Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-5_03-cv-00156/USCOURTS-cand-5_03-cv-00156-8/pdf.json

Nature of Suit Code: 440
Nature of Suit: Other Civil Rights
Cause of Action: 42:1983 Civil Rights Act

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United States District Court

For the Northern District of California

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*E-FILED 11/6/07*

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

SAN JOSE DIVISION

AGNES SUEVER, et al., 

Plaintiffs,

 v.

KATHLEEN CONNELL, et al.,

Defendants. /

NO. C 03-00156 RS

ORDER DENYING MOTION FOR

LEAVE TO SEEK

RECONSIDERATION

Defendants seek leave to file a motion for reconsideration of this Court’s determination on

October12, 2007, that the State of California is constitutionally obligated to pay interest when

returning money to claimants under the state’s Unclaimed Property Law (“UPL”). Civil Local Rule

7-9 echoes case law as to when reconsideration is appropriate. It provides that a party may seek

reconsideration if the party “specifically shows”:

(1) That at the time of the motion for leave, a material difference in fact or law

exists from that which was presented to the Court before entry of the interlocutory

order for which reconsideration is sought. The party also must show that in the

exercise of reasonable diligence the party applying for reconsideration did not know

such fact or law at the time of the interlocutory order; or

 (2) The emergence of new material facts or a change of law occurring after

the time of such order; or

 (3) A manifest failure by the Court to consider material facts or dispositive

legal arguments which were presented to the Court before such interlocutory order. 

Case 5:03-cv-00156-RS Document 183 Filed 11/06/07 Page 1 of 5
United States District Court

For the Northern District of California

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Here, defendants contend that reconsideration is warranted for any or all of the four

following reasons: (1) the Court mistakenly believed that California has now amended the UPL to

provide for interest to be paid on claims made; (2) a recent federal district court decision, issued

before this Court’s decision, but not recognized as significant by defendants until later, reaches a

result contrary to the conclusion of this Court, (3) this Court erred in concluding that any of the

named plaintiffs in this action have standing to challenge defendants’ alleged non-payment of

interest, because all of the named plaintiffs received interest and; (4) the Controller cannot determine

what rate of interest he must pay under the Court’s order, given the lack of statutory authority to pay

any interest at all.

Defendants are correct that the Court’s October 12th Order stated that “the UPL has

apparently now been amended to restore claimants’ entitlement to interest,” but that statement was

made only in the context of rejecting any potential argument that the interest question was moot. 

See October 12th Order at 7:21-23. Even though the UPL has not yet been amended to provide for

interest payments, that has no bearing on the analysis of whether interest may be constitutionally

withheld.

Defendants’ contention that reconsideration is warranted in light of Simon v. Wiessman, 2007

WL 2461707 (E.D. Pa. Aug. 27, 2007), is both too late and unavailing on the merits. Simon is at

most cumulative to the state cases on which defendants relied, albeit a sister federal decision. It is

not binding. For the same reasons that the Court declined to follow Sogg v. Ohio Dept. of

Commerce, 2007 WL 1821306 (Ohio App. 2007), it cannot follow Simon. The issue presented in

this case is not whether, hypothetically, a state could choose to treat interest as permanently

escheated while holding principal in a custodial capacity only. The Ninth Circuit has expressly held

that California’s UPL establishes only a custodial system–that it is not true escheat. See, e.g., Taylor

v. Westley, 402 F.3d 924, 931 (9th Cir. 2005) (“the money, even if in the general fund, is not held

free and clear by the State of California, but subject to retransfer if the property is later found not to

be permanently escheated.”) Having unequivocally declared that it is holding the property on behalf

of its true owner, the state cannot thereafter constitutionally refuse to return interest that is, under

Case 5:03-cv-00156-RS Document 183 Filed 11/06/07 Page 2 of 5
United States District Court

For the Northern District of California

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 Defendants also complain that they should have been permitted further discovery directed

at showing the named plaintiffs’ claims to be barred by the statute of limitations. That is not a basis

for reconsideration.

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long established common law principles, part of that property, at least without a clearly delineated

statutory scheme that, with adequate due process protections, justifies permanent escheat of the

interest.

Defendants’ contentions that no named plaintiff was denied interest or that the Court

improperly shifted the burden to them to establish a lack of standing is not borne out by the record.

First, defendants acknowledge that plaintiff Agnes Suever (now deceased) was not paid interest

when she reclaimed her property. Defendants argue that Suever would have received interest, had

she made her claim to the Controller, rather than to the account holder. Defendants have not,

however, suggested that if Suever’s representatives make a claim for interest now that the Controller

will pay it.

Furthermore, named plaintiff Richard Valdes is alleging that the Controller has failed even to

acknowledge that it is holding his property, much less return principal or interest. Defendants argue

that Valdes’s claim lacks merit, citing his deposition testimony to the effect that it is “possible” his

memory is innacurate. Whether or not Valdes is likely to prevail, however, is a separate question

from standing. There appears to be no dispute that were Valdes to prove the Controller does hold

his property, the Controller would willingly return the principal but would not pay interest absent a

Court order or amendment of the UPL. That is sufficient to establish standing in support of the

Court’s October 12th Order.1

Finally, the Controller’s argument that he cannot determine what rate of interest to pay is not

a basis for reconsideration of the merits of the October 12th Order. As the Court observed in its

order on plaintiffs’ motion for class certification:

Although the Court likely could adjudicate the question of whether a particular rate of

interest was constitutionally adequate, there is no apparent basis on which to

conclude any specific rate of interest is constitutionally required. Certainly, the

motion presented to the Court that resulted in the October 12, 2007 Order sought no

such determination.

Case 5:03-cv-00156-RS Document 183 Filed 11/06/07 Page 3 of 5
United States District Court

For the Northern District of California

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ORDER

C 03-00156 RS 

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The Controller may be entitled to file a motion seeking a determination from the Court that a

particular rate of interest is constitutionally adequate, but that would not involve “reconsideration”

of the October 12th Order. Accordingly, defendants’ motion for leave to seek reconsideration is

DENIED, without prejudice to any motion defendants may bring with respect to the rate of interest

that should be paid. By separate order to be issued in due course, the Court will advise the parties as

to any further proceedings regarding plaintiffs’ requests to certify a class with respect to recovering

interest on previously-paid claims. 

IT IS SO ORDERED.

Dated: 11/6/07 

RICHARD SEEBORG

United States Magistrate Judge

Case 5:03-cv-00156-RS Document 183 Filed 11/06/07 Page 4 of 5
United States District Court

For the Northern District of California

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ORDER

C 03-00156 RS 

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THIS IS TO CERTIFY THAT NOTICE OF THIS ORDER HAS BEEN GIVEN TO:

James C. Harrison jharrison@rjp.com, kkrogseng@rjp.com

Robin Bradle Johansen rjohansen@rjp.com, kkrogseng@rjp.com

William Wayne Palmer wmwpalmer@aol.com, aleks.chern@inbox.com, dculhane@dim.com

Margaret R. Prinzing mprinzing@rjp.com, jball@rjp.com

Thomas Andrew Willis twillis@rjp.com, kkrogseng@rjp.com

Counsel are responsible for distributing copies of this document to co-counsel who have not

registered for e-filing under the Court's CM/ECF program. 

Dated: 11/6/07 Chambers of Judge Richard Seeborg

By: /s/ BAK 

Case 5:03-cv-00156-RS Document 183 Filed 11/06/07 Page 5 of 5