Legal Docket: Unclaimed money

MARY REICHARD, HOST: It’s Monday morning, November 14th, 2022 and you’re listening to The World and Everything in It! Good morning. I’m Mary Reichard.

NICK EICHER, HOST: And I’m Nick Eicher. It’s time for Legal Docket, where we cover every single oral argument heard this term by the U.S. Supreme Court. You listen every Monday between now and the end of the term, and you’ll know something about everything.

Today, three cases.

First, what happens when you send money to someone via MoneyGram and that someone doesn’t claim it?

It’s hard to believe that happens, but it does.

Moneygram’s the second biggest money transfer company in the world. It makes it easy to send or receive money for a small fee. Even if you don’t have a bank account.

But, again, what about the money that goes unclaimed? And the address of the sender or recipient remains unknown? Where does the money go? Who gets it?

REICHARD: That’s where the common law doctrine of “escheatment” comes in. Escheatment is the right of the state to take ownership of unclaimed property. It’s useful to wrap things up so property isn’t in limbo forever.

With MoneyGram orders, we’re talking hundreds of millions of dollars that go unclaimed for myriad reasons. And that’s what the fight is over.

With MoneyGram headquartered in Delaware, that state claims the money. It’s been this way for years! Lawyer Neil Katyal argued predictability is good. To do otherwise?

KATYAL: …that is incredibly damaging and destabilizing to the financial sector because this has all been around and done a certain way since 1974.

EICHER: The states suing Delaware say: Really, so keep doing something because we’ve done it for 48 years?

Thirty state governments argue that’s not an argument.

Different kinds of unclaimed property are treated differently. For instance, bank accounts, insurance proceeds, and other money transfers.

REICHARD: The law in this case has a very long name: The federal Disposition of Abandoned Money Orders and Traveler’s Check Act, the F-D-A-M-O-T-C-A. Even the initialism doesn’t help much, so the lawyers just call it “the FDA.” Congress passed the FDA in 1974. Here’s the lawyer for the 30 states, Nicholas Bronni. You’ll hear him use the term “instruments.” He’s talking about financial instruments.

BRONNI: That statute says that where addresses aren't typically kept for a class of instruments, those instruments escheat to the state of purchase. Now, 50 years later, Delaware claims that it's entitled to the exact same sort of windfall that led to the enactment of the FDA. To justify that, it argues that the FDA doesn't cover instruments that function precisely like other money orders but are marketed differently. But marketing strategies do not define commercial instruments and they don't justify $250 million windfalls.

Part of the problem is that that law, court opinions, and common law don’t neatly line up.

In this exchange with Bronni, here’s Justice Samuel Alito trying to distinguish one financial instrument from another.

ALITO: How about a prepaid cash card? Some grandparents always used to send their grandchildren a MoneyGram -- a MoneyGram for Christmas. And now they want to become more modern, so they send them a prepaid Visa cash card.

BRONNI: Not covered either as a money order or a similar written instrument because it has to have a named payee, and gift cards do not have named payees.

ALITO: How about a gift certificate that does have a named payee?

One tricky aspect here is that the MoneyGrams aren’t labeled money orders. The top of a MoneyGram just says “receive money” or “send money.” So Delaware argues because the FDA requires a label saying quote-unquote “money order,” it should win.

You’ve heard the saying, “If it walks like a duck and talks like a duck, it must be a duck?” Justice Clarence Thomas asked something similar of lawyer Katyal for Delaware:

THOMAS: What if, tomorrow morning they simply stamp the top of these, the two disputed instruments, "money order," "commercial money order"? Would that solve your problem?

KATYAL: So, Justice Thomas, that would -- if they changed the label, we do think that it would mean it's not a money order or traveler's check. So we do think you look to the label for that.

But they’re not labeled that way. So Katyal suggested this problem is better solved elsewhere:

KATYAL: The safe thing to do is what you've done in case after case, which is to say, if we're concerned about equity, that's something for Congress. It's something for the states. It's not for this Court.

Unclaimed property is Delaware’s third biggest revenue source. So it stands to lose a lot if it doesn’t win here. I think it had better brace for that outcome: a Special Master report concluded the money should go to the state where the money instrument was purchased.

Next, two cases couched in criminal law.

Jones v Hendrix asks how an inmate can challenge his conviction years later, after the rules of evidence change in his favor.

EICHER: Here’s the background. More than two decades ago, a jury found Marcus DeAngelo Jones guilty of possessing a firearm as a felon, among other charges.

Later, the Supreme Court changed what the government must prove: that an offender not only possessed a gun but also knew he had the legal status of “felon.” Two proofs in order to convict.

But back when Jones was tried, that wasn’t the requirement.

So now Jones wants to challenge his conviction because under the new rules, he could be found innocent.

REICHARD: I am going to spare you the technicalities—because my eyes glazed over and I can’t imagine what it’d do to your ears.

There are many technicalities.

EICHER: Mary, you’re kind. The legal question is by what procedural vehicle can Jones bring his challenge?

In Justice Alito’s question to the government lawyer, he looked for a bright-line rule for trial court judges to follow. He mentions “habeas.” As in habeas corpus, the legal protection from unlawful imprisonment.

ALITO: Do you -- do you have any concern about the complexity of the rule that you are advocating?...Are you concerned that every federal prisoner who wants to bring a successive motion is going to claim that this falls within the traditional scope of habeas, and this would be an escape clause that would be invoked again and again and again, and all the district judges are going to have to analyze the traditional scope of habeas to see whether the claim actually falls within that?

Inmates’ rights versus the convenience of the government. Put that way—and lots of media put it that way—Justice Alito took heavy criticism.

But it’s a common concern often raised in Supreme Court cases: whether the system can handle the work put on it.

Justice Sonia Sotomayor focused on inmate Jones:

SOTOMAYOR: …okay, there is no way to look at what they did as fitting the statutory terms that have now been described by this Court. There's no inference that could be drawn from the evidence that they did it. They're completely innocent. You’re suggesting that wouldn’t create a fifth and eighth amendment problem?

REICHARD: Bottom line is the court must sort out conflicting laws that try to balance judicial efficiency with protecting the rights of prisoners.

Our final case today arises from death row in Arizona. In 2005, a jury convicted John Cruz of capital murder. Under state law, he could have received either the death penalty or life without parole.

Cruz wanted the jury to be told that if it didn’t give him the death penalty, he would never be eligible for parole. He cited a 1994 Supreme Court decision called Simmons that gave defendants the right to instruct the jury that way. The rule helped remove inferences a jury might make about a defendant’s future danger to society.

EICHER: But the jury wasn’t instructed that way. Now Arizona asks the Supreme Court to uphold this death sentence as consistent with state practice.

Its lawyer, Chief Deputy Attorney General Joseph Kanefield, argued against what he called endless attempts by criminals to avoid responsibility:

KANEFIELD: On May 26, 2003, the Petitioner murdered Tucson Police Officer Patrick Hardesty in the line of duty by shooting him five times at point-blank range. He comes here today on appeal of a successive state post-conviction judgment to obtain a new penalty phase so that he can request the parole ineligibility instructions under Simmons v. South Carolina, a case which predated his trial by over a decade.

REICHARD: Besides, Cruz didn’t raise this issue in his first appeal. So, too late now.

Cruz’s lawyer pounded on his strongest case: that Arizona violated Supreme Court precedent. Here’s Neil Katyal:

KATYAL: In 2005, John Cruz was sentenced to death. The judge instructed jurors that, without a death sentence, Cruz would face quote, "life imprisonment with possibility of parole." The judge did so despite this Court's decision 11 years earlier in Simmons. Cruz's jury labored under a seriously wrong idea. Indeed, the jury foreman the very next day said: "We wanted a reason to be lenient, and many of us would have rather voted for life, but we were not given an option to vote for life in prison without the possibility of parole."

I counted at least five justices sympathetic to that side. Here’s Justice Elena Kagan, citing that earlier Simmons precedent:

KAGAN: I think Kafka would have loved this. Cruz loses his Simmons claims on direct appeal because the Arizona courts say point-blank Simmons never applied in Arizona. And then he loses the next time around because the Arizona courts say Simmons always applies.

EICHER: In 2016, the Supreme Court in another case called Lynch directly told the Arizona courts to comply with Simmons.

But Arizona’s Supreme Court again said no, on grounds that nothing that significant had changed. Listen to Kanefield explain that:

KANEFIELD: The Arizona Supreme Court's holding is grounded in the core principle of finality and is adequate and an independent state ground for its judgment. Under the rule, Arizona's indisputable interest in finality of criminal convictions can only yield to a claim based on those rare decisions announcing a new rule of law or a significant statutory or constitutional amendment. Here, Petitioner did not make that showing.

REICHARD: Kanefield downplayed how significant the change in the law really was. Several justices seemed to dispute that characterization.

And Justice Elena Kagan put it this way:

KAGAN: It sounds like you're thumbing your nose at us.

If Cruz prevails, Arizona would have to give new sentencing hearings to about three dozen inmates where the jury would hear about their ineligibility for parole.

And that’s this week’s Legal Docket!

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