Posted on Jun 12, 2015 by JMS Advisory Group |
On June 5th, another Federal lawsuit was filed in the District of Delaware against the Delaware State Escheator and Kelmar Associates, contesting the parties’ overly aggressive auditing tactics. This is the second serious constitutionally-based challenge to Delaware’s audit program in recent times, with Temple-Inland leading the charge in the other case – which is headed to trial in 2016.
The Wall Street Journal even picked up the story, which we find interesting.
In this case, Plains All American identifies Kelmar as the state’s “for profit collection agent”, and alleges that Delaware law “does not authorize Defendants to issue an administrative subpoena, and no warrant has been issued for a physical inspection of Plains’ private records.” The Complaint goes on to assert that, “even if Defendants had the statutory authority to issue a document request, which they do not, the document requests issued by Kelmar to Plains exceed those permissible under the Fourth Amendment.” What is different about this litigation is the fact that the challenge to the various aspects of Delaware’s audit tactics has come at the beginning of the exam – under a different, yet equally valid, line of reasoning than previous cases premised on Constitutional concerns.
It will be interesting to see where this case goes, and how the proceedings impact other holders presently under audit. We have already seen the various holdings in Temple Inland embolden some holders to assert greater rights in non-litigation settings (e.g. audits & VDAs). Contact JMS for further information about this case, how to defend an unclaimed property audit, and any other unclaimed property compliance questions.