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Court Shoots Down Unclaimed Funds Class Action Suit

The Minnesota Court of Appeals has rejected a class-action lawsuit challenging the Department of Commerce’s handling of about $750 million worth of “abandoned” property in the state’s general fund.  The lawsuit filed in 2015 accused the department of boosting the state’s profits but falling short of locating the rightful owners of “abandoned” assets. The lawsuit alleged that the state engaged in unconstitutional taking.

The Court of Appeals did not agree with the plaintiffs’ argument that the Department of Commerce’s chief method for providing notice to property owners via the website www.missingmoney.com was “poorly publicized.” In addition, pointing to a 1982 U.S. Supreme Court decision, whereby the Supreme Court concluded that, “the state has no obligation to compensate the owner for the consequences of his own neglect,” Minnesota judges also rejected the idea that Minnesota law is unconstitutional because it authorizes the taking of private property without just compensation.

The appeals court did not directly address the argument that the state’s failure to pay interest constitutes a taking. In a footnote, Judge Renee Worke acknowledged a 7th Circuit decision (Cerajeski v. Zoeller, 2013) that said the government must compensate a property owner whose assets were originally held in an interest-bearing account.

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