after notice, deposit proceeds in the general fund, and reimburse owners who successfully claim net proceeds; interest is payable only if the property previously accrued interest.
FMC Corp. and Michigan Millers delivered two checks (≈ $350) belonging to Dennis O’Connor to the State; Michigan liquidated the property and later reimbursed O’Connor for the principal but not any post‑liquidation net interest.
O’Connor alleges he received no statutorily required notices (from holders or the State) before custody or liquidation and sued: (a) the State under the Fifth Amendment and (b) State Treasurer Rachael Eubanks and Program Manager Terry Stanton in their individual capacities under 42 U.S.C. § 1983 for Takings and Fourteenth Amendment due‑process violations.
The district court dismissed all claims with prejudice, holding officials entitled to qualified immunity and the State entitled to sovereign immunity. O’Connor appealed.
The Sixth Circuit affirmed dismissal of takings claims against officials (qualified immunity) and affirmed dismissal of takings against the State (Eleventh Amendment), but vacated dismissal of officials on due‑process claims and remanded for further proceedings.

Issues

Issue	Plaintiff's Argument (O'Connor)	Defendant's Argument (Eubanks/Stanton/Michigan)	Held
1) Can officials be held individually liable for a Takings Clause violation?	Officials can be sued under § 1983 for uncompensated takings.	Individual liability for takings is not clearly established; officials are entitled to qualified immunity.	Officials entitled to qualified immunity on takings claims (Sterling Hotels/Vicory controlling).
2) Did officials violate due process by providing no pre‑deprivation notice or process for interest earned post‑liquidation?	O’Connor had a property interest in net interest and received no process/notice, so due process was violated.	UUPA treats principal as abandoned; statutory scheme satisfies process.	Dismissal vacated as to due‑process claims; officials are not entitled to qualified immunity on those claims at pleading stage (plausible, clearly established right to notice).
3) Does O’Connor have a constitutional property right in net post‑liquidation interest?	Yes: precedent holds owners are entitled to net interest earned on their property while the government holds or liquidates it.	UUPA extinguishes title as abandoned, so no interest right.	Court holds precedent (Webb’s, Fisher, Phillips) establishes a property right in net interest; complaint plausibly alleges interest and costs.
4) Can O’Connor pursue Takings Clause damages against the State in federal court?	Federal forum is proper for Takings Clause claims seeking just compensation.	Eleventh Amendment bars federal suits against states when adequate state remedies exist.	Takings claims against Michigan dismissed for lack of jurisdiction (Eleventh Amendment) because UUPA provides state‑court remedies; dismissal should be without prejudice.

Key Cases Cited

Sterling Hotels, LLC v. McKay, 71 F.4th 463 (6th Cir.) (individual officials entitled to qualified immunity on takings claims)
Vicory v. Walton, 730 F.2d 466 (6th Cir.) (panel statement suggesting no individual liability for takings)
City of New Orleans v. Fisher, 180 U.S. 185 (government must account to owner for interest earned on taken property)
Webb’s Fabulous Pharmacies, Inc. v. Beckwith, 449 U.S. 155 (owners entitled to interest earned while government holds proceeds)
Phillips v. Washington Legal Foundation, 524 U.S. 156 (reaffirming owner rights in interest earned)
Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306 (notice is a constitutional minimum before deprivation of property)
Knick v. Township of Scott, 139 S. Ct. 2162 (owner may bring federal takings claim without first suing in state court)
DLX, Inc. v. Kentucky, 381 F.3d 511 (6th Cir.) (Eleventh Amendment bars federal takings suits against states when state remedies are available)
Skatemore, Inc. v. Whitmer, 40 F.4th 727 (6th Cir.) (applying DLX to bar federal takings claims against the State)
Brown v. Legal Foundation of Washington, 538 U.S. 216 (no taking where earned interest did not exceed administrative costs)