Court rules for Arkansas, 28 other states in MoneyGram case

WASHINGTON — A 29- state coalition led by Arkansas prevailed in a lawsuit against Delaware in a 9- 0 U. S. Supreme Court opinion over unclaimed MoneyGram funds when the high court issued an opinion Tuesday saying those funds should be refunded to the states where the transfers originated.

According to a news release from Arkansas Attorney General Tim Griffin, the state led a 2016 lawsuit against Delaware over the issue of whether unclaimed and abandoned funds related to MoneyGram official checks should be released to the plaintiff states where the checks were purchased or Delaware, where MoneyGram — which is headquartered in Dallas — is incorporated.

According to Forbes Magazine, more than 1.6 million businesses from around the world — including Walmart, Amazon, American Express, Disney, Google and Tesla — are incorporated in Delaware because of the state’s tax code, privacy laws and legal system.

In 2016, Griffin’s office said, Arkansas brought an original jurisdiction action in the Supreme Court seeking more than $250 million in unclaimed funds from uncashed MoneyGram official check products that it claimed were wrongfully handed over to Delaware. The case, Arkansas et al. v. Delaware, centered on which state is entitled to take custody of funds payable on unclaimed official checks sold by MoneyGram, a money transfer services company that operates in all 50 states and internationally.

Under the Federal Disposition Act, Griffin said, proceeds on unclaimed money orders, traveler’s checks and similar items must be turned over to the state where an item was purchased. But, Griffin said, since 2005, MoneyGram has turned those funds over to Delaware, as its state of incorporation. On Tuesday, the high court agreed that those funds are governed by the Federal Disposition Act and that MoneyGram should have turned those funds over to Arkansas and its coalition partners, not Delaware.

In Justice Ketanji Brown Jackson’s first opinion as a Supreme Court justice, Jackson said that MoneyGram checks are similar enough to money orders to be covered under the Federal Disposition Act, which means the hundreds of millions of dollars in unclaimed funds currently claimed by Delaware will instead go to the states in which the MoneyGram purchases originated. Under

the Federal Disposition Act, states are “entitled to the proceeds” of unclaimed money orders and traveler checks that originated in their state.

“We hold that the FDA covers the instruments in question and thus that they should general escheat to the State of purchase,” Jackson wrote in her opinion. “When a financial product operates like a money order … it is sufficiently ‘similar’ to a money order to fall presumptively within the FDA.”

Other states in the coalition are Alabama, Arizona, California, Colorado, Florida, Idaho, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maryland, Michigan, Montana, Nebraska, Nevada, North Dakota, Ohio, Oklahoma, Oregon, South Carolina, Texas, Utah, Virginia, Washington, West Virginia, Wisconsin and Wyoming.

The coalition is led by Arkansas, with a leadership group from California, Texas and Wisconsin. Pennsylvania is allied with Arkansas’s coalition and did not argue separately, but deferred to Arkansas.

“This is an important win for Arkansas and our coalition of states,” Griffin said in a press release Tuesday. “For the past decade, Delaware has claimed millions of dollars that rightfully belong to us, and that money will now go where it belongs.”