Article III Standing and Constitutional Protection of Interest on Custodial Unclaimed Property:
Commentary on Hendershot v. Stanton (6th Cir. 2025)

I. Introduction

Brigitte Hendershot v. Terry Stanton & Rachael Eubanks is a published decision of the United States Court of Appeals for the Sixth Circuit addressing a constitutional challenge to Michigan’s unclaimed-property regime, specifically to the State’s practice of retaining interest on property it holds in a custodial capacity under the Michigan Uniform Unclaimed Property Act (UUPA).

Although the panel, in an opinion by Judge Thapar, ultimately resolves only an Article III standing issue and remands to the district court, the opinion does significantly more than that. It:

• Clarifies that a plaintiff alleging the State has retained interest that rightfully belongs to her has suffered a concrete “pocketbook” injury sufficient for Article III standing, even if state law purports to deny that property right.
• Rebukes the district court for collapsing the standing inquiry into the merits of the underlying Takings Clause claim.
• Signals deep skepticism toward a recent Michigan Court of Appeals decision (Kemerer v. Michigan) that upheld Michigan’s refusal to pay interest on unclaimed property, and explains why federal courts are not bound to follow such intermediate state decisions when they conflict with longstanding state and federal takings principles.
• Reaffirms that, under both Michigan law and the federal Constitution, the State’s role under the UUPA is custodial rather than proprietary, and that interest on custodial funds generally “follows the principal” as a protected property right.

Taken together, the opinion establishes an important procedural and substantive baseline: federal courts must treat alleged loss of interest on state-held unclaimed property as a justiciable injury and must independently evaluate property interests in light of constitutional constraints, rather than simply deferring to contemporary state statutory labels or intermediate state-court interpretations.

II. Factual and Procedural Background

A. Michigan’s Uniform Unclaimed Property Act (UUPA)

Michigan enacted the UUPA in 1995 “to administer unclaimed assets.” Under the Act:

• Property, including “any income or increment derived from the property,” that remains unclaimed for a specified dormancy period is “presumed abandoned.” Mich. Comp. Laws § 567.223(1), §§ 567.225–.237.
• When property is presumed abandoned, the State takes custody of it (but, as the opinion emphasizes, not ownership).
• The rightful owner may later file a claim with the State to recover the original property or the monetary value of the principal. § 567.245(1).

The statute creates a differential rule for interest:

• If the property was interest-bearing when transferred to the State, Michigan must pay interest to the owner at “6% a year or any lesser rate the property earned while in the possession of the holder.” § 567.245(3).
• If the property was not interest-bearing when the State received it, Michigan pays no interest at all, even if the State itself earns interest while holding the property. § 567.243(3); see O’Connor v. Dep’t of Treasury, 9 N.W.3d 351, 357 (Mich. Ct. App. 2023).

B. Hendershot’s Allegations

Plaintiff Brigitte Hendershot alleges that Michigan currently holds between $200 and $600 in unclaimed property that belongs to her. To substantiate that allegation, she attached a screenshot from Michigan’s public unclaimed-property database showing three financial accounts in her name.

Crucially for both standing and merits, her complaint:

• Does not state whether any of her accounts were interest-bearing at the time Michigan took custody of them.
• Does not allege any specific amount of interest at stake or even that the accounts are currently generating interest while held by the State.
• Acknowledges that she has not yet filed an administrative claim to recover her property; instead, she sues now, anticipating that when she does claim her money, Michigan will return only the principal and not the interest earned during state custody.

C. The Lawsuit

Before seeking her money back administratively, Hendershot filed a § 1983 lawsuit in federal court against:

• The administrative manager and
• The administrator

of Michigan’s unclaimed-property program, both in their official capacities.

She alleges that the State’s policy of withholding interest on property held under the UUPA constitutes an uncompensated taking of private property in violation of the Fifth Amendment Takings Clause, as applied to the States through the Fourteenth Amendment. She seeks:

• Declaratory relief that the policy is unconstitutional; and
• Injunctive relief requiring the State to pay her (and a putative class of similarly situated owners) the interest accrued on their unclaimed property when it is returned.

D. The District Court’s Dismissal

The State moved to dismiss on two grounds:

1. Sovereign immunity; and
2. Lack of Article III standing.

The district court granted the motion on standing alone. In its view, Michigan law “does not grant a property right to individuals whose property is abandoned in any interest the State earns on that property.” Without such a property right, the court reasoned, Hendershot “has not demonstrated an injury by [the interest] being withheld.”

The district court’s conclusion rested heavily on the Michigan Court of Appeals’ decision in Kemerer v. Michigan, which had rejected a similar interest-based challenge to the UUPA. Kemerer held, among other things, that:

• Owners lack a “superior interest of ownership” in property once it is in Michigan’s custody; and
• Common-law interest rules do not apply to unclaimed property deemed “presumed abandoned.”

On that basis, the district court concluded Hendershot lacked a cognizable injury-in-fact and thus lacked standing. Hendershot appealed.

III. Summary of the Court of Appeals’ Opinion

The Sixth Circuit reverses and remands. Its core holdings and moves are:

1. Standing: Hendershot sufficiently alleged Article III standing. Her claim that Michigan wrongfully keeps interest earned on her property, and her request that the court order payment of that interest, state a classic “pocketbook” injury that is fairly traceable to the State and redressable by court-ordered relief.
2. Error Below: The district court improperly collapsed the standing inquiry into the merits by deciding she had no property right to the interest and then using that conclusion to declare that she had suffered no injury-in-fact. Whether she in fact has a property right is a merits question, not a jurisdictional one.
3. No Conversion to Merits Ruling on Appeal: Although an appellate court sometimes may affirm on any ground supported by the record or treat a jurisdictional motion as a Rule 12(b)(6) motion to dismiss for failure to state a claim, the panel declines to do so here because:
   • The complaint is too bare-bones about the nature of her accounts (e.g., whether they were interest-bearing);
   • The defendants did not pursue their sovereign immunity arguments on appeal; and
   • The district court did not meaningfully analyze the statutory text, common law, or higher-court precedent, but instead simply followed an intermediate appellate decision (Kemerer).
4. Guidance on the Merits (Dicta): The court provides pointed guidance—though not a formal holding—on why Kemerer is suspect and why, under both Michigan and federal law:
   • The UUPA is custodial, not a transfer of title to the State;
   • Interest generally “follows the principal,” including when the State holds property as a custodian;
   • States cannot redefine or re-label property interests (e.g., by calling them “abandoned”) to evade the Takings Clause.
5. Open Issues: The opinion leaves for remand:
   • Whether the claim is ripe given that Hendershot has not yet filed a formal reclaim demand (an issue noted but not briefed);
   • Any renewed sovereign immunity arguments;
   • The factual details about her accounts; and
   • The full merits of whether the State’s interest policy violates the Takings Clause, including any defense based on reasonable administrative costs.

In short, the Sixth Circuit holds that the federal courts have jurisdiction to hear Hendershot’s claim and must now grapple with the substantive property and takings issues on a more fully developed record.

IV. Detailed Analysis

A. Article III Standing and “Pocketbook” Injuries

Standing requires:

1. An injury-in-fact — concrete, particularized, and actual or imminent;
2. Causation — fairly traceable to the defendant’s challenged conduct; and
3. Redressability — likely to be remedied by a favorable decision.

Lujan v. Defenders of Wildlife, 504 U.S. 555, 559–61 (1992).

The Sixth Circuit characterizes Hendershot’s alleged injury as a “classic pocketbook injury.” She claims:

• The State has held her money;
• The State has (or may have) earned interest on that money; and
• The State refuses to give that interest back to her.

This fits within the category of financial harms that the Supreme Court has repeatedly recognized as sufficient for standing. The opinion cites:

• TransUnion LLC v. Ramirez, 594 U.S. 413, 425 (2021) (reaffirming that traditionally recognized economic harms satisfy the concreteness requirement); and
• Collins v. Yellen, 594 U.S. 220, 243 (2021), which similarly recognizes financial injuries as prototypical concrete injuries.

For causation, the injury is directly traceable to Michigan’s enacted policy of refusing to pay interest on certain unclaimed property. For redressability, a court order requiring payment of that interest would cure the injury. That is enough for Article III.

The key point: Even if the State later proves that, as a matter of law, it owes no interest to Hendershot, her allegation that the interest is hers and was withheld is sufficient at the pleading stage to confer standing. The correctness of that claim is a merits question, not a jurisdictional one.

B. The District Court’s Error: Collapsing Standing into the Merits

The Sixth Circuit emphasizes a fundamental structural point of federal jurisdiction:

“Ordinarily, the question of whether we have the ‘power to hear a case’ is ‘quite separate’ from ‘whether the allegations the plaintiff makes entitle [her] to relief.’” (quoting Morrison v. Nat’l Australia Bank Ltd., 561 U.S. 247, 254 (2010)).

The district court reversed that order. It first decided, on the merits, that:

• Michigan law does not grant owners of presumed-abandoned property any right to interest earned while in State custody; and therefore
• Hendershot had no property right in the interest allegedly withheld.

It then repackaged that merits determination as a lack of injury-in-fact. In other words, because Hendershot supposedly had no property right, she could not have been injured by the State’s refusal to pay interest.

The appellate court labels this a conflation of jurisdiction and merits. The appropriate question at the standing stage is whether Hendershot has alleged a non-frivolous violation of a legal right that (if true) would be redressable—not whether she will ultimately prevail on that legal claim.

This correction is doctrinally important beyond this case: it reinforces that disputes about what counts as “property” for Takings Clause purposes generally go to the merits and must not be used to strip federal courts of jurisdiction at the threshold.

C. Why the Sixth Circuit Does Not Decide the Merits Now

In some cases, once a jurisdictional error is corrected, an appellate court may:

• Affirm on alternate grounds if they were argued below and are supported by the record; or
• Re-characterize a Rule 12(b)(1) dismissal as a Rule 12(b)(6) dismissal and resolve the merits for efficiency.

Citing Morrison, the court acknowledges that option but refuses to exercise it here for three reasons.

1. Inadequate Factual Allegations

The complaint provides almost no detail about the nature of Hendershot’s accounts—particularly whether they were interest-bearing when transferred to the State, or whether and how much interest they currently accrue. The only factual support is a screenshot from the unclaimed-property database, which shows accounts but not their characteristics.

Because these facts may be critical to applying Michigan’s statutory rules (which distinguish interest-bearing and non-interest-bearing property) and to assessing any Takings Clause theory, the panel declines to decide the merits on an incomplete record.

2. Sovereign Immunity Not Pressed on Appeal

Although the State invoked sovereign immunity in the district court, it did not press that argument in its appellate briefing. The Sixth Circuit treats that omission as a waiver (or at least a forfeiture) of the immunity argument at this stage. It refuses to raise or decide sovereign immunity sua sponte where the State itself has not adequately briefed it on appeal.

3. The District Court’s Over-Reliance on Kemerer

The district court treated itself as bound by the Michigan Court of Appeals’ decision in Kemerer v. Michigan, which had rejected a similar challenge to the UUPA. The Sixth Circuit explains that federal courts sitting in diversity (and, by extension, in § 1983 actions applying state property law) give weight to intermediate state court decisions only insofar as they correctly predict the state supreme court’s view.

In particular, Ruth v. Bituminous Casualty Corp., 427 F.2d 290, 293 (6th Cir. 1970), instructs that intermediate appellate decisions are not persuasive where there is:

• Any clear indication that the decision was “erroneously” decided; or
• A conflict with previously enunciated decisions of the state supreme court.

Here, the panel sees “ample reason to doubt” that Kemerer accurately reflects Michigan Supreme Court doctrine, both as to:

• Whether the State becomes owner (rather than mere custodian) of unclaimed property; and
• Whether interest follows the principal in custodial settings.

Because the district court did not independently analyze the UUPA or relevant higher-court precedent, and instead simply followed Kemerer, the Sixth Circuit concludes that the lower court’s analysis cannot be treated as a merits ruling that the appellate court should simply affirm or adopt.

D. Federal Courts and State Definitions of “Property”

The opinion makes a broader doctrinal point: although state law is an “important source” for defining property interests, it is not the only source.

The court cites:

• Phillips v. Washington Legal Foundation, 524 U.S. 156, 164 (1998) (property interests arise from “independent source[s] such as state law”);
• Tyler v. Hennepin County, 598 U.S. 631, 638 (2023) (“State law is one important source,” but not the exclusive determinant of “property” for Takings Clause purposes); and
• Hall v. Meisner, 51 F.4th 185, 190 (6th Cir. 2022) (“the Takings Clause would be a dead letter if a state could simply exclude from its definition of property any interest that the state wished to take”).

Together, these cases reinforce that:

• States cannot immunize themselves from takings liability by redefining traditional property interests (e.g., equity in real estate, interest on custodial accounts) as non-property under state law.
• Constitutional “property” is ultimately a federal question informed, but not dictated, by state labels.

Applying these principles, the Sixth Circuit warns that Michigan cannot extinguish owners’ traditional property rights in interest “even for the limited duration” during which the State holds their property as a custodian. The court relies on Webb’s Fabulous Pharmacies, Inc. v. Beckwith, 449 U.S. 155, 164 (1980), which held that a county violated the Takings Clause by taking the interest earned on funds deposited into a court registry.

The opinion similarly invokes Tyler’s warning that a state cannot manipulate definitions of “abandonment” to sidestep the Takings Clause. 598 U.S. at 647. It follows that Michigan’s statutory presumption of abandonment under the UUPA cannot, by itself, erase underlying constitutional property rights if in substance the State is merely a temporary custodian.

E. The Custodial Nature of the UUPA

Judge Thapar underscores that under the UUPA, Michigan “takes custody—not ownership—of unclaimed property.” He relies on the Sixth Circuit’s prior decision in O’Connor v. Eubanks, 83 F.4th 1018 (6th Cir. 2023) (per curiam), which held that Michigan does not “acquire title” to property under the UUPA, including interest earned while in its possession.

This custodial characterization is grounded in:

• The statutory text, which:
  • Repeatedly refers to the individuals whose property is held as “owners,” and
  • Describes Michigan’s role as “custodial.” See Mich. Comp. Laws § 567.224; § 567.222(n).
• Michigan Supreme Court precedent on “custodial statutes,” which “effectuate ‘no deprivation of property rights of an owner.’” Schoener v. Continental Motors Corp., 106 N.W.2d 774, 777 (Mich. 1961).

Against this backdrop, Kemerer’s suggestion that owners somehow have an “inferior” property interest once the State takes custody is in direct tension with both statutory text and longstanding state law. Federal courts, therefore, are not obliged to accept Kemerer’s view as an authoritative statement of Michigan law, especially where it appears inconsistent with Michigan Supreme Court guidance.

F. The “Interest Follows Principal” Rule

A central substantive theme of the opinion is the longstanding doctrine that “interest follows principal”: whoever owns the principal sum is ordinarily entitled to the interest it generates. The Sixth Circuit marshals both Michigan and federal precedents to show the depth and durability of this principle.

1. Michigan Authorities

The opinion cites a line of Michigan cases standing for the proposition that owners retain rights to interest on property held in the State’s custody:

• Brown v. Vidro, 244 N.W. 227 (Mich. 1932);
• Star-Batt, Inc. v. City of Rochester Hills, 650 N.W.2d 422 (Mich. Ct. App. 2002);
• Potter v. Wayne County, 207 N.W.2d 448 (Mich. Ct. App. 1973);
• Grand Rapids Public Schools v. City of Grand Rapids, 381 N.W.2d 783 (Mich. Ct. App. 1985).

These decisions collectively support the notion that:

• The State’s custody of property—whether in an escrow, registry, or unclaimed-property program—does not strip the owner of entitlement to the earnings generated by that property.

2. Federal Authorities

The Sixth Circuit’s own decision in O’Connor v. Eubanks, 83 F.4th 1018 (6th Cir. 2023), plays a key role. There, the court expressly held that:

“Interest earned on assets held under the UUPA belongs to the owner, even when the principal was not interest-bearing at the time the state took custody.”

That holding, the panel explains, is “constitutionally compelled” by Supreme Court precedent, including:

• Webb’s Fabulous Pharmacies, Inc. v. Beckwith, 449 U.S. 155, 164–65 (1980) (county’s appropriation of interest on funds in court registry was a taking);
• Phillips v. Washington Legal Foundation, 524 U.S. 156, 159–60 (1998) (interest on client funds held in IOLTA accounts is private property of the client, even if amounts are small);
• Brown v. Legal Foundation of Washington, 538 U.S. 216, 235 (2003) (recognizing a taking occurred when IOLTA interest was redirected, though concluding just compensation was effectively zero).

These cases collectively establish that:

• Interest generated by private funds held by the State or state-controlled entities ordinarily belongs to the private owner;
• Appropriating that interest without just compensation is a taking; and
• The fact that the underlying funds were not originally interest-bearing does not, by itself, strip the owner of a right to interest once the State chooses to invest or otherwise earn on those funds.

The Sixth Circuit’s reaffirmation of this framework in Hendershot reinforces that the interest-follows-principal rule has constitutional stature, not merely common-law pedigree. As such, Michigan cannot redefine or abrogate it by statute without confronting the Takings Clause.

G. Limits on State “Labeling” of Property Interests

Building on Tyler, Cedar Point Nursery v. Hassid, 594 U.S. 139 (2021), and Horne v. Department of Agriculture, 576 U.S. 350 (2015), the court emphasizes that states may not manipulate labels to circumvent takings protections.

The opinion cautions that:

“[U]nder the federal Constitution, property rights ‘cannot be so easily manipulated’ by state-law labels.” (quoting Cedar Point and Horne).

Applied to unclaimed property:

• Calling property “presumed abandoned” does not automatically eliminate the owner’s constitutional interest or transform the State’s status from custodian to owner.
• Characterizing unclaimed property as something less than full private property, or downgrading the owner’s rights, cannot serve as a “get-out-of-Takings-Clause-free card.”

This is a direct rebuke to any reading of Kemerer or similar decisions suggesting that Michigan’s statutory regime can unilaterally subordinate owners’ rights in a way that avoids the Fifth Amendment’s just-compensation requirement.

H. Open Legal and Factual Questions on Remand

Although the Sixth Circuit gives strong hints about how the merits might be resolved, it explicitly leaves several questions open:

1. Ripeness

The State briefly argued that the case might be unripe because Hendershot has never filed an administrative reclaim request. The panel notes that:

• Whether that ripeness argument can be squared with Knick v. Township of Scott, 588 U.S. 180 (2019), “is an open question in our circuit.”
• Other circuits have split on whether unclaimed-property owners must exhaust administrative procedures or wait for a denial before bringing a federal takings claim, citing post-Knick cases such as Knellinger v. Young, Maron v. Chief Financial Officer of Florida, and Dillow v. Treasurer of Pennsylvania.

Because the State did not “press” ripeness as a ground for affirmance on appeal, the Sixth Circuit declines to decide the issue and leaves it for the district court on remand.

2. Sovereign Immunity and Proper Defendants

The State raised sovereign immunity below but did not pursue the argument on appeal. The court therefore does not decide whether the Ex parte Young doctrine or some other theory permits injunctive and declaratory relief against these officials in their official capacities. That issue may be revisited on remand, especially if the State chooses to reassert it.

3. The Nature of Hendershot’s Accounts

The record does not yet reveal:

• What type of accounts are at issue;
• Whether they were interest-bearing when delivered to the State; or
• Whether the State in fact earned interest or any form of “income or increment” on them.

These details may bear on both the statutory analysis (e.g., under §§ 567.243 and 567.245) and the measure of any alleged taking (e.g., whether there is any interest to return and in what amount).

4. Administrative Costs

The court notes that Michigan may have arguments about its entitlement to “reasonable administrative costs” in operating the unclaimed-property program, citing O’Connor v. Eubanks, where the Sixth Circuit suggested that the State might recoup costs before remitting the remainder of interest to owners.

How to balance:

• The owner’s constitutional right to interest; and
• The State’s legitimate costs in administering a large custodial system

is left open. On remand, Michigan may attempt to justify some retention of interest on this basis, though not as a wholesale appropriation.

V. Clarifying Complex Legal Concepts

A. Standing vs. Merits

Standing asks: does this plaintiff have a sufficient stake in the controversy to invoke the federal judicial power? It is about:

• Having suffered (or imminently facing) a concrete injury;
• Caused by the defendant’s conduct;
• That a court can remedy.

Merits asks: assuming the facts alleged are true, does the law entitle this plaintiff to relief? That often requires:

• Interpreting statutes;
• Applying constitutional tests; and
• Weighing precedents.

In Hendershot, standing turns on whether the alleged withholding of interest is a plausible economic injury. The merits will decide whether Michigan law and the Constitution actually grant Hendershot a right to that interest.

B. Ripeness

Ripeness concerns the timing of a lawsuit: is the dispute sufficiently concrete and developed that a court should decide it now, or is it premature and hypothetical?

In Takings cases, ripeness questions often arise when:

• The plaintiff has not yet exhausted administrative procedures, or
• The government has not yet taken a final position on how it will apply the challenged policy.

Here, the State might argue that the injury is speculative until Hendershot actually files a claim and the State formally refuses to pay interest. The Sixth Circuit flags, but does not resolve, this question.

C. Sovereign Immunity and Official-Capacity Suits

Sovereign immunity generally shields states from being sued for damages in federal court without their consent. However, under the Ex parte Young doctrine, plaintiffs may often sue state officials in their official capacities for:

• Prospective injunctive relief; and
• Declaratory relief

to stop ongoing violations of federal law.

Hendershot pursues such relief against state officials rather than the State itself, likely relying on this approach. Whether that suffices to circumvent sovereign immunity in this specific statutory context remains to be worked out on remand if the State re-raises the issue.

D. Custodial Escheat vs. True Abandonment

Custodial escheat (as under the UUPA) means the State holds property on behalf of the owner until they come forward to claim it. The State is a temporary steward, not a new owner. The owner’s title and rights generally persist, including the right to reclaim the property.

True abandonment at common law typically occurs when an owner intentionally relinquishes possession and control with no intention of reclaiming the property. In extreme cases, the law may deem such property ownerless, allowing others (including the State) to acquire it.

The UUPA’s concept of “presumed abandoned” is a statutory construct triggered by dormancy, not by clear proof of actual, intentional abandonment. As Tyler warns, states cannot rely solely on such statutory presumptions to defeat constitutional property rights if, in substance, the owner’s interest continues.

E. Takings Clause Basics Relevant Here

The Fifth Amendment Takings Clause (applied to the States through the Fourteenth Amendment) provides: “nor shall private property be taken for public use, without just compensation.”

Key features relevant to this case:

• It applies to both real and personal property, including monetary interests and intangible property.
• Taking the interest generated by private funds can itself be a taking, even if the principal is returned, as in Webb’s and Phillips.
• The State may owe just compensation when it appropriates such interest, although compensation can be zero if the owner has suffered no net loss (as in Brown v. Legal Foundation of Washington).

Hendershot sits squarely in this line of authority: if Michigan has effectively taken interest that constitutionally belongs to owners of unclaimed property, it must either:

• Pay that interest back (as just compensation), or
• Show that no compensable deprivation has occurred (for example, because the interest was never generated, or because the State’s retention is offset by legitimate, demonstrable administrative costs).

VI. Likely Impact and Broader Significance

A. Strengthening Access to Federal Courts for Unclaimed-Property Owners

By holding that a claimed entitlement to interest on custodial unclaimed property is a sufficient injury for standing, Hendershot:

• Makes it harder for states and lower courts to use standing as a threshold barrier to avoid adjudicating takings challenges to unclaimed-property programs.
• Signals that plaintiffs need not prove their property rights at the jurisdictional stage; alleging a plausible economic injury suffices.

This is likely to encourage further litigation challenging state practices that withhold interest or other economic increments on property held under unclaimed-property laws, tax-foreclosure schemes, and similar regimes.

B. Constraining State Reliance on Intermediate Appellate Decisions Like Kemerer

The opinion substantially undermines the persuasive force of Kemerer v. Michigan in federal court by:

• Highlighting its tension with Michigan statutory text and earlier Michigan Supreme Court precedent;
• Contrasting it with the U.S. Supreme Court’s takings jurisprudence on interest; and
• Reminding federal courts that intermediate state decisions are not binding when they appear inconsistent with higher authority.

This may deter states from relying on creative reinterpretations of property law by intermediate courts as a way to insulate themselves from federal takings scrutiny.

C. Reinforcing the Constitutional Status of Interest on Custodial Accounts

Although O’Connor already squarely recognized that interest on UUPA-held property “belongs to the owner,” Hendershot reinforces that conclusion and situates it firmly within a constitutional, not merely statutory or common-law, framework.

For Michigan:

• The decision pressures the State to revisit UUPA practices that withhold interest, especially on non-interest-bearing accounts that generate returns once in the State’s hands.
• It suggests that the State may need to develop mechanisms for tracking and crediting interest (or similar increments) to rightful owners, subject only to demonstrable reasonable administrative costs.

D. Interaction with the National Debate Post-Tyler and Cedar Point

Hendershot fits into a broader line of cases reinvigorating property rights and curbing governmental overreach in areas like tax foreclosures (Tyler) and compelled physical invasions of land (Cedar Point).

The opinion affirms that:

• Once a state has acknowledged that it is acting as a custodian (rather than acquiring title), it cannot selectively treat particular attributes of ownership—such as the right to interest—as though they belong to the State; and
• Attempts to re-label or re-characterize private property interests to avoid paying compensation will be scrutinized as potential violations of the Takings Clause.

Other jurisdictions with unclaimed-property statutes, IOLTA-type programs, or similar custodial regimes may look to Hendershot as persuasive authority reinforcing the principle that interest belongs to the owner and that federal courts must independently police any state attempt to appropriate it.

E. Practical Consequences for Future Litigation

On remand and in future cases:

• Plaintiffs will likely plead more specific facts about:
  • The nature of their accounts (interest-bearing or not);
  • The State’s actual or likely earnings on those funds; and
  • The value of interest allegedly withheld.
• States will more seriously develop defenses based on:
  • Administrative-cost offsets;
  • Arguments about when the State actually earns interest (e.g., if funds are pooled);
  • Ripeness and exhaustion of administrative procedures (to the extent consistent with Knick); and
  • Potential sovereign-immunity barriers to monetary relief.

But crucially, the door to federal adjudication of these issues is now clearly open in the Sixth Circuit. States cannot rely on standing doctrines or intermediate state-court decisions to keep unclaimed-property takings claims out of federal court.

VII. Conclusion

Hendershot v. Stanton is, formally, a standing decision. Substantively, it is much more than that.

The Sixth Circuit:

• Confirms that alleging loss of interest on unclaimed property held by the State is a sufficient economic injury for Article III standing, without requiring the plaintiff to prove her property right at the jurisdictional stage;
• Corrects the district court’s conflation of standing with the merits of the Takings Clause claim;
• Reasserts that federal courts must independently evaluate what counts as “property” under the Constitution, and cannot uncritically defer to state-law labels or intermediate state-court opinions that contradict higher authority;
• Reinforces the constitutional principle that interest follows principal, particularly in custodial settings like unclaimed-property programs; and
• Signals skepticism toward state efforts—including Michigan’s— to use “presumed abandonment” or similar statutory constructs as a way to appropriate interest without paying just compensation.

While the ultimate resolution of Hendershot’s own claim remains to be determined on remand—factually (what interest, if any, was earned on her accounts) and legally (how Michigan’s regime interacts with administrative costs, ripeness, and sovereign immunity)—the opinion sets a strong precedent. It ensures that property owners in the Sixth Circuit can bring federal takings challenges to unclaimed-property practices and that those challenges will be evaluated under robust, constitutionally grounded understandings of property, rather than narrow, state-crafted definitions designed to avoid the demands of the Takings Clause.