A federal judge took the unusual step last month of authorizing an immediate appeal of her decision to dismiss key components of a constitutional challenge to Colorado’s program for reuniting people with their unclaimed property.

In February, U.S. District Court Judge Charlotte N. Sweeney determined that a pair of plaintiffs could not pursue their claim that Colorado’s treasurer violated the constitutional “takings clause” by allegedly taking custody of their property without compensation. Previously, she had dismissed the case in its entirety, but the Denver-based U.S. Court of Appeals for the 10th Circuit responded that the plaintiffs adequately stated a claim for a constitutional violation.

Still, Sweeney identified a problem with the 10th Circuit’s decision: It was silent about whether Treasurer Dave Young and unclaimed property director Bianca Gardelli were entitled to recognized forms of immunity for their actions. Sweeney concluded that the takings claims against the defendants were barred by the 11th Amendment and by the judicially created doctrine of qualified immunity.

In response, plaintiffs David Knellinger and Robert Storey asked Sweeney to authorize an unusual mid-case appeal to the 10th Circuit to address the discrepancy that Sweeney described. In an Aug. 21 order, she agreed to do so.

If the 10th Circuit hears the case at its conclusion and revives the claims she already dismissed, “the parties would be required to relitigate the case over again, including expanding discovery and potentially rearguing significant summary judgment and class certification motions,” Sweeney wrote.

Colorado’s unclaimed property program, nicknamed the “Great Colorado Payback,” originated in the state’s treasury department in 1987. The overall goal is to reunite people with lost or forgotten property held in state custody.

Colorado requires property holders and the state to provide certain notice to the suspected property owner, which can now be sent by email. The treasurer’s office also maintains a website where people can search for and claim their property.

According to the plaintiffs’ complaint, Knellinger typed his name into the unclaimed property database and saw that he had an unknown item held by Verizon, with an estimated value between $50 and $249. Storey also discovered he had unclaimed property worth less than $50.

Instead of filing a claim through Young’s office, the plaintiffs filed a lawsuit on behalf of themselves and 1.6 million people, alleging that Colorado engaged in an unconstitutional “taking” and a due process violation.

In January 2023, Sweeney dismissed the lawsuit, reasoning the plaintiffs had not sufficiently alleged that the property in the state’s database was theirs. But a three-judge panel of the 10th Circuit agreed Knellinger and Storey had alleged the state took custody of their property without compensation and used it for public purposes, meaning their constitutional claims could proceed.

Soon afterward, the state moved once again to dismiss the lawsuit for a different reason: Colorado is immune from being sued.

Sweeney acknowledged the 10th Circuit did not address the immunity issue, and had only ruled that the plaintiffs alleged a viable legal claim for property taken without compensation. This time, she determined immunity applied for most claims, but that Knellinger and Storey could proceed on their due process allegations that officials did not follow the notification process in state law prior to taking their property.

Knellinger and Storey then asked Sweeney to allow an immediate appeal to the 10th Circuit to consider several key, unsettled legal issues in the case, including the question of governmental immunity.

If Sweeney is correct that immunity applies, “applying sovereign immunity undermines the very basis for the Tenth Circuit’s holding, which was premised on Plaintiffs having a claim,” wrote the plaintiffs’ attorneys. “The Tenth Circuit should effectively re-decide its Opinion with this changed landscape.”

The state defendants opposed the request, arguing the plaintiffs were seeking to revive their takings claims to accomplish “radical objectives,” meaning “the upheaval of the uniform system for administering unclaimed property in Colorado.”

“There is nothing stopping the named Plaintiffs from asserting a claim for their respective properties by following the statutory procedures and instructions available on the Department of Treasury website,” wrote the Colorado Attorney General’s Office.

Sweeney agreed with the plaintiffs, noting the 10th Circuit’s guidance on the immunity issue would be crucial.

The conflict between the 10th Circuit’s previous decision and the government’s ordinary entitlement to immunity “concerns issues that give rise to substantial ground for a difference of opinion,” she wrote in her August order.

The case is Knellinger et al. v. Young et al.