Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca9-12-17828/USCOURTS-ca9-12-17828-0/pdf.json

Nature of Suit Code: 850
Nature of Suit: Securities, Commodities, Exchange
Cause of Action: 

---

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

CHRIS LUSBY TAYLOR; NANCY A.

PEPPLE-GONSALVES; SUSAN 

SWINTON; WILLIAM J. PALMER, 

deceased; DON H. PERRI; JENNIFER 

WALSH; MARK MACAULEY; MARY A.

STEELE, on behalf of themselves and 

other persons similarly situated,

Plaintiffs-Appellants,

v.

BETTY YEE,

* individually and in her 

official capacity as State Controller of 

the State of California; RICHARD 

CHIVARO,

Defendants-Appellees.

No. 12-17828

D.C. No.

2:01-cv-02407-

JAM-GGH

OPINION

Appeal from the United States District Court

for the Eastern District of California

John A. Mendez, District Judge, Presiding

 

* Betty Yee, is substituted for her predecessor, John Chiang, as 

Controller of the State of California, Fed. R. App. P. 43(c)(2).

 

 

 

 Case: 12-17828, 03/11/2015, ID: 9452603, DktEntry: 37-1, Page 1 of 24
2 TAYLOR V. YEE

Argued and Submitted

February 11, 2015─San Francisco California

Filed March 11, 2015

Before: Mary M. Schroeder and Barry G. Silverman, 

Circuit Judges and Paul C. Huck,

** Senior District Judge.

Opinion by Judge Huck

SUMMARY***

Civil Rights

The panel affirmed the district court’s dismissal, for 

failure to state a claim, of a putative class action 

challenging the California State Controller’s application of 

California’s Unclaimed Property Law.

Appellants alleged that the procedures used both before 

unclaimed property is transferred to the Controller (“preescheat”) and after it is transferred (“post-escheat’) violate 

appellants’ due process rights. Specifically, appellants 

asserted that the pre-escheat notice provided by the 

 

** The Honorable Paul C. Huck, Senior District Judge for the U.S. 

District Court for Southern Florida, sitting by designation.

*** This summary constitutes no part of the opinion of the court. It has 

been prepared by court staff for the convenience of the reader.

 Case: 12-17828, 03/11/2015, ID: 9452603, DktEntry: 37-1, Page 2 of 24
TAYLOR V. YEE 3

Controller was constitutionally inadequate because the 

Controller does not attempt to locate property owners using 

the data sources required by Sections 1531 of the 

Unclaimed Property Law. The panel held that appellants’ 

argument was based on a misinterpretation of the statute, 

which relates only to post-escheatment procedures, and that 

appellants’ suggested requirement that the Controller use 

additional databases exceeded due process requirements.

The panel further rejected appellants’ argument that the 

Controller’s pre-escheat notice process was inadequate 

because it is carried out by companies that receive a portion 

of the escheated value and therefore have a conflict of 

interest. The panel held that this argument was not 

supported by law or the alleged facts. The panel further 

held that appellants’ challenge to the post-escheat 

procedure was not ripe for review. 

COUNSEL

William W. Palmer, The Law Offices of William W. 

Palmer, Sacramento, California; C. Brooks Cutter and John 

R. Parker, Jr., Kershaw, Cutter & Ratinoff, LLP, 

Sacramento, California; Robert A. Buccola, Steven M. 

Campora, and James J. Ison, Dreyer Babich Buccola Wood 

Campora, LLP, Sacramento, California, for PlaintiffsAppellants.

Robin B. Johansen and Margaret R. Prinzing, Remcho, 

Johansen & Purcell, LLP, San Leandro, California, for 

Defendants-Appellees.

 Case: 12-17828, 03/11/2015, ID: 9452603, DktEntry: 37-1, Page 3 of 24
4 TAYLOR V. YEE

OPINION

HUCK, Senior District Judge:

I. INTRODUCTION

This putative class action has a long and tortuous 

history in this Court. Presumably this opinion will be 

known as Taylor V.1 Appellants challenge the 

constitutionality of California’s Unclaimed Property Law 

(“UPL”), which provides for the conditional transfer of 

unclaimed property to the State of California.2 While this 

Court has previously held the UPL facially constitutional, 

see Taylor III, 525 F.3d at 1289, the instant suit challenges 

 1 This Court’s prior decisions in this matter are: Taylor v. Westly 

(Taylor I), 402 F.3d 924 (9th Cir. 2005); Taylor v. Westly (Taylor II), 

488 F.3d 1197 (9th Cir. 2007) (per curiam); Taylor v. Westly (Taylor 

III), 525 F.3d 1288 (9th Cir. 2008) (per curiam); and Taylor v. Chiang 

(Taylor IV), 405 F. App’x 167 (9th Cir. 2010). In addition, this Court 

has decided four appeals in a related case brought by Appellants’ 

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

Suever v. Connell (Suever II), 579 F.3d 1047 (9th Cir. 2009); Suever v. 

Connell (Suever III), 484 F. App’x 187 (9th Cir. 2012); and Suever v. 

Connell (Suever IV), 133 S. Ct. 1243 (2013).

2 The UPL is California’s escheatment statute. “Escheat is . . . a means 

of dealing with . . . money and property [that] are unclaimed and the 

person entitled to it is dead or . . . cannot be found and there is no other 

individual with a good claim.” Taylor I, 402 F.3d at 926. Essentially, 

property that is unclaimed, as defined by the UPL, is transferred 

(escheats) to California. However, an owner may reclaim property 

escheated pursuant to the UPL at any time; thus the property “does not 

permanently escheat to the state.” Cal. Civ. Proc. Code § 1501.5(a). If 

California sells the property, the owner may recover the proceeds. The 

State may destroy property that has no commercial value.

 Case: 12-17828, 03/11/2015, ID: 9452603, DktEntry: 37-1, Page 4 of 24
TAYLOR V. YEE 5

the California State Controller Betty Yee’s (“the 

Controller”) application of the statute.3 Appellants claim 

that the procedures used both before unclaimed property is 

transferred to the Controller (“pre-escheat”) and after it is 

transferred (“post-escheat”) violate Appellants’ due process 

rights. The district court dismissed Appellants’ suit with 

prejudice for failure to state a claim. We AFFIRM.

Appellants’ first and primary argument is that the preescheat notice provided by the Controller is constitutionally 

inadequate because the Controller does not attempt to 

locate property owners using the data sources required by 

Section 1531.5 of the UPL. Appellants further argue that 

the Controller’s pre-escheat notice process is inadequate 

because it is carried out by companies that have an alleged 

conflict of interest because they receive a portion of the 

escheated property’s value. Finally, Appellants argue that 

the Controller’s post-escheat procedures violate the Due 

Process and Takings Clauses because they do not provide 

an adequate remedy when the Controller denies an 

individual’s claim to escheated property.

II. BACKGROUND

As explained below in more detail, under the UPL, 

property that appears to be lost or abandoned by the owner 

is conditionally transferred to the State if it remains 

unclaimed after notice is provided to the owner. Examples 

of such lost or abandoned property are savings accounts at 

a bank or shares of stock held in a brokerage account. In 

 3 Appellee Betty Yee is the California State Controller and Appellee 

Richard Chivaro is the Chief Counsel to the State Controller.

 Case: 12-17828, 03/11/2015, ID: 9452603, DktEntry: 37-1, Page 5 of 24
6 TAYLOR V. YEE

August of 2007, in response to Taylor II, which found the 

UPL’s notice requirements insufficient, the California 

Legislature amended the UPL to provide additional notice 

to owners of unclaimed property. In Taylor III, this Court 

determined that the amended UPL is facially constitutional. 

Appellants now bring this as-applied challenge to the law.

California’s Unclaimed Property Law

According to the Controller, the purpose of the UPL is 

to locate owners of apparently lost or abandoned property 

and restore their property to them; but if these efforts are 

unsuccessful, to give the benefit of any unclaimed property 

to California, rather than to financial institutions or other 

private entities holding the property (“holders”). As the 

Controller explains, the UPL thus ensures that unless and 

until the owner reclaims it, unclaimed property will be used 

for the public good rather than for the benefit of private 

banks and financial institutions.

Pursuant to the UPL, holders must transfer property to 

the State once the property meets the UPL’s definition of 

unclaimed property. See Cal. Civ. Proc. Code § 1511 et 

seq. However, prior to escheatment to California, the UPL 

requires that multiple forms of notice be given to the 

apparent owners of unclaimed property, including two 

notice letters.

As an initial step, the UPL provides that the holder 

“shall make reasonable efforts to notify any owner by mail 

or, if the owner has consented to electronic notice, 

electronically, that the owner’s” property will escheat to the 

State. Id. §§ 1513.5(d), 1514(b), 1516(d). The same 

general notice requirements apply to all types of property 

under the UPL, although the specifics vary by property 

type. Compare id. § 1514 (safe deposit boxes), with § 1516 

 Case: 12-17828, 03/11/2015, ID: 9452603, DktEntry: 37-1, Page 6 of 24
TAYLOR V. YEE 7

(business dividends and distributions). This notice is sent 

to the apparent owner’s address, as reflected in the holder’s 

records. The notice contains a form that the owner is to 

complete, sign, and return, in which case, “it shall be 

deemed that the [holder] knows the location of the owner,” 

who claims the property. E.g., id § 1531.5(d). The holder 

may also provide telephonic or electronic methods by 

which the owner can claim the property. Id.

If the owner does not respond to the holder’s notice, the 

property is deemed unclaimed and the holder must report to 

the Controller “the name, if known, and last known 

address, if any, of each person appearing from the records 

of the holder to be the owner of any property of value of at 

least fifty dollars ($50) escheated under this chapter.” Id. 

§ 1530(b)(1). The statute mandates specific dates, 

depending on the property’s classification, by which a 

holder must report the unclaimed property to the 

Controller. Id. § 1530(d). The holder’s notice to the owner 

is to be given “[n]ot less than 6 nor more than 12 months 

before the time the account, deposit, shares, or other 

interest becomes reportable to the Controller in accordance 

with this chapter.” Id. § 1513.5.

After the holder has reported the unclaimed property to 

the Controller, but before it is transferred, that is, preescheat, “the Controller shall mail a notice to each person 

having an address listed in the report who appears to be 

entitled to property of the value of fifty dollars ($50) or 

more escheated under this chapter.” Id. § 1531(d).4

 The 

 4 By design of the statute, the Controller’s notice occurs prior to 

escheatment because it must be sent “[w]ithin 165 days after the final 

 Case: 12-17828, 03/11/2015, ID: 9452603, DktEntry: 37-1, Page 7 of 24
8 TAYLOR V. YEE

Controller’s notice must state that property is being held, 

name the addressee who may be entitled to it, and give the 

name and address of the holder. Id. § 1531(e). Further, the 

notice must provide:

[a] statement that, if satisfactory proof of 

claim is not presented by the owner to the 

holder by the date specified in the notice, the 

property will be placed in the custody of the 

Controller and may be sold or destroyed 

pursuant to this chapter, and all further 

claims concerning the property or, if sold, 

the net proceeds of its sale, must be directed 

to the Controller.

Id. § 1531(e)(3). Usually, the Controller’s notice is mailed 

to the owner’s address provided by the holder.

The Controller takes an additional step to determine the 

current address of the owner. Under the UPL, if the 

holder’s report includes the owner’s Social Security 

number, “the Controller shall request the Franchise Tax 

Board to provide a current address for the apparent owner 

on the basis of that number.” Id. § 1531(d). If the 

Franchise Tax Board provides an address different from the 

one provided by the holder, the Controller sends notice to 

that address. Id. Otherwise, if the Franchise Tax Board 

does not provide any address, or provides the same address 

 

date” on which the holder submits its report to the Controller, whereas 

the holder is to deliver the unclaimed property “no sooner than seven 

months [i.e., 210 days] and no later than seven months and 15 days 

after the final date for filing the report.” See id. §§ 1531(d), 1532.

 Case: 12-17828, 03/11/2015, ID: 9452603, DktEntry: 37-1, Page 8 of 24
TAYLOR V. YEE 9

as the holder, the Controller mails notice to the address 

provided by the holder. Id.

If the owner fails to timely “establish[] his or her right 

to receive any property specified in the report to the 

satisfaction of the holder before that property has been 

delivered to the Controller” then the property must be 

transferred (that is, escheated) to the Controller in the time 

specified by the statute. Id. § 1532(a)–(b). However, the 

property transferred to the Controller does not 

“permanently escheat to the state.” Id. § 1501.5(a). 

Rather, the Controller holds the unclaimed property in trust 

for the owner who may claim it at any time. Those who 

“claim[] to have been the owner . . . of property paid or 

delivered to the Controller under this chapter may file a 

claim to the property or to the net proceeds from its sale.” 

Id. § 1540(a).

Beyond the notice mailed by the Controller, the UPL 

requires additional forms of notice. The Controller must 

also provide notice via publication “in a newspaper of 

general circulation which the Controller determines is most 

likely to give notice to the apparent owner of the property.” 

Id. § 1531(a). The newspaper notice does not state which 

property was taken or from whom, but instead explains 

generally that the Controller takes custody of unclaimed 

property. The advertisement states that “California may 

have received Property belonging to You” and explains that 

property is deemed unclaimed if there has been no owner 

contact with the property holder or account activity for 

three years.

The newspaper notice also informs potential owners of 

the Controller’s website where they may perform a search 

to determine whether they may be the owner of unclaimed 

property. If there is property in that person’s name, the 

 Case: 12-17828, 03/11/2015, ID: 9452603, DktEntry: 37-1, Page 9 of 24
10 TAYLOR V. YEE

website further describes what the property is, what it is 

worth, which holder reported it, and the owner’s name and 

address as reported by the holder. The website provides 

instructions for filling out a claim form, which can be done 

online.

In Taylor III, this Court explained that the UPL, as 

amended in 2007, passes constitutional muster because the 

State, in addition to the holder, “is required to provide preescheat ‘notice reasonably calculated, under all the 

circumstances, to apprise interested parties of the pendency 

of the action and afford them an opportunity to present their 

objections.’” 525 F.3d at 1289 (quoting Jones v. Flowers, 

547 U.S. 220, 226 (2006)). The UPL declares, “[i]t is the 

intent of the Legislature that property owners be reunited 

with their property” and that in amending the law, 

California intended to provide “[n]otification by the state to 

all owners of unclaimed property prior to escheatment.” 

Cal. Civ. Proc. Code § 1501.5(c)(1) (emphasis added). The 

amended UPL came about as a result of this Court’s 

decision in Taylor II.

Taylor I, II, and III

In Taylor I, two individuals5 sued after the Controller 

escheated purportedly unclaimed shares of stock that the 

individuals owned. Taylor I, 402 F.3d at 926. The issue 

then was whether the notice provided to plaintiffs was 

constitutionally adequate. The district court dismissed the 

complaint under the Eleventh Amendment for lack of 

 5 The suit “was filed as a class action, but never reached the point of 

class certification vel non.” Taylor I, 402 F.3d at 925.

 Case: 12-17828, 03/11/2015, ID: 9452603, DktEntry: 37-1, Page 10 of 24
TAYLOR V. YEE 11

jurisdiction. This Court reversed. Id. at 936. We ruled that 

the suit was not barred by the Eleventh Amendment 

because plaintiffs’ action was for return of their own 

properties. See id.

After remand, plaintiffs, challenging the adequacy of 

the notice provided prior to escheat of the unclaimed 

property to the Controller, moved for a preliminary 

injunction. In response, the Controller argued the UPL 

provided constitutionally adequate notice by requiring that: 

1) the Controller place advertisements in the newspaper 

explaining that owners could check an unclaimed property 

website to see if their names or property were listed as 

escheated to the State; 2) the Controller “mails written 

notice to some, but not all, individuals whose property has 

been escheated”; and 3) the holders of the property subject 

to escheat “provide notice to individuals” prior to the 

property being escheated. Taylor II, 488 F.3d at 1201.

The district court denied plaintiffs’ request for a 

preliminary injunction and this Court again reversed, noting 

that California needed to take action to “remedy the 

constitutional problem with its escheat statute,” 

specifically, the lack of adequate notice. Id. at 1202. We 

explained, “[b]efore the government may disturb a person’s 

ownership of his property, ‘due process requires the 

government to provide notice reasonably calculated, under 

all the circumstances, to apprise the interested party of the 

pendency of the action and afford him an opportunity to 

present his objections.’” Id. at 1201 (quoting Jones,

547 U.S. at 226).

In reversing the district court’s denial of the injunction, 

this Court ruled that the plaintiffs had a strong likelihood of 

success in proving that the notice provisions of the UPL did 

not provide due process. Id. First, we held that the website 

 Case: 12-17828, 03/11/2015, ID: 9452603, DktEntry: 37-1, Page 11 of 24
12 TAYLOR V. YEE

and the Controller’s mailings (which only went to some 

individuals) “[did] not respond to the requirement that 

notice be given before an individual’s control of his 

property is disturbed,” (i.e. escheated). Id. Further, “mere 

publication is not constitutionally adequate.” Id. Finally, 

the holder’s obligation to provide notice did not satisfy the 

obligation of the State itself to give notice. Id. As a result, 

this Court ruled that a preliminary injunction should have 

been granted. Id. at 1202.

On remand, the district court issued the preliminary 

injunction. Taylor v. Chiang, No. CIV. S-01-2407 WBS 

GGH, 2007 WL 1628050 (E.D. Cal. June 1, 2007). The 

injunction enjoined the Controller from receiving, taking 

title to, possessing, selling, or destroying any property 

pursuant to the UPL “until the Controller has first 

promulgated regulations providing for fair notice to the 

owner and public, satisfactory to and approved by this 

court.” Id. at *5.

As a result of Taylor II, in 2007 the California 

Legislature “eliminated the statutory and administrative 

procedure that [this Court] had determined to be 

unconstitutional” and “promulgated an entirely new 

statutory procedure addressing escheat.” Taylor III,

525 F.3d at 1289. In light of the revised UPL, the district 

court dissolved the injunction. Taylor v. Chiang, No. Civ. 

S-01-2407 WBS GGH, 2007 WL 3049645 (E.D. Cal. Oct. 

18, 2007). The district court ruled that the notice provision 

of the amended UPL remedied the constitutional problems 

identified by Taylor II because it required the Controller to 

send notice before an individual’s property is transferred to 

the State and maintain a searchable unclaimed property 

website. Id. at *3.

 Case: 12-17828, 03/11/2015, ID: 9452603, DktEntry: 37-1, Page 12 of 24
TAYLOR V. YEE 13

Appellants appealed the dissolution of the injunction, 

which resulted in Taylor III. There, this Court ruled that 

“[o]n its face, the new procedure complies with the due 

process standard established by the Supreme Court in 

Mullane v. Cent. Hanover Bank & Trust Co., 339 U.S. 306, 

70 S. Ct. 652, 94 L. Ed. 865 (1950), and Jones v. Flowers,

547 U.S. 220, 126 S. Ct. 1708, 164 L. Ed. 2d 415 (2006).” 

Taylor III, 525 F.3d at 1289. Appellants could not prevail 

on a facial challenge because “[u]nder the new law, the 

Controller is required to provide pre-escheatment notice 

reasonably calculated, under all the circumstances, to 

apprise interested parties of the pendency of the action and 

afford them an opportunity to present their objections.” Id. 

(citations and quotation marks omitted). Therefore, it is 

clear that this Court has held that the UPL, on its face, 

provides for constitutionally adequate notice. This Court 

reiterated the facial constitutionality of the UPL in Suever 

II, 579 F.3d at 1054 n.4, stating:

In Taylor v. Westly (Taylor III), 525 F.3d 

1288 (9th Cir. 2008) (per curiam), we held 

that the “entirely new statutory procedure 

addressing escheat” promulgated by the 

State following the issuance of the 

preliminary injunction in Taylor II is facially 

constitutional, and that, as a result, the 

district court did not abuse its discretion in 

dissolving the injunction. Id. at 1289–90.

As a result of Taylor III, Appellants’ ostensibly last 

hope is to craft an as-applied challenge to the UPL, which 

they have done in their Second Amended Class Action 

Complaint.

 Case: 12-17828, 03/11/2015, ID: 9452603, DktEntry: 37-1, Page 13 of 24
14 TAYLOR V. YEE

Appellants’ Second Amended Class Action 

Complaint

Appellants’ Second Amended Class Action Complaint 

alleges that the Controller is administering the UPL in a 

manner that violates Appellants’ due process rights 

guaranteed by the Fifth and Fourteenth Amendments to the 

United States Constitution and 42 U.S.C. § 1983. The 

district court dismissed all counts for failure to state a 

claim.

Here, the primary issue to be resolved is whether 

Appellants have sufficiently stated an as-applied claim that 

the Controller is not providing constitutionally adequate 

notice because she is not taking additional steps to locate 

and notify property owners.

III. STANDARD OF REVIEW

We review de novo the district court’s order granting 

Appellees’ motion to dismiss under Federal Rule of Civil 

Procedure 12(b)(6). Zadrozny v. Bank of N.Y. Mellon, 

720 F.3d 1163, 1167 (9th Cir. 2013). “Dismissal is proper 

only where there is no cognizable legal theory or an 

absence of sufficient facts alleged to support a cognizable 

legal theory.” Navarro v. Block, 250 F.3d 729, 732 (9th 

Cir. 2001). To survive a motion to dismiss, the complaint 

must allege “enough facts to state a claim to relief that is 

plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 

544, 570 (2007). The Court must “accept all factual 

allegations in the complaint as true and construe the 

pleadings in the light most favorable to the nonmoving 

party.” Rowe v. Educ. Credit Mgmt. Corp., 559 F.3d 1028, 

1029–30 (9th Cir. 2009) (citation and quotation omitted). 

The Court “can affirm a 12(b)(6) dismissal on any ground 

 Case: 12-17828, 03/11/2015, ID: 9452603, DktEntry: 37-1, Page 14 of 24
TAYLOR V. YEE 15

supported by the record, even if the district court did not 

rely on the ground.” Davis v. HSBC Bank Nevada, N.A., 

691 F.3d 1152, 1159 (9th Cir. 2012) (citation and quotation 

omitted).

IV. ANALYSIS

A. Appellants’ Claim of Inadequate Notice

Since Taylor I, Appellants have continuously argued 

that under the UPL the Controller is not providing notice in 

compliance with the Due Process Clause.

The Supreme Court announced that where persons may 

be deprived of their property, the Due Process Clause 

requires “notice reasonably calculated, under all the 

circumstances, to apprise interested parties of the pendency 

of the action and afford them an opportunity to present their 

objections.” Mullane, 339 U.S. at 314.

A second, more recent, Supreme Court opinion further 

defined the law regarding adequate notice, explaining that 

“[b]efore a State may take property and sell it for unpaid 

taxes, the Due Process Clause of the Fourteenth 

Amendment requires the government to provide the owner 

‘notice and opportunity for hearing appropriate to the 

nature of the case.’” Jones, 547 U.S. at 223 (quoting

Mullane, 339 U.S. at 313).

In Jones, the petitioner purchased a house and lived 

there with his wife for more than twenty-five years before 

they separated. Id. After the separation, the petitioner 

moved out, but continued to pay the mortgage each month, 

and the mortgage company paid the property taxes. Id. 

However, once the mortgage was paid, the property taxes 

were unpaid and delinquent. Id. Arkansas’ Commissioner

 Case: 12-17828, 03/11/2015, ID: 9452603, DktEntry: 37-1, Page 15 of 24
16 TAYLOR V. YEE

of State Lands notified the petitioner of the tax delinquency 

by mailing a certified letter to the petitioner at the 

property’s address. Id. This letter “stated that unless [the 

petitioner] redeemed the property, it would be subject to 

public sale two years later.” Id. However, nobody was 

home to sign for the letter and nobody appeared at the post 

office to claim the letter. Id. at 224. Therefore, the letter 

was returned to the Commissioner as unclaimed. Id.

Just weeks before the public sale of the property, the 

Commissioner published a notice of the sale in a local 

newspaper. Id. After the sale of the property was 

negotiated with a third party, the Commissioner sent 

another certified letter to the petitioner in an attempt to 

notify the petitioner that his home was going to be sold if 

he did not pay the delinquent taxes. Id. Just as the first 

notice, this second letter was returned to the Commissioner 

as unclaimed. Id.

Ultimately, the property was sold and the buyer “had an 

unlawful detainer notice delivered to the property. The 

notice was served on [the petitioner’s] daughter, who 

contacted [the petitioner] and notified him of the tax sale.” 

Id. The petitioner filed suit, arguing that the Commissioner 

failed to provide constitutionally adequate notice of the tax 

sale. Id.

Jones required the Court to determine “whether due 

process entails further responsibility when the government 

becomes aware prior to the taking that its attempt at notice 

has failed.” Id. at 226. This is because the Court had 

previously “explained that the ‘notice required will vary 

with circumstances and conditions.’” Id. at 227 (quoting 

Walker v. City of Hutchinson, 352 U.S. 112, 115 (1956)). 

Stated another way, the issue was whether the 

government’s knowledge that the notice had not been 

 Case: 12-17828, 03/11/2015, ID: 9452603, DktEntry: 37-1, Page 16 of 24
TAYLOR V. YEE 17

received was a “circumstance and condition that varies the 

notice required.” Id. (quotation omitted).

The Supreme Court held “that when mailed notice of a 

tax sale is returned unclaimed, the State must take 

additional reasonable steps to attempt to provide notice to 

the property owner before selling his property, if it is 

practicable to do so.” Id. at 225.

The Court found there were “several reasonable steps 

the State could have taken,” and that “[w]hat steps are 

reasonable in response to new information depends upon 

what the new information reveals.” Id. The certified mail 

was marked as unclaimed, which could have meant that the 

petitioner still lived at the address, but was not home or that 

the petitioner no longer lived at the address. Id. One 

reasonable step would have been for the State to “resend 

notice by regular mail, so that a signature was not 

required.” Id. This would “increase the chances of actual 

notice to [the petitioner] if—as it turned out—he had 

moved.” Id. at 235. Relevant to Appellants’ case, the 

petitioner in Jones argued “that the Commissioner should 

have searched for his new address in the Little Rock 

phonebook and other government records such as income 

tax rolls.” Id. at 235–36. However, the Court declared 

that it “[did] not believe the government was required to go 

this far.” Id.

6

 6 It is important to note that in Jones the Court was concerned with the 

“important and irreversible prospect” of “the loss of a house.” Id. at 

230. Indeed the Court cited to a number of federal appellate and state 

supreme court cases addressing notice in the context of selling real 

property to a third party at a tax sale. Id. at 227. In stark contrast, the 

property conditionally transferred to the Controller pursuant to the UPL 

 Case: 12-17828, 03/11/2015, ID: 9452603, DktEntry: 37-1, Page 17 of 24
18 TAYLOR V. YEE

Appellants rely on Jones for their proposition that the 

Controller must also “consult ‘all’ publicly available 

databases” to locate the owners of unclaimed property. 

Specifically, Appellants claim that the Controller is 

violating the Due Process Clause because he is failing to 

utilize Section 1531.5 of the UPL. Section 1531.5 provides 

that “[t]he Controller shall establish and conduct a 

notification program designed to inform owners about the 

possible existence of unclaimed property received pursuant 

to” the UPL. Cal. Civ. Proc. Code § 1531.5(a) (emphasis 

added). It permits California’s state and local 

governmental agencies, “upon the request of the 

Controller,” to provide the Controller with information 

from their databases that could be used post-escheat to 

locate owners of unclaimed property. Id. § 1531.5(c)(1). 

Appellants maintain that the Controller’s failure to utilize 

the additional data available through Section 1531.5 

violates Appellants’ due process rights. This interpretation 

is incorrect.

 

does not permanently escheat to the State and may be claimed at any 

time. Cal. Civ. Proc. Code § 1501.5(a). That said, owners that 

belatedly step forward to reclaim their property may be able to obtain 

only the sale proceeds. In such a case, the Controller then holds the 

proceeds in trust until the owner steps forward to claim the property. 

Further, if the property “has no apparent commercial value” the 

Controller must retain the property “for a period of not less than seven 

years from the date the property is delivered to the Controller . . . [and] 

may at any time thereafter destroy or otherwise dispose of the property 

. . . .” Id. § 1565.

 Case: 12-17828, 03/11/2015, ID: 9452603, DktEntry: 37-1, Page 18 of 24
TAYLOR V. YEE 19

B. Appellants Incorrectly Interpret Section 

1531.5

This Court has already ruled that the UPL passes 

muster under the Mullane–Jones standard. However, 

Appellants contend that in ruling the UPL constitutional, 

this Court relied upon Section 1531.5. Under Appellants’ 

interpretation of the law, when generating the pre-escheat 

notices, the Controller is required to utilize Section 1531.5 

and search additional databases in an attempt to locate 

property owners.

Contrary to Appellants’ position, it appears this Court 

did not rely on Section 1531.5, which applies post-escheat, 

in determining the facial constitutionality of the revised 

UPL. Indeed, the only reference to Section 1531.5 found in 

Taylor III was in a citation where the Court mentioned 

California had overhauled its escheat law.7

 Taylor III, 

 7 In Taylor III, this Court provided a brief history of the case stating,

After the plaintiff had won these two victories on 

appeal, the district court issued a preliminary 

injunction pursuant to our mandate. The State then 

eliminated the statutory and administrative procedure 

that we had determined to be unconstitutional. The 

State promulgated an entirely new statutory 

procedure addressing escheat. See Cal. Civ. Proc. 

Code § 1501.5(c) (West 2008); see also id. at 

§§ 1531, 1531.5, 1532, 1563, 1565. Concluding that 

the amendments remedied the constitutional defects 

we identified in Taylor II, the district court granted 

the Controller’s motion to dissolve the injunction.

Taylor III, 525 F.3d at 1289. This is the only mention of Section 

1531.5 in the opinion.

 Case: 12-17828, 03/11/2015, ID: 9452603, DktEntry: 37-1, Page 19 of 24
20 TAYLOR V. YEE

525 F.3d at 1289. Rather, it was the requirement that the 

Controller provide reasonable pre-escheat notice that 

brought the UPL into constitutional compliance, as this 

Court stated:

On its face, the new procedure complies 

with the due process standard established by 

the Supreme Court in Mullane v. Cent. 

Hanover Bank & Trust Co., 339 U.S. 306, 

70 S.Ct. 652, 94 L.Ed. 865 (1950), and 

Jones v. Flowers, 547 U.S. 220, 126 S.Ct. 

1708, 164 L.Ed.2d 415 (2006). Under the 

new law, the Controller is required to 

provide pre-escheat “‘notice reasonably 

calculated, under all the circumstances, to 

apprise interested parties of the pendency of 

the action and afford them an opportunity to 

present their objections,’” Flowers, 547 U.S. 

at 226, 126 S.Ct. 1708 (quoting Mullane,

339 U.S. at 314, 70 S.Ct. 652). Thus, the 

plaintiffs’ challenge, to the extent that it is a 

facial challenge against the new law, fails.

Id. (emphasis added). That Section 1531.5 relates only to 

post-escheatment procedures is clear from the language of 

that section, titled “Notification program for possible 

owners of escheated property,” which states “[t]he 

Controller shall establish and conduct a notification 

program designed to inform owners about the possible 

existence of unclaimed property received pursuant to this 

chapter.” Cal. Civ. Proc. Code § 1531.5(a) (emphasis 

 Case: 12-17828, 03/11/2015, ID: 9452603, DktEntry: 37-1, Page 20 of 24
TAYLOR V. YEE 21

added).8 Therefore, Section 1531.5 does not mandate that 

the Controller seek access to additional databases to locate 

property owners to provide pre-escheat notice.

Tellingly, when appealing the dissolution of the 

injunction, Appellants argued that the amended provisions 

of the UPL did not satisfy the Mullane–Jones standard 

because the additional information available under Section 

1531.5 was not available until after the property is received 

by the Controller. Appellees correctly note that this 

Court’s focus in Taylor II and Taylor III was on notice 

being provided by the Controller before the property was 

transferred to the State, that is, escheated, and therefore 

Section 1531.5 could not have been a deciding factor for 

the Court in Taylor III, as Appellants argue.

Furthermore, Section 1531.5 is permissive in that it 

allows state and local agencies to furnish records “upon the 

request of the Controller,” but it does not mandate that the 

Controller request such records. Cal. Civ. Proc. Code 

§ 1531.5(c)(1). It seems clear that the purpose of this 

provision is to permit the agencies to disclose personal 

information that would be non-disclosable in the absence of 

this statutory waiver. Rather than a mandate that the 

Controller use the agencies’ databases, Section 1531.5 

provides legal cover for the agencies’ disclosure of such 

personal information should the Controller opt to request it.

Therefore, Appellants’ argument that the Controller 

does not meet the Mullane-Jones standard because she fails 

 8 Moreover, at oral argument Appellants’ counsel conceded that 

Section 1531.5 does not apply pre-escheat.

 Case: 12-17828, 03/11/2015, ID: 9452603, DktEntry: 37-1, Page 21 of 24
22 TAYLOR V. YEE

to utilize data made available by Section 1531.5 is without 

merit as it is based upon a misinterpretation of the statute. 

Moreover, in trying to provide pre-escheat notice to owners 

of unclaimed property, the Controller does take “additional 

reasonable steps to notify [the owners], if practicable to do 

so.” Jones, 547 U.S. at 234. If provided with a Social 

Security number, the Controller utilizes the Franchise Tax 

Board’s database to determine if there is a more current 

address. The Controller also provides notice in the 

newspaper to explain to the public generally that it is 

holding properties that may belong to the readers. Finally, 

the Controller maintains a searchable website where 

individuals can determine whether they are the owners of 

unclaimed property, and if so, can submit a claim form.

Appellants’ suggested requirement that the Controller 

utilize additional governmental databases may, of course, 

lead to more claims being filed, but it exceeds the 

minimum due process requirements. Indeed, as indicated 

above, the property owner in Jones argued that Arkansas’ 

Commissioner of State Lands “should have searched for 

[his] new address in the Little Rock phonebook and other 

government records such as income tax rolls.” Id. at 235–

36. However, the Supreme Court “[did] not believe the 

government was required to go this far.” Id. at 236. 

Likewise here, the Controller is not required, either by the 

Due Process Clause or Section 1531.5, to go as far as 

Appellants suggest.9

 9 Appellants take issue with the Controller’s use of the Franchise Tax 

Board database, arguing that

 Case: 12-17828, 03/11/2015, ID: 9452603, DktEntry: 37-1, Page 22 of 24
TAYLOR V. YEE 23

C. Appellants’ Additional Arguments

The Court also rejects Appellants’ additional argument 

related to the Controller’s use of related companies to 

administer the UPL. This argument is not supported by law 

or the alleged facts. The cases cited by Appellants are 

inapposite because here, the allegedly biased companies are 

not decision-makers and instead merely perform ministerial 

duties. Furthermore, Appellants do not sufficiently allege 

that the companies have failed to carry out the UPL’s 

notice procedures.

 

[b]y using only the FTB database to notify owners of 

unclaimed property before their property is seized, 

the Controller purposely and by design fails to find 

current addresses of millions of Californians and 

other citizens who moved, permanently reside out-ofstate, and may never even have set foot in California, 

but have deposited their earnings in bank accounts, 

bought securities, opened safety deposit boxes and 

otherwise invested and safeguarded their properties 

by depositing said assets with banks, corporations, 

and financial institutions that [have] offices in 

California.

(Sec. Am. Compl. ¶ 70). Yet, when ruling the law constitutional, this 

Court was obviously aware that in sending pre-escheat notices, the 

Controller would utilize the last known address provided by the holders 

or alternative addresses from the FTB database. Moreover, Appellants’ 

argument undercuts their other argument that the Controller should be 

utilizing other databases, such as California’s Department of Motor 

Vehicles, to locate property owners. Those who simply maintained 

their assets in California banks and permanently reside out-of-state, 

such as Plaintiff Chris Lusby Taylor, likely do not have California 

driver’s licenses and would therefore likely not appear in a California 

DMV database.

 Case: 12-17828, 03/11/2015, ID: 9452603, DktEntry: 37-1, Page 23 of 24
24 TAYLOR V. YEE

Appellants’ challenge to the Controller’s post-escheat 

procedure is not ripe because the Appellants failed to 

challenge the Controller’s action—or inaction—in superior 

court as required by Section 1541 and Appellants do not 

appeal the district court’s determination that the postescheat procedure provided by the UPL is reasonable. See 

Suitum v. Tahoe Reg’l Planning Agency, 520 U.S. 725, 734 

(1997) (citing Williamson Cnty. Reg’l Planning Comm’n v. 

Hamilton Bank of Johnson City, 473 U.S. 172, 195 (1985); 

Carson Harbor Village, Ltd. v. City of Carson, 353 F.3d 

824, 826 (9th Cir. 2004) (citing Williamson, 483 U.S. at 

186)).

10

V. CONCLUSION

For these reasons, this Court AFFIRMS the district 

court’s ruling.

 10 Even if adequately raised, Appellants’ argument regarding the 

Controller’s post-escheat procedure is without merit. The UPL 

provides that within ninety days after the Controller’s denial of a claim, 

an individual aggrieved by the Controller’s decision may seek review 

in state court. See Cal. Civ. Proc. Code § 1541. The ninety day 

limitation is not inherently unreasonable. Indeed, ninety days is the 

same period in which a plaintiff must bring suit for discrimination 

under Title VII after the EEOC has issued its right to sue letter. See

42 U.S.C. § 2000e-5(f)(1). Moreover, any claim that the limitation 

period is unconstitutional is foreclosed by our prior decision holding 

the UPL facially constitutional. See Taylor III, 525 F.3d at 1289.

 Case: 12-17828, 03/11/2015, ID: 9452603, DktEntry: 37-1, Page 24 of 24