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UPPO Weighs in on Delaware v. Pennsylvania and Wisconsin

Posted By Administration, Thursday, August 4, 2016

UPPO filed an amicus brief with the Supreme Court of the United States on Monday, Aug. 1 asking the court to hear State of Delaware v. Commonwealth of Pennsylvania and State of Wisconsin, and to clarify the reach of the federal common law rules governing unclaimed property. Specifically, UPPO requests the Supreme Court clarify that the federal common law rules apply to cases involving conflicting claims among the states, and cases involving a dispute between a holder and a single state. UPPO also seeks clarification that the secondary rule protects the rights of holders against unconstitutional overreaching by states.


Case background
MoneyGram has been involved in a number of lawsuits involving Delaware, Wisconsin and Pennsylvania. The states are each claiming right to MoneyGram’s Official Checks. Delaware claims MoneyGram should escheat the property to Delaware because it’s MoneyGram’s place of corporate domicile. Wisconsin and Pennsylvania argue that the Official Checks should be remitted to the jurisdiction in which the purchase took place.  While the states battle it out, Delaware has refused to indemnify MoneyGram.


Learn more about the cases involving MoneyGram which have led up to Delaware v. Pennsylvania and Wisconsin.


UPPO Government Relations and Advocacy Committee members, John Coalson of Alston & Bird, Sara Lima of Reed Smith, Ethan Millar of Alston & Bird, and Diann Smith of McDermott Will & Emery, were joined by Michael Lurie and Matthew Setzer of Reed Smith to draft the amicus brief. They laid out a number of arguments in the brief to depict the current unclaimed property landscape and why it warrants the Supreme Court’s attention and consideration.


The landscape has changed since the Supreme Court announced the common law rules in Texas v. New Jersey.
“While significant change is to be expected over a half-century, the revolution in unclaimed property is ground-breaking,” the brief states. It goes on to say that the major developments include: massive increases in the unclaimed property collected by states; legislative trends increasing state unclaimed property collections; and aggressive interpretations of the secondary rule.


Holders are caught between conflicting and competing state laws.
The Supreme Court created the federal common law rules to resolve conflicting claims of different states with “clarity and ease of application” (Texas v. New Jersey). The intention of creating the rules have been lost, and states have interpreted the federal common law rules differently, causing issues like the one that presents itself in Delaware v. Pennsylvania and Wisconsin.


Another example of conflict is how states interpret “last known address.” Texas v. New Jersey dictates that property with a “last known address” of the owner should be escheated to the state where that address is located. The problem lies in that the definition of “last known address” is different among states. The brief adds that, “For example, New Jersey regulation states that a zip code is a last known address. Connecticut and Michigan define last known address as an address sufficient for mailing.”


Holders face significant burdens in light of these conflicting and expansive state rules.
Multiple states can assert claim to property, yet the holder is required to obtain confirmation from a state that it is required to remit the disputed property to that state, and in addition, defend its choices to the multiple other states claiming the property. The Council on State Taxation conducted a study of its members and found that 61 percent spent more than $1 million dollars in staff time, legal fees and other expenses (excluding the actual assessment) to go through the motions of an unclaimed property audit.


Holders have minimal recourse.
In the past, states have argued that federal common law rules only apply to interstate disagreements, and that holders cannot raise the federal common law rules in defense. This leaves holders at risk of multiple states claiming custody of the same property.


Next steps
Its anticipated that Supreme Court will make a decision as to whether it’ll hear the case around early October. Check back for updates and more information.

Tags:  amicus curiae brief  Delaware v. Pennsylvania and Wisconsin  unclaimed property  UPPO 

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