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Tuesday, August 20, 2019

Conn. SC: State can keep nearly $6M in unclaimed bottle deposits

By Jessica M. Karmasek | Aug 16, 2013

HARTFORD, Conn. (Legal Newsline) -- The Connecticut Supreme Court this week overturned a nearly $6 million award to beer and soda distributors in a case over unclaimed bottle and can deposits the state made them turn over under a 2009 bill.

The state's high court, in its unanimous decision Tuesday, reversed a lower court's ruling.

The original plaintiffs, 12 beer and soft drink distributors doing business in Connecticut, sued the Commissioner of Environmental Protection, seeking a declaratory judgment and damages for the alleged, retroactive taking of their property in violation of the Fifth and Fourteenth amendments to the U.S. Constitution, and the state's constitution.

The property in question is unclaimed beverage container deposits, the disposition of which was considered by the state Legislature in 2008, and again in 2009, when Connecticut was facing a significant budget deficit.

State legislation signed into law on Jan. 15, 2009, and made applicable for a period of four months prior to its effective date, provided that all unclaimed deposits accruing during the designated four-month period, which previously had been retained by the plaintiffs, must be paid to the state.

The plaintiffs did not challenge the state's right to the unclaimed deposits from the effective date onward.

Instead, they claimed that application of the provision to the four-month period prior to that date was an "unconstitutional taking" because they had a vested property interest in the deposits.

The commissioner argued that the legislation did not effect such a taking because the distributors did not have a vested property interest.

The commissioner appealed to the Supreme Court the judgment of a trial court, awarding damages and attorney's fees to the original plaintiffs and damages to the intervening plaintiffs following the court's granting of the original plaintiffs' motion for summary judgment and denial of the commissioner's motion for summary judgment.

Justice Peter Zarella, writing for the court, agreed with the state, saying the distributors failed to prove they were entitled to the money.

"Viewing the issue through this lens, we conclude that the plaintiffs had no property interest in the unclaimed deposits because their right to use and control the deposits was severely limited following passage of the 2008 act," Zarella wrote.

"As previously discussed, although the act did not address disposition of the unclaimed deposits, it stated in specific terms how such funds were to be managed, including that they were to be deposited in a special interest bearing account at the Connecticut branch of a financial institution. Even more significant, the 2008 act contained no provision allowing the unclaimed deposits to be withdrawn by the distributors.

"In short, the 2008 act did not allow the distributors to withdraw or control the funds placed in the special accounts beyond the parameters established by the act's provisions. Thus, the distributors had no property interest in the unclaimed deposits because they possessed none of the normal incidents of ownership."

From Legal Newsline: Reach Jessica Karmasek by email at jessica@legalnewsline.com.

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