Opinion ID: 3065051
Heading Depth: 3
Heading Rank: 2

Heading: The Putative2 Class Allegations3

Text: 2 In its April 1, 2008 order, the district court granted Plaintiffs’ motion to amend the class definition, but denied Plaintiffs’ motion to certify the 11838 SUEVER v. CONNELL Plaintiffs allege that the Controller wrongfully appropriated, misused, sold, and refused to relinquish their financial assets. In their first amended complaint, they claim that the Controller unlawfully employed “auditors” to pressure certain financial institutions into paying or turning over assets that were not properly subject to escheat. For example, these financial institutions purportedly had knowledge of some of Plaintiffs’ addresses when the transfers occurred. Moreover, the Controller allegedly failed to provide the requisite notice to Plaintiffs, thereby preventing them from reclaiming their property before its liquidation. After 1989, Plaintiffs assert, the Controller implemented a policy of publishing only block advertisements rather than listing the specific names and addresses of putative owners, in violation of California Code of Civil Procedure § 1531. The Controller also allegedly stopped mailing direct notices to owners’ last known addresses. The first amended complaint further alleges that the Controller misused the property it unlawfully seized. For instance, Plaintiffs assert that the Controller unconstitutionally applied simple-interest-rate legislation retroactively, thereby appropriating compound interest that had accrued on escheated property. Meanwhile, the Controller purportedly refused to pay any interest at all on escheated cashier’s checks and dividends. Nor, according to Plaintiffs, did the Controller properly register or notify owners of escheated cashier’s checks, or properly segregate the money in the Unclaimed Property Fund from the money in the General Fund. The Controller also allegedly destroyed documents pertaining to proof of class “without prejudice to a further motion upon any future resolution of the interest rate issues.” 3 We extract many of the facts regarding the first amended complaint from the background discussion in Suever v. Connell (Suever I), 439 F.3d 1142, 1145-46 (9th Cir. 2006), facts which our own independent review of the record confirms. SUEVER v. CONNELL 11839 ownership as well as the contents of safety deposit boxes, again without notice. Plaintiffs claim that these unlawful acts amount to a conspiracy on the Controller’s part to obtain funds with which to mitigate California’s longstanding budget crisis. Through this conspiracy, the Controller allegedly permitted several companies, regulated entities, and financial institutions to unlawfully withhold over $1 billion in personal property. Rather than promulgating any formal rules to authorize these actions, the Controller switched internal policies repeatedly, failed to provide any notice, and insulated itself from public accountability. In doing so, Plaintiffs allege, the Controller violated not only the federal Due Process, Takings, and Contracts Clauses, but also federal and state securities statutes and the UPL itself. Plaintiffs cite the above-mentioned violations as supporting their claim for declaratory relief, which in turn, they assert, would require the Controller to disgorge or return either their property or the reasonable value thereof. In addition, Plaintiffs allege two 42 U.S.C. § 1983 claims based on procedural due process and the Takings Clause. Specifically, Plaintiffs assert that the Controller violated procedural due process by appropriating and liquidating assets without adequate notice, and that these same actions also constitute a “taking” that requires the State to pay just compensation. Plaintiffs also allege that they deserve the “proper value of their property, which “should be valued according to the applicable principles of law for reimbursement purposes,” and that they are entitled to: (1) an accounting of their appropriated property; (2) attorneys’ fees; (3) creation of a common fund for return of their property “with proper interest”; and (4) injunctive relief to require the return of their property and to prevent the Controller’s continued violation of federal constitutional or statutory law. Finally, Plaintiffs allege several state law actions: negligence, fraud, a taxpayer claim, breach of fiduciary duty, and 11840 SUEVER v. CONNELL violation of the UPL. These violations purportedly warrant payment of “restitution” in the amount of the difference between the proceeds of the sale of their unclaimed property and the current market value, as well as punitive damages. Plaintiffs also assert that the state claims warrant injunctive relief to require the Controller’s prospective compliance with the UPL.