Treasurer of New Jersey v. United States Department of the Treasury
2012 U.S. App. LEXIS 13143
3rd Cir.2012Background
- Seven plaintiff States sue the U.S. Treasury seeking proceeds from matured but unredeemed U.S. savings bonds, alleging their unclaimed-property acts require turnover to the States.
- Bonds are federal obligations; redemption is governed by federal regulations and the Treasury may pay only to the named owners or as otherwise provided by federal rules.
- States rely on custody-based escheat statutes to claim proceeds, arguing federal law does not preempt their acts for custody purposes.
- District Court dismissed, ruling on sovereign immunity, intergovernmental immunity, preemption, and APA notice-and-comment grounds; the Third Circuit reverses in part, affirming dismissal and addressing jurisdiction and preemption.
- Court ultimately held sovereign immunity is waived by the APA §702, but preemption and intergovernmental immunity bar the States’ custody-based claims against the Treasury; the Tenth Amendment claim is colorable but not meritorious.
- Proceedings reflect a comprehensive preemption analysis of whether state escheat laws may govern federal bond proceeds without conflicting with federal regulation
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does APA §702 waive sovereign immunity for nonmonetary relief in this action? | States rely on §702 waiver for nonmonetary relief against agency action. | Escheat action is improper given federal preemption and immunity concerns. | Yes, the waiver applies; sovereign immunity does not bar the suit on nonmonetary relief. |
| Do federal statutes and regulations preempt the States’ custody-based unclaimed property claims to bond proceeds? | States allege their acts can custody-transfer bond proceeds without conflicting with federal law. | Federal bond regulations conflict with state custody remedies and would disrupt federal contract framework. | Yes, preemption bars the States’ custody-based claims. |
| Does intergovernmental immunity bar States from compelling the federal government to comply with state escheat laws? | States seek custody of funds held by the U.S. Treasury. | Custody enforcement would regulate the federal government’s operations and property. | Yes, intergovernmental immunity bars the relief sought. |
| Is the District Court properly seated with subject-matter jurisdiction under federal questions or supplemental jurisdiction? | Case arises under federal law via Tenth Amendment and preemption arguments. | Subject-matter jurisdiction could be lacking if claims are purely state-law; but federal issues predominate. | District Court had jurisdiction under 28 U.S.C. §1331 and supplemental jurisdiction under §1367. |
Key Cases Cited
- Free v. Bland, 369 U.S. 663 (1962) (federal regulation preempts state property law in savings bonds)
- United States v. Klein, 303 U.S. 276 (1938) (federal government retains property interests; escheat priority principles)
- Trudeau v. Federal Trade Commission, 456 F.3d 178 (D.C. Cir. 2006) (§702 waiver extends beyond APA final-action requirement)
- Veterans for Common Sense v. Shinseki, 644 F.3d 845 (9th Cir. 2011) (§702 waiver broad for nonmonetary relief against agencies)
- Bowsher v. United States, 935 F.2d 334 (D.C. Cir. 1991) (intergovernmental immunity; federal funds held for federal debts)
- Grable & Sons Metal Prods. v. Darue Eng’g & Mfg., 545 U.S. 308 (2005) (significant federal issue jurisdiction when claim faces a federal question on the face of the complaint)