Opinion ID: 3065051
Heading Depth: 3
Heading Rank: 4

Heading: Prior Relevant Proceedings

Text: In 2001, counsel for Plaintiffs filed a lawsuit in the case of Taylor v. Connell seeking on behalf of different plaintiffs in the Eastern District of California the return of stock or refund of proceeds held by the Controller, alleging violations of, inter alia, the Due Process Clause, federal securities acts, and state law. See No. CIV. S-01-2407 FCD GGH, 2002 WL 34204694, at  (E.D. Cal. June 26, 2002). After the district court dismissed the action on Eleventh Amendment grounds, id. at -6, we vacated the judgment and remanded, concluding: Because the plaintiffs seek genuinely prospective relief, and because the funds they seek are held by the state as custodian in trust for them rather than as the state’s own funds, much as a municipality holds a car towed from an expired parking meter, the com- plaint should not have been dismissed under the Eleventh Amendment for lack of jurisdiction. Taylor v. Westly (Taylor I), 402 F.3d 924, 936 (9th Cir. 2005). The Taylor I panel further stated, however, that the Eleventh Amendment did bar the plaintiffs’ “retroactive requests for money,” and also noted: “We need not decide the issue of sovereign immunity in the context of a takings claim, since we have already decided that plaintiffs’ property has not been taken at all, but has merely been held in trust for them by the Controller.” Id. at 935-36. Meanwhile, in November 2003, prior to our decision in Taylor I, the district court in the present case granted the ConSUEVER v. CONNELL 11843 troller’s motion to dismiss this action, without leave to amend, on the ground that the Eleventh Amendment barred the claims alleged. On appeal, we issued our decision in Suever I, which, based on the ruling in Taylor I, likewise vacated the district court’s Eleventh Amendment ruling because “the class’s request that the Controller return the members’ property is not barred by the State’s sovereign immunity.” Suever I, 439 F.3d at 1147-48. While the Suever I panel gave examples of some claims that could go forward and others that “were clearly barred,” it elected not to parse all of the averments of the first amended complaint or to opine on every potential claim. Id. at 1148. On remand, the Controller moved for judgment on the pleadings, asking the district court to answer the questions left open by the Suever I panel regarding which claims could proceed and which could not, and the district court granted the motion in part in November 2006. Plaintiffs subsequently moved for partial summary judgment on several issues, largely based on the argument that it is beyond factual dispute that the State engaged in conduct that we had previously declared unlawful. See Taylor I, 402 F.3d at 935 (stating that the plaintiffs “allege[d] actions that would fall outside the scope of the Controller’s statutory authority to such an extent as to be ultra vires”); Suever I, 439 F.3d at 1148 (noting that the first amended complaint alleges both “that the Controller acted ultra vires by improperly seizing property ineligible for escheat” and “that the Controller acted unconstitutionally by providing inadequate notice to property owners whose property was to be escheated”); Taylor v. Westly (Taylor II), 488 F.3d 1197, 1201 (9th Cir. 2007) (granting plaintiffs a preliminary injunction in part because “the likelihood of success on the merits [wa]s high” regarding their unconstitutional notice claim).4 4 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. 11844 SUEVER v. CONNELL The district court’s October 12, 2007 order granted partial summary judgment to Plaintiffs on their claim that the State may not constitutionally withhold interest when it returns property to owners under the UPL. The district court otherwise denied Plaintiffs’ claims for (1) a declaration on the merits that the notice provisions of the UPL and the Controller’s practices thereunder are unconstitutional; (2) a declaration on the merits that the Controller has taken possession of property “outside the scope” of the UPL; and (3) an order that the Controller begin the process of promulgating regulations that will govern how persons may present and “perfect” a claim under the UPL. On October 26, 2007, the district court issued an order denying Plaintiffs’ motion for class certification, which had been heard at the same time as the motion for partial summary judgment. The district court also denied in November 2007 a request by the Controller for leave to seek reconsideration of the ruling that interest is constitutionally required. In its April 1, 2008 order, the district court granted the Controller’s motion to certify for interlocutory appeal its earlier ruling that the State is constitutionally required to pay interest when it returns property to owners under the UPL; granted Plaintiffs’ motion to amend the class definition but denied without prejudice their motion to certify the class; and denied Plaintiffs’ request for a permanent injunction requiring the State to pay interest at California’s alterative borrowing rate. The district court also granted in part and denied in part the Controller’s motion for partial summary judgment. Specifically, the district court granted the Controller’s motion regarding (1) Plaintiffs’ claim for retroactive “restitution” in the amount of the difference between the proceeds of the sale of their unclaimed property and the current market value; (2) dismissal of former Controller Westly as a defendant in his individual capacity; (3) Plaintiffs’ taxpayer and state law claims; and (4) Plaintiffs’ motion to compel further discovery responses. However, the district court denied without prejuSUEVER v. CONNELL 11845 dice the Controller’s request for a determination that the UPL, as amended, is now constitutional5; rejected the Controller’s statute of limitations argument; and denied the Controller’s requests for a protective order and for sanctions arising from its contention that Plaintiffs have improperly obtained and used privileged documents.