Legal challenge looms as Ohio lawmakers look to grab unclaimed money for Browns stadium
COLUMBUS, Ohio—Two Democratic former state officials said they’re preparing to file a class-action lawsuit against the Ohio legislature’s plan to put $600 million from the state’s unclaimed property fund toward a new Cleveland Browns stadium in suburban Brook Park, should the proposal become law.
It remains to be seen how the threatened lawsuit, which ex-state Rep. Jeff Crossman and former Ohio Attorney General Marc Dann unveiled to reporters Wednesday, might fare if the budget proposal is signed into law by Gov. Mike DeWine.
The proposed lawsuit, draft copies of which were provided to reporters, would claim that lawmakers’ move to raid $1.7 billion from the unclaimed property fund – $600 million of which would specifically be offered to cover 25% of the new Browns stadium’s estimated cost – violates the U.S. Constitution’s guarantees of due process and against taking private property without just compensation.
The draft lawsuit also asserts that the scheme would violate the Ohio Constitution’s guarantees against seizure of private property, serve as a breach of the state’s fiduciary duty to protect people’s unclaimed funds, and violate the state constitution’s requirement that every bill can only address one subject.
The lawsuit would be filed in Franklin County Common Pleas Court in the name of Lakewood resident Mary Bleick, whom state records show has less than $25 worth of unclaimed funds.
Dann, now an attorney practicing in Cleveland, told reporters outside the Ohio Statehouse that the unclaimed property fund is the private property of Ohioans – money from inactive bank accounts, old safe deposit boxes, and uncashed checks and insurance policies that no one has claimed after three to five years.
The $600 million for the Browns stadium, which would rise to $636 million with interest, would be repaid over the next 16 years with state tax revenue generated from the stadium and a proposed $1 billion mixed-use development surrounding it.
Under the state budget bill, unclaimed money that isn’t collected within 10 years of entering the fund would revert to the state to use for stadiums and cultural facilities.
“The unclaimed fund trust is not a slush fund for lawmakers,” Dann said. “The state has a legal and moral obligation to safeguard those funds until the rightful owners come forward, not to liquidate them for a billionaire’s stadium project.”
When asked whether their client would have standing to sue, given they could just submit a request now to get their money, Crossman replied, “We don’t know that they could get their money.”
“They have a right to that property, and the state doesn’t. It’s as simple as that,” Crossman said. “You can have all the due process in the world, and it’s still being taken.”
Dann and Crossman said they are Browns fans who don’t oppose building a new stadium -- just the proposed way of getting the money.
Senate Republicans behind the unclaimed-funds proposal have defended its constitutionality, and called it a creative solution to help the Browns stadium project using money that otherwise would just be sitting around.
Under their plan, Browns owners Jimmy and Dee Haslam would have to put $50 million into an escrow account that could be tapped into if there’s not enough tax revenue to cover the bond payments. The Haslams would also have provide an additional $50 million if their initial $50 million runs out.
Senate Finance Committee Chair Jerry Cirino, a Lake County Republican, questioned whether plaintiffs in a lawsuit challenging the scheme would have standing to sue, as anyone with unclaimed funds would still have ample opportunity to collect them even if the stadium-funding plan becomes law.
“We think we are within our rights as a legislature to be able to do what we’re talking about doing here,” Cirino said last week, according to WEWS-TV.
This wouldn’t be the first time that Ohio lawmakers have dipped into the state’s unclaimed property fund. Since the fund was created in 1967, nearly $1.3 billion in total has been diverted. Most of that money went to the state’s general revenue fund, but some of it was used for things like job development, helping local governments after the state’s sales tax on Medicaid managed care organizations was abolished, and special projects.
That’s according to a memo from the nonpartisan Legislative Service Commission, issued last Friday in response to queries from state Rep. Tristan Rader, a Lakewood Democrat, about the constitutionality of using unclaimed funds for stadium projects.
The memo stated that no Ohio courts have previously ruled on the constitutionality of taking unclaimed funds in the way the current budget bill calls for.
In 2009, the Ohio Supreme Court held that owners of unclaimed funds are entitled to interest that the state earned while holding onto the money, but the ruling stated that the Ohio General Assembly “has not plainly legislated” whether unclaimed funds are considered abandoned property.
The memo also pointed out that at least four other states – Arizona, Hawaii, Indiana, and Rhode Island -- have laws that turn unclaimed funds over to the state after a certain period of time.
So far, those laws have not been overturned, the memo noted, though it added that “it is not clear whether a court would consider other states’ laws when evaluating the law in Ohio.”
If a lawsuit like Dann’s and Crossman’s is filed, the memo stated that courts would likely consider two questions:
Whether the state’s eminent domain powers allow it to keep unclaimed funds after a certain amount of time, and
Whether using such money for stadium projects and cultural facilities, in the way the current budget bill calls for, are considered for a “public purpose.”