Source: https://www.keaneunclaimedproperty.com/keanotes/spring-2019/litigation-update/
Timestamp: 2019-04-20 07:04:00+00:00

Document:
Univar, Inc. v. Geisenberger, et al.
On December 3, 2018, Univar, Inc. filed an action in U.S. District Court against the Delaware State Escheator and other officials with the Department Finance for declaratory and injunctive relief, on the grounds that an unclaimed property audit initiated by Kelmar, as the state’s third-party auditor, on December 11, 2015, violated federal common law and was unconstitutional under the Fourth Amendment, Ex Post Facto, Due Process, Equal Protection, and Takings Clauses of the U.S. Constitution.
Delaware’s estimation methodology exposes holders to multiple liabilities for the same unclaimed property.
Univar repeatedly objected to Kelmar’s initial document request for over two years. On October 30, 2018, Delaware issued a subpoena for the records that Kelmar had initially requested in 2015. Delaware has since filed suit in the Chancery Court to enforce the subpoena.
The District Court has a new opportunity to rule on the estimation practices employed by Kelmar. In February 2017, Delaware amended its unclaimed property law to, among other things, adopt a ten-year statute of limitations, a ten-year record retention requirement and authorize the use of a reasonable method of estimation if the holder lacks sufficient records. However, the estimation methodology used by Kelmar has not changed, even in light of the District Court’s opinion in Temple-Inland v. Cook, in which the judge famously stated that the estimation methodology used by the state and Kelmar in unclaimed property audits violated the holder’s due process rights and “shocked the conscience.” The District Court was able to sidestep the issue again in Plains All American Pipeline LLC v. Cook, because the claim was not yet ripe for litigation, as Delaware had not yet made a demand for the holder’s records in the audit. The District Court is once again confronted with many of the same arguments made in the Plains case and the case is in fact ripe under Plains, since Univar filed its lawsuit after receiving the subpoena from Delaware.
On March 7, 2018, the Minnesota Supreme Court held in Minnesota v. Hall that the state is required to pay interest on proceeds from an interest-bearing bank account while such proceeds were in the custody of the state, stating that “the right to earn interest was part of the claimant’s unclaimed property and therefore she had the right to receive that interest from the state if she is to be made whole.” The state’s failure to pay interest was therefore a violation of the Takings Clause under the US Constitution. However, the court did not provide such relief to the remaining plaintiffs with non-interest bearing accounts (specifically, payroll checks and insurance proceeds), stating that paying interest in such cases would “reward [the owner’s] inattention and provide an inappropriate windfall.” (Id at 13).
Judge Easterbrook also cited the US Supreme Court’s decision in Brown v. Legal Foundation of Washington, which held that the Takings Clause “protects the time value of money just as much as it does money itself.” While taking note that the Court ultimately found no violation of the Takings Clause in Brown because the amounts of principal from small client trust funds were so small that the administrative expenses exceeded returns on the investments, the state could argue on remand that under Brown, interest was not owed on such a small amount.
 Univar, Inc. v. Geisenberger et al., No. 1:18-CV-01909 (D. Del. 2018).
 Temple-Inland v. Cook, 192 F. Supp. 3d 527 (D. Del. 2016).
 Plains All Am. Pipeline LLC v. Cook, 866 F. Supp. 3d 534 (3d. Circ. 2017).
 Hall v. Minnesota, No. A16-0874, slip op. at 16.
 S. David Goldberg v. Michael W. Frerichs, Treasurer of Illinois, 2019 WL 76468 (Jan. 2, 2019).
 FRERICHS DISTRICTCOURTCITATION, 2018 US Dist. Lexis 51062 (N.D. Ill. March 28, 2018).
 Brown v. Legal Foundation of Washington, 538 US 216, 235 (2003).

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