In the first ruling written by President Joe Biden’s appointee Justice Ketanji Brown Jackson, the U.S. Supreme Court on Tuesday sided with 30 states that argued that Delaware had no right keep hundreds of millions of dollars in uncashed MoneyGram checks for itself.
The ruling authored by Jackson, who was confirmed last year by the Senate as the newest of the nine justices, was unanimous. Jackson wrote that the unclaimed funds generally belonged to the states where the MoneyGram financial products were purchased and not to Delaware, the state where the world’s second-largest money transfer company is incorporated.
Many
of the largest U.S. companies are incorporated in Delaware. For the state, unclaimed property has become a big money maker. It accounted for $448.6 million of Delaware’s $5.4 billion in revenue in 2021, making it the third-largest source of revenue.Jackson, the first Black woman to serve as a justice, is one of three liberal members of a court with a 6-3 conservative majority. Jackson is the only justice appointed to the court by Biden, a Democrat. His Republican predecessor Donald Trump was able to appoint three conservative justices during his four years in office. Jackson replaced retiring liberal justice Stephen Breyer and was sworn in to the role in June.
In the ruling, Jackson wrote that generally a state under its power called “escheatment” can take possession of abandoned property if it is located within the state.
But in the case of MoneyGram checks, Jackson said a federal law known as the Disposition of Abandoned Money Orders and Traveler’s Checks Act enacted in 1974 governs and generally gives the rights to the states where the checks were bought.
Under that law, money orders that go uncashed can be generally taken by the state in which they are purchased.
Delaware
contended the MoneyGram financial products at issue, which were known as “official checks,” did not qualify under that law as “money orders” or “other similar written instruments.” Those checks are prepaid financial instruments that can be bought at banks or credit unions that can be used to transfer funds to a named payee.From 2002 to 2017, Delaware took possession of $250 million in uncashed MoneyGram checks that were bought around the country, even though only $1 million was bought in Delaware itself, Jackson noted.
A group of states including Pennsylvania, Wisconsin and Arkansas took Delaware to court, arguing that the 1975 law applied, and an independent arbiter tasked by the Supreme Court to conduct an initial assessment of the case at first sided them.
But the arbiter, U.S. Circuit Judge Pierre Leval, later agreed with Delaware’s view that they were not legally money orders but were “third-party bank checks.”
Jackson rejected that position, saying the financial instruments were similar to money orders in function and operation by allowing prepayment of a specified amount to a specific person.
“And none of the differences Delaware identifies relates to the statutory text or ordinary meaning of a money order,” Jackson wrote.