Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_10-cv-01610/USCOURTS-cand-3_10-cv-01610-21/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1332 Diversity-Other Contract

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United States District Court

For the Northern District of California

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

SAN FRANCISCO DIVISION

IN RE APPLE IPHONE/IPOD 

WARRANTY LITIGATION

____________________________________/

No. C 10-1610 RS

FURTHER ORDER RE DISPOSITION 

OF FUNDS FROM UNCASHED 

CHECKS

Pursuant to an order entered on June 25, 2015, the parties have submitted a “Joint Status 

Statement” regarding the disposition of proceeds from uncashed settlement checks as discussed in 

that order. Apple reports, as supported by a declaration of the claims administrator, that no legal or 

practical barriers exist to preclude turning over the funds to the authorities in the relevant states in 

“custodial escheat,” consistent with the intent expressed in the June 25th order. While plaintiffs’ colead counsel do not challenge any of Apple’s factual assertions, they argue that the Court lacks legal 

discretion to order disposition of the funds in such a manner.

As an initial matter, plaintiffs’ argument is effectively a request for reconsideration of the 

June 25th order, which has not been presented in the manner required by the local rules.

Case 3:10-cv-01610-RS Document 173 Filed 08/28/15 Page 1 of 4
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United States District Court

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Additionally, although plaintiffs disagree with the conclusions of the June 25th order, they have not 

offered any grounds that generally would support reconsideration in any event. 

More fundamentally, plaintiffs’ arguments appear to be based on a misunderstanding of the 

nature of so-called “custodial escheat.” As the Ninth Circuit has explained in connection with 

California’s unclaimed property law, custodial escheat is not the same as “permanent escheat.” See, 

Taylor v. Westly (Taylor I), 402 F.3d 924, 930 (9th Cir. 2005). In a statutory custodial escheat 

system, the state holds the property in trust for the private owners, even when monies are deposited 

into the state’s general fund. Id. at 931.1 

Accordingly, while the June 25th order does address a situation not expressly contemplated 

by the parties’ settlement agreement, it does not represent a “modification” of the parties’ agreement 

to “add an escheatment provision.” Custodial escheat systems are provisions of general law that 

govern the holding of funds for their rightful owners. The parties’ settlement agreement here 

provided for a mechanism to identify class members and the amount to which each was entitled 

even without the necessity of class members submitting claims, in many instances. Checks were 

then issued, at which time the funds can be deemed effectively to have become the property of those 

persons. The June 25th order does not materially alter the parties’ agreement. The settlement fund 

has still been apportioned among the plaintiff class as envisioned by the parties—the order merely 

directs that the property of class members that remains in the administrator’s hands be handled 

pursuant to existing provisions of state law.

The decision of the Texas Supreme Court in Highland Homes Ltd. v. State, 448 S.W.3d 403, 

(Tex. 2013) does not compel a different analysis or result. There the issue was whether parties 

could validly agree that checks that went uncashed for ninety days were void, with the funds then 

going to a designated cy pres recipient, rather than to the state’s unclaimed property fund. In light 

of the fact that the class representatives had the authority to control disposition of the settlement 

funds and bind the class, the court reasoned that the monies could not be considered “unclaimed,” 

and upheld the agreement. See 448 S.W.3d at 411 (“The absent members agreed to the 90–day 

 

1 While the parties have not briefed the details of the unclaimed property statutes in all the affected 

states, Apple’s report supports a conclusion that none of the relevant states lack a custodial escheat 

system or would otherwise treat the funds as permanently escheated or unavailable to be claimed by 

the class members to whom the checks were issued.

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United States District Court

For the Northern District of California

limitation on taking property they claimed, just as the class representatives individually did, and are 

as fully bound.”) In other words, in Highland Homes, the settlement agreement expressly provided 

that class members would forfeit any ownership in the settlement funds if they failed to negotiate 

their settlement checks within 90 days, and therefore the funds from the uncashed checks were not 

the named payees’ property, subject to the unclaimed property statutes.

Here, in contrast, the settlement agreement explicitly provides that if checks go uncashed 

after 30 and 90 days, the settlement administrator is required to “take appropriate follow-up steps.” 

This direction, which the administrator has followed to date (with some success) by making a 

number of additional efforts to ensure the checks get cashed, is consistent with the notion that the 

checks continue to represent property of the persons to whom they were issued. The June 25th 

order does not add to or alter the provisions of the settlement; it merely provides the administrator 

guidance that it may fulfill its duty to “take appropriate follow-up steps” by complying with state 

law governing unclaimed property. The June 25th order further explained why the other proposals 

for disposition of the funds would actually be less consistent with the language and intent of the 

agreement, and not as equitable.

Finally, plaintiffs point to criticisms that have been raised as to the efficacy of state 

unclaimed property systems in restoring property to its rightful owners, and to charges that states 

have used funds in custodial escheat for other purposes. The Court is familiar with these concerns. 

See, Suever v. Connell (Suever I), 439 F.3d 1142, 1148 (9th Cir. 2006); Suever v. Connell (Suever 

II), 579 F.3d 1047 (9th Cir. 2009); Suever v. Connell (Suever III), 484 Fed.Appx. 187 (9th Cir.

2012). While California’s legislature has addressed these issues, see Taylor v. Westly (Taylor III ), 

525 F.3d 1288, 1289 (9th Cir. 2008), it may be that not all other relevant states have. Nevertheless, 

there is nothing to suggest that class members in any of the states involved in this action will lose 

the right to claim and obtain their funds from the settlement at any time. Accordingly, even if 

plaintiffs had sought leave to file a motion for reconsideration, and could have shown that the 

prerequisites for reconsideration exist, any such reconsideration would have resulted in reaffirming 

the conclusions of the June 25th order. The settlement administrator is authorized to proceed as 

previously directed.

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IT IS SO ORDERED.

Dated: August 28, 2015

RICHARD SEEBORG

UNITED STATES DISTRICT JUDGE

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