The debate over the debt limit will likely flare tensions between centrist and far-right Republicans the closer the country gets to the real deadline sometime later in the year. (Photo by Getty Images)
Attorneys leading a class action lawsuit against Ohio’s new stadium funding plan have thrown their weight behind a case out of California. They’ve filed an amicus brief, urging the U.S. Supreme Court to hear a case challenging how California handles abandoned funds.
In the most recent state budget, Ohio lawmakers devised a system to use private citizens’ unclaimed funds to pay for a new Cleveland Browns stadium. Lawmakers earmarked $1 million for outreach, but there’s no explicit requirement for officials to notify individual owners before their property gets transferred.
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Attorneys Jeff Crossman and Marc Dann see parallels in California’s unclaimed funds program.
“The idea that the government can take your property without notice, without your consent or without payment first, is exactly what our state and federal constitutions were written to prevent,” attorney Jeffrey Crossman explained in a press release.
“Private property rights are supposed to be sacred,” he added. “Yet in both states, the government is treating other people’s property as a slush fund.
What’s California up to?
In California, most unclaimed funds including old bank accounts, security deposits and unused life insurance benefits become dormant once there’s no account activity for three years. If the state controller can’t track down the rightful owner, that property gets liquidated and transferred to the state.
The court case, known as Peters v. Cohen, turns on the state’s notification requirements.
Jan Peters is German citizen, but he had an account in California holding Amazon stock. That account eventually got reported as dormant. But when the state attempted to contact Peters, the private firm it worked with changed his address in Munich, Germany to Munich, California and used a zip code of “00000.”
Munich, California doesn’t exist, and “00000” is not a valid zip code. Unsurprisingly, the notice never reached Peters, and so the controller sold his Amazon stock in July 2020. His holdings were worth $1.6 million at the time of sale. They’d be worth more than $4.2 million now.
Peters’ U.S. Supreme Court petition argues California’s statutes don’t account for reasonable investment strategies like buying and holding. And while California works hard to track down people with unpaid taxes or traffic tickets, it doesn’t go to the same lengths to return money.
The petition added California’s growing reliance on third-party firms, paid on commission, has “not only lubricate(d) the funnel for unclaimed property to slide into the coffers of the state but also increase(d) the risk of erroneous seizures.”
The
Capital Journal reached out to the California Controller Malia Cohen. Her press secretary declined comment.
Unlike Ohio’s new unclaimed funds law, California maintains an indefinite obligation to return funds to their owners. So, Peters eventually received $1.6 million from the state of California. But because the state failed to provide notice before selling his stock, Peters contends he’s also entitled to the difference between the sale price and its current market value.
The Ninth Circuit Court of Appeals turned Peters down, determining his claim amounted to “a request for money damages barred under the Eleventh Amendment.” He’s appealed to the U.S. Supreme Court. In September, the justices are slated to consider whether to hear the case.
Attorney and Democratic former state Rep. Jeff Crossman, speaking, alongside former Democratic Attorney General Marc Dann. (Photo by Nick Evans, Ohio Capital Journal.)
How the case intersects with Ohio
In an amicus brief, Crossman and co-counsel Marc Dann argue there’s a “striking similarity” between the procedures in California and Ohio. They argue both arrangements allow the state to systematically take private property without adequate notice.
In California, if attempts at contact fail, the state gets the money and then officials run generic newspaper ads. The state also maintains a website where claimants can search for property. For unclaimed property worth less than $50, officials don’t have to contact owners ahead of transfer at all. Even if Ohio lawmakers set aside $1 million for additional outreach, Crossman and Dann argue Ohio’s law doesn’t require directly contacting property owners before taking possession of their unclaimed funds.
“This lack of individualized notice mirrors California’s deficient procedures,” they argued, adding it violates existing precedents “for notice that is reasonably calculated to reach affected parties.”
Crossman and Dann insisted the Peters case isn’t an isolated incident, but rather “a growing trend among states, including Ohio, to exploit unclaimed property laws for revenue.”
Still, there are notable differences between Ohio’s new statute and the process in California.
Because officials in California will repay valid claims in perpetuity, its seizure of unclaimed funds amounts to something more like a loan. California gets the benefit of those dollars without having to pay interest, and rightful owners lose out on their asset’s appreciation, but the money doesn’t just disappear.
That looks more like the prior transfers Ohio has made from unclaimed funds to the state general fund. State lawmakers got to use the money, but the expenditures didn’t change Ohio’s obligation to pay valid claims.
Lawmakers backing the stadium plan pointed to those earlier transfers to justify the new program, but the new program operates differently. After a ten-year grace period, the money transferred to the new sports and cultural facilities fund really does pass into state possession, and property owners can’t get it back.
With that prospect looming, Crossman and Dann told the justices, “this court’s intervention is critically necessary to establish clear standards for notice and compensation in unclaimed property schemes, protecting millions of Americans from unconstitutional deprivations.”
Follow Ohio Capital Journal Reporter Nick Evans on X or on Bluesky.
