COLUMBUS, Ohio–A federal judge on Tuesday denied a request to stop the state of Ohio from raiding $1.7 billion from its unclaimed property fund to help build a new Cleveland Browns stadium, among other projects.
The ruling, issued by U.S. District Court Judge Edmund A. Sargus, Jr., is a blow to opponents of the plan, who had hoped the judge would block the state’s plans to withdraw the money from the fund on Jan. 1.
However, Sargus’ ruling also leaves open the possibility that their overall legal challenge could end up succeeding.
Last summer, Ohio lawmakers passed language via the new state budget to take an initial $1.7 billion from the $4.8 billion fund, which contains privately owned assets such as inactive bank accounts, old safe deposit box holdings and uncashed checks and insurance policies.
In addition, starting in 2036, any unclaimed funds that have been held by the state for 10 years will automatically be seized by the state for construction work on other sports stadiums and cultural facilities around Ohio.
A proposed class-action lawsuit, filed by a Democratic law firm in October on behalf of some Ohioans with money in the fund, claims that having the state take ownership of such money – a policy called “escheatment” – violates the U.S. Constitution’s guarantees of due process, the Ohio Constitution’s requirement that each piece of legislation must only deal with one subject, and both constitutions’ restrictions against taking private property without just compensation.
Sargus, in Tuesday’s ruling, denied plaintiffs’ request for a preliminary injunction or a temporary restraining order, pointing to a 2019 U.S. Supreme Court ruling that such moves are “generally unavailable” when the government offers compensation remedies.
In this case, Sargus noted, the Ohioans suing to block the plan have such a remedy: the state budget allows them and others with money in the unclaimed property fund to apply to reclaim it until 2036.
In addition, he continued, as a federal judge, he doesn’t have jurisdiction to weigh in on a state matter involving the Ohio Constitution.
The case was filed by former Attorney General Marc Dann and former state Rep. Jeff Crossman of Parma. Crossman said Tuesday an appeal will be considered.
While rejecting the request to immediately block the state’s plan, Sargus noted Tuesday that “this litigation will continue” and that “plaintiffs and perhaps a not-yet-certified class could possibly prevail on their alleged claims.”
The lawsuit is one of the only remaining hurdles to the Cleveland Browns’ plans to build a new $2.4 billion stadium in suburban Brook Park by 2029.
Of the $1.7 billion slated to be taken out of the unclaimed property fund, $600 million is set to help cover one-quarter of the Browns’ stadium price tag.
Ohio Senate Republicans came up with the unclaimed property fund idea as an alternative to the Browns’ initial proposal for the state to raise $600 million via interest-bearing bonds.