On February 29, 2016, the U.S. Supreme Court denied the writ of certiorari to review the judgment of the U.S. Court of Appeals for the Ninth Circuit in Taylor v. Yee, 780 F.3d 928 (9th Cir. 2015). The case involves a 13-year litigation over California’s Unclaimed Property Law (UPL), which authorizes the state to escheat and liquidate unclaimed property, including unclaimed securities. Although the Court denied the writ of certiorari, Justice Samuel Alito’s concurrence denying certiorari signals the Court’s growing concerns over the constitutionality of current state escheat laws.

The Petition -

On August 5, 2015, Chris Lusby Taylor and others filed a petition for a writ of certiorari asking the Court to reverse the Ninth Circuit’s decision, which rejected the petitioners’ claim that the UPL violated the Due Process Clause of the Fourteenth Amendment by failing to provide constitutionally adequate notice to owners of unclaimed securities to be escheated, and by failing to take adequate steps to locate and notify property owners before liquidating their property. In particular, the petitioners argued that the UPL violates due process because it does not provide adequate individualized notification that property may be escheated by utilizing records and databases readily available to the state trying to locate the owner, but rather relies on written notices to addresses that the state knows are no longer valid and generic newspaper publications. In addition, in light of Horne v. Department of Agriculture, 135 S. Ct 2419, 2428 (June 22, 2015), the petitioners asked the Court to vacate and remand the Ninth Circuit’s decision on the separate basis that the Ninth Circuit applied the incorrect legal standard by failing to review California’s unclaimed property scheme under the Takings Clause of the Fifth Amendment. In particular, the petitioners alleged that California’s practice of liquidating the securities after seizing them, and paying only the proceeds of the liquidation rather than their current value, is an unconstitutional taking without just compensation.