ST. PAUL, Minn. (Legal Newsline) – A class action lawsuit over the fate of $750 million in unclaimed cash and other assets signified as abandoned was recently nixed by the Minnesota Court of Appeals.
The lawsuit not only accused the Department of Commerce of not attempting to contact the lawful owners of the assets, but also of unlawful taking, because even when the rightful owners were found, they were simply returned their cash or assets and did not receive any accrued interest.
This method of not paying out interest is authorized under the Minnesota Unclaimed Property Act, which the suit alleged was unconstitutional. That, too, was shot down under Judge Renee Worke, who pointed to past precedent from 1982's U.S. Supreme Court's ruling in Texaco Inc. v. Short as the basis for her decision.
The plaintiffs, which attorney Daniel Hedlund of Gustafson Gluek PLLC believes could number in the tens of thousands, are likely now looking to take the case to the state Supreme Court.
"The plaintiffs and their counsel are disappointed in the Court of Appeals' ruling and are considering all of their options, including an appeal to the Minnesota Supreme Court," Hedlund recently told Legal Newsline. "The state's public records indicate that Minnesota currently has $749 million in unclaimed property in its possession."
A financial report earlier this year mentioned that the state could owe as much $15 million in interest on the unclaimed assets, but because a class action lawsuit can only address common claims and just 25 percent of the claimants originally had funds placed in an interest-bearing account, Worke decided to shoot down the suit even though the 2013 case of Cerajeski v. Zoeller stated that property owners must be paid out on any assets held in interest-bearing accounts.
This decision was also despite the amount of unclaimed assets skyrocketing in recent years. In 2015, at the time of the filing, the total owed by the state was $606 million, or a full $143 million less than the current figure. In 2007, the figure was roughly $300 million.
"Over the years, the state has increased its efforts to bring money into the fund through shortening dormancy periods and increasing collection efforts, while at the same time decreasing its efforts to provide notice to property owners," Hedlund said.
"The result of these changes has been a dramatic increase in the amount of money the state has collected."
The state, however, contends that it has actually improved efforts to inform owners, and that method of contact was up for debate in this decision as well. The state utilized the website www.missingmoney.com where users are required to type in their name, which was a slight change from the an actual list that the possible owners were required to examine.
Worke ruled that in the current age of technology, such a change to the method of search was neither "uncommon" or "budensome" to users. Despite Worke's ruling, Hedlund maintains that the state's payback program is unconstitutional.
"As currently administered, the program in unconstitutional because it, one: results in taking of plaintiff's property by not paying interest, and two: is a violation of due process due to inadequate notice," he said.