Summary
The Sixth Circuit held that Brigitte Hendershot had Article III standing to challenge Michigan's alleged withholding of interest on unclaimed property held in state custody. The court concluded that the district court improperly merged the standing inquiry with the merits and reversed the dismissal. It remanded for further proceedings because the record and briefing were insufficient to resolve the merits or alternative defenses.
Topics
Practice areas
Questions Presented
- Whether Hendershot alleged an injury in fact sufficient for Article III standing when she claimed that Michigan held and would withhold interest belonging to her.
- Whether the district court improperly treated the merits of Hendershot's alleged property right as a jurisdictional standing question.
- Whether the Sixth Circuit could affirm on sovereign-immunity or other merits grounds, or convert the Rule 12(b)(1) motion into a Rule 12(b)(6) motion, on the existing record.
Holdings
- Hendershot adequately alleged Article III standing because she claimed a personal economic injury caused by Michigan's withholding of interest from accounts she alleged belonged to her, and the requested relief could redress that injury.
- The district court erred by deciding that Hendershot lacked a property right to the interest and then characterizing that merits conclusion as a lack-of-standing determination.
- The Sixth Circuit could not resolve the merits or affirm on alternate grounds because the complaint and appellate briefing did not provide an adequate record.
- Intermediate Michigan appellate decisions are not binding on a federal court applying Michigan law; they receive weight only to the extent they correctly predict the Michigan Supreme Court's decision.
Key quotations
“The district court reached the opposite conclusion by collapsing the standing analysis into the merits inquiry.” (p. 3)
“In short, the district court erred when it dismissed the case for lack of standing.” (p. 4)
“For starters, intermediate court opinions aren’t binding in federal court.” (p. 5)
“As we’ve explained, Michigan “take[s] custody—not ownership—of unclaimed property” under the UUPA.” (p. 6)
“Under the federal Constitution, property rights “cannot be so easily manipulated” by state-law labels.” (p. 6)
Factual background
Michigan holds three financial accounts listed under Brigitte Hendershot's name as unclaimed property under the Uniform Unclaimed Property Act. Hendershot alleged that the accounts, valued between $200 and $600, belonged to her and that Michigan would return the principal without interest if she claimed them. She had not yet sought return of the accounts and did not allege whether they were interest-bearing when transferred to Michigan or the amount of interest at issue.
Procedural history
Hendershot sued Michigan officials in their official capacities under 42 U.S.C. § 1983, alleging that Michigan's withholding of interest earned on unclaimed property violated the Fifth Amendment's Takings Clause. The district court dismissed for lack of standing, reasoning that Michigan law did not give her a property right to interest earned while the State held the property. The Sixth Circuit reversed and remanded, concluding that the complaint alleged an injury in fact and that the district court had improperly conflated standing with the merits.
Remand instructions
Remand for further proceedings, including consideration of the merits, any properly presented sovereign-immunity or ripeness arguments, the Uniform Unclaimed Property Act, Michigan abandonment law, and the relevant state and federal precedent.