Prospective Only: Fourth Circuit Limits Ex parte Young Relief in Takings Cases to Post-Judgment Interest on State-Held Unclaimed Property

Introduction

In Steven G. Albert v. Brooke E. Lierman, the United States Court of Appeals for the Fourth Circuit issued a published decision clarifying how the Eleventh Amendment’s sovereign immunity bar and the Ex parte Young exception apply to Takings Clause challenges against state unclaimed-property regimes. The plaintiffs contend that Maryland’s refusal to pay interest accrued on property held by the State under the Maryland Uniform Disposition of Abandoned Property Act (the “Act”) effects an unconstitutional taking because the State benefits from the property without paying just compensation. The Comptroller argued lack of standing, unripeness, and sovereign immunity. The district court denied dismissal, holding the suit fell within Ex parte Young’s prospective-relief exception.

On interlocutory appeal, the Fourth Circuit exercised jurisdiction only over the sovereign-immunity ruling, affirmed in part, reversed in part, and remanded. The court drew a sharp prospective/retrospective line: federal courts may not order states to pay “accrued” (pre-judgment) interest because that is retroactive monetary relief barred by the Eleventh Amendment, but may, under Ex parte Young, enjoin future violations and thereby require payment of post-judgment interest as an ancillary effect of prospective relief.

Summary of the Opinion

The Fourth Circuit held:

Eleventh Amendment sovereign immunity applies to federal Takings Clause claims (reaffirming Hutto and Zito), subject to Ex parte Young’s prospective-relief exception.
Albert’s request for interest that has already accrued on property held by Maryland is “tantamount to a claim for money damages” and barred by the Eleventh Amendment.
Only the portion of the claim seeking compensation for interest that will begin to accrue after entry of a federal court judgment fits within Ex parte Young’s prospective-relief framework and may proceed.
The court declined pendent appellate jurisdiction over standing and ripeness; those issues remain for the district court on remand.
Dismissal on sovereign-immunity grounds should ordinarily be without prejudice because it is a threshold, non-merits disposition.

Disposition: Affirmed in part (as to the availability of prospective, post-judgment relief), reversed in part (as to retroactive, pre-judgment interest), and remanded.

Background

Maryland’s Act requires holders to turn over property “presumed abandoned” when owners have not engaged with it for a statutory period (typically three years). The Comptroller may liquidate non-monetary property and deposit proceeds, retaining up to $50,000 to pay claims, with remaining funds allocated to designated funds and the General Fund. Before 2004, successful claimants received principal plus accrued interest. In 2004, the General Assembly repealed the interest-payment requirement. The parties dispute whether the Act functions as a custody statute (retaining private ownership) or an escheat (vesting ownership in the State), but agree Maryland now pays only principal.

Plaintiff Steven Albert alleges that Maryland’s retention and use of the value of his property without paying the interest it earns is a taking without just compensation. He seeks declaratory and injunctive relief requiring the Comptroller to pay principal and interest when he files a claim. He sued the Comptroller in her official capacity; the district court held the suit fell within Ex parte Young’s exception to sovereign immunity, and the Comptroller appealed.

Jurisdictional Posture

The court exercised interlocutory review under the collateral order doctrine to address only the district court’s denial of Eleventh Amendment immunity (P.R. Aqueduct & Sewer Auth. v. Metcalf & Eddy). It declined pendent appellate jurisdiction over standing and ripeness because those issues were not “inextricably intertwined” with the sovereign-immunity question (Industrial Services Group v. Dobson).

Analysis

1) Precedents Cited and How They Shaped the Outcome

Hutto v. South Carolina Retirement System; Zito v. North Carolina Coastal Resources Commission: The court reaffirmed Fourth Circuit precedent that the Eleventh Amendment applies to Takings Clause suits in federal court; a state does not waive immunity simply because the Takings Clause is “self-executing.” A federal takings claim is barred “if state courts remain open” to adjudicate compensation claims.
Ex parte Young; Verizon Maryland: Articulates the exception permitting prospective injunctive and declaratory relief to halt ongoing violations of federal law. The relief must be truly prospective, not an award for past wrongs in disguise.
Edelman v. Jordan; Milliken v. Bradley; Antrican v. Odom: Edelman is the cornerstone distinguishing impermissible retroactive monetary relief (barred) from permissible prospective orders whose effect on the treasury is merely “ancillary.” Milliken and Antrican confirm that prospective injunctions may have substantial fiscal impact on a state without violating the Eleventh Amendment.
Kimble v. Solomon: Reinforces that direct monetary awards are barred, but recognizes that obligations triggered after a district court decree fall within permissible prospective relief.
Papasan v. Allain; Green v. Mansour: Clarify that courts look to the substance, not labels. Relief that compensates for “accrued monetary liability” for past violations is retroactive; a declaratory judgment cannot be an “end run” around Edelman.
Suever v. Connell (9th Cir.): Closely analogous unclaimed-property case holding that an injunction requiring payment of “retroactive interest” is “in practical effect indistinguishable” from an award of damages and thus barred.
EEE Minerals, LLC v. North Dakota (8th Cir.); Merritts v. Richards (3d Cir.); Ladd v. Marchbanks (6th Cir.); Taylor v. Westly (9th Cir.): A line of circuit cases rejecting efforts to “repackage” just-compensation claims as prospective injunctions; reparative injunctions ordering payment for past takings are not prospective.
Knick v. Township of Scott: Used here for the proposition that a takings violation occurs when the government takes property without paying just compensation, placing the “injury” (and thus the requested relief) in the past for sovereign-immunity purposes.
Wicomico Nursing Home v. Padilla: Demonstrates that orders compelling payment of previously denied claims are retrospective and barred.
Dobson; P.R. Aqueduct; Hafer v. Melo; Pennhurst: Establish appellate jurisdiction boundaries; confirm official-capacity suits are suits against the State; and reaffirm that federal courts cannot order state officials to comply with state law (Pennhurst).
Sinochem; Merritts; S. Walk at Broadlands; Wright & Miller: Support the court’s direction that sovereign-immunity dismissals, as threshold non-merits rulings, should typically be without prejudice.
Virginia Hospital Association v. Baliles: Cited by the district court for the point that prospective relief may have incidental fiscal consequences; the Fourth Circuit’s final analysis embeds that principle within the Edelman framework.
Maron v. Chief Financial Officer (11th Cir. 2025): Not controlling in the Fourth Circuit; distinguished because it treats a takings violation as incomplete until a state denies compensation. The Fourth Circuit noted Albert did not advance that theory and, indeed, alleged the violation occurred when Maryland took and used the property—making his request for pre-judgment interest retroactive.

2) The Court’s Legal Reasoning

The court proceeded in two steps.

Eleventh Amendment applies to Takings Clause suits in federal court. The court rejected the argument that the Takings Clause’s “self-executing” nature overrides sovereign immunity, citing Hutto and Zito. Thus, unless Ex parte Young applies, the suit is barred.
Ex parte Young applies only to truly prospective relief. The panel examined the substance of the requested injunction and declaratory judgment. Because Albert seeks interest that accrued from the time Maryland first took and used the property until the date of a future federal judgment, that portion of relief compensates for a past injury and is “retroactive” under Edelman and Papasan. Relabeling the request as “equitable restitution” or an injunction does not change its nature.

However, if Albert ultimately prevails on the merits and obtains a federal judgment that the State’s refusal to pay interest violates the Takings Clause, the district court may prospectively enjoin the Comptroller from retaining interest after judgment. Requiring payment of post-judgment interest is an “ancillary effect” of a prospective injunction to halt an ongoing constitutional violation and ensure future compliance with federal law.

The court also rejected an underdeveloped contention that relief would not draw on the general treasury (and thus would not offend the Eleventh Amendment), noting that the Comptroller was sued in an official capacity and is treated as the State for immunity purposes.

3) Impact and Forward-Looking Considerations

The decision has significant implications for takings litigation against states, especially in the unclaimed-property context:

Prospective-only pathway in federal court: Plaintiffs may seek declaratory and injunctive relief to stop ongoing practices determined to violate the Takings Clause, but any monetary component is limited to post-judgment accruals. Federal courts in the Fourth Circuit cannot order states to pay pre-judgment “just compensation” (including pre-judgment interest) under Ex parte Young.
Division of forums: Property owners seeking “just compensation” for past takings likely must proceed in state court for monetary relief, while federal court remains available for prospective injunctive/declaratory relief. This is a practical consequence of Knick’s removal of state-exhaustion requirements combined with sovereign-immunity limits on federal monetary relief.
Unclaimed-property schemes: Challenges to statutory schemes that retain interest on state-held property will need to separate (1) past accrued interest (barred retroactive relief in federal court) from (2) prospective relief (post-judgment interest). States contemplating or defending similar regimes must account for exposure to prospective injunctions even where retroactive awards are immunized federally.
Emerging circuit divergence: The court acknowledged the Eleventh Circuit’s contrary approach in Maron, which ties completion of a takings violation to denial of compensation. The Fourth Circuit did not adopt that view. The divergence may prompt Supreme Court review or legislative responses clarifying remedies and forum.
Class actions and remedy design: For putative classes, relief must be carefully framed to avoid retroactivity problems. Class-wide declarations and prospective injunctions are possible; class-wide monetary recovery for pre-judgment accruals is not available in federal court against the State under the Eleventh Amendment.

Complex Concepts Simplified

Eleventh Amendment sovereign immunity: Generally bars suits in federal court against states and state officials in their official capacities. There are exceptions (e.g., congressional abrogation, state waiver, Ex parte Young). Absent an applicable exception, federal courts cannot award monetary relief against a state.
Ex parte Young (prospective relief): Allows federal courts to enjoin state officials to stop an ongoing violation of federal law. Relief must be prospective. A court may issue orders that have financial consequences (e.g., compliance costs or post-judgment payments), but cannot award money to compensate for past harms.
Retroactive vs. prospective relief: Retroactive relief compensates for past injury (e.g., requiring a state to pay money it should have paid earlier). Prospective relief prevents or halts ongoing violations (e.g., an injunction to change policy going forward). Labels do not control; substance does.
Takings Clause timing: Under Knick, a taking occurs when the government takes private property for public use without paying for it. In the Fourth Circuit’s frame here, that means a claim for “accrued interest” describes a past injury (retroactive), whereas interest accruing after a federal judgment addresses future compliance (prospective).
Collateral order doctrine: Allows immediate appeals from certain interlocutory orders, including denials of Eleventh Amendment immunity. Other issues (like standing and ripeness) are generally not reviewed at the same time unless “inextricably intertwined” with the immediately appealable ruling.
Ancillary fiscal effects: A prospective injunction may permissibly require future payments or impose costs on the state. Those effects are not themselves barred if the injunction’s core is forward-looking compliance with federal law.

Application to the Maryland Act

The court did not decide whether the Act creates a custody regime or an escheat, nor did it decide whether the refusal to pay interest violates the Takings Clause. It assumed, as the parties did on appeal, that current law does not authorize the Comptroller to pay interest. The merits—whether the State’s retention and use of interest constitutes a taking—remain to be litigated in the district court. If the plaintiffs establish a constitutional violation, the district court may enjoin the Comptroller from retaining interest in the future and, as an ancillary effect, require payment of post-judgment interest until just compensation is provided. Claims to pre-judgment interest must be dismissed under the Eleventh Amendment (without prejudice).

What Remains on Remand

Standing and ripeness: The Fourth Circuit expressly declined to reach these threshold issues. The district court’s earlier rulings stand for now, but these questions remain live and may be revisited as the case proceeds.
Merits of the federal takings claim: Whether Maryland’s refusal to pay interest on unclaimed property is a taking requiring just compensation is undecided. The opinion also does not address the appropriate measure of just compensation if a violation is found.
Relief tailoring: The district court must dismiss claims seeking pre-judgment interest (retroactive relief) and confine any injunction to future compliance, including post-judgment interest.

Key Takeaways

In the Fourth Circuit, the Eleventh Amendment bars federal-court orders requiring states to pay “accrued” (pre-judgment) just compensation or interest for past takings; such relief is retroactive in substance.
Ex parte Young permits prospective injunctive relief that halts ongoing violations going forward. If a plaintiff prevails, courts may require payment of post-judgment interest as an ancillary effect of enforcing future compliance.
Federal takings plaintiffs seeking monetary relief for past harms must look to state courts for damages; federal court is reserved for forward-looking remedies.
Labeling relief as “injunctive” or “equitable restitution” cannot convert a past-damages claim into a prospective remedy; courts look to the practical effect of the relief.
An emerging circuit divergence exists over when a takings violation is “complete” for Ex parte Young purposes (compare the Fourth Circuit’s approach here with the Eleventh Circuit’s Maron decision).

Conclusion

Albert v. Lierman refines the boundary between sovereign immunity and the Takings Clause in the Fourth Circuit. The court reaffirms that the Eleventh Amendment applies to takings claims in federal court and that Ex parte Young supplies only a prospective path: plaintiffs can obtain forward-looking relief that compels constitutional compliance but cannot recover compensation for past injuries through federal injunctive or declaratory decrees. In the unclaimed-property context, the ruling means that accrued, pre-judgment interest is off-limits in federal court; only post-judgment interest, as an ancillary consequence of a prospective injunction, may be ordered. This calibrated approach preserves state sovereign immunity while allowing federal courts to halt ongoing constitutional violations, and it sets a clear litigation roadmap for takings plaintiffs and states alike.