730 F.3d 628
6th Cir.2013Background
- AmEx issues traveler’s checks (TCs); funds from unredeemed TCs are invested until redemption. Historically states treated uncashed TCs as abandoned after 15 years.
- Kentucky amended KRS § 393.060(2) in 2008 (re-enacted in 2009) to shorten the presumptive abandonment period for TCs from 15 to 7 years (the "Amendment").
- AmEx sued the Kentucky Treasurer (Hollenbach), alleging the Amendment (as applied retroactively) violated Due Process, Contract, Takings, and Dormant Commerce Clause rights; district court initially sided with AmEx on due process, this court reversed as to prospective application and remanded.
- On remand AmEx added a dormant Commerce Clause claim and argued the Amendment was not retroactive under Kentucky law; the district court granted summary judgment for the Treasurer. AmEx appealed.
- The Sixth Circuit held the Amendment is substantive under Kentucky law and therefore applies only prospectively from April 24, 2008, and rejected AmEx’s dormant Commerce Clause challenge.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Amendment applies retroactively under Kentucky law | AmEx: statute lacks express retroactivity and is substantive, so it cannot apply retroactively | Hollenbach: Amendment is remedial and may apply retroactively | Court: Amendment is substantive (alters rights/obligations) and applies only prospectively from 4/24/2008 |
| Dormant Commerce Clause (even prospectively) | AmEx: shorter abandonment period burdens interstate/international TC business and forces AmEx to alter nationwide practices | Hollenbach: law regulates locally and does not control out-of-state commerce; any business decision by AmEx is voluntary; state revenue is a cognizable local benefit | Court: No Commerce Clause violation — statute neither discriminates nor imposes burdens that clearly exceed local benefits |
| Collateral estoppel based on AmEx litigation in New Jersey (Sidamon‑Eristoff) | N/A (AmEx previously litigated similar claims in NJ) | Hollenbach: preclusion should bar AmEx from relitigating issues decided in Third Circuit | Court: Preclusion doesn't apply because prior denial was preliminary and not final, and different state law issues were involved |
| Whether court should reach AmEx’s other constitutional claims premised on retroactivity | AmEx sought to invalidate Amendment as retroactive on several constitutional grounds | Hollenbach defended constitutionality if applied retroactively | Court: Because Amendment is prospective, the court need not decide those retroactivity-based constitutional claims |
Key Cases Cited
- Cherry Hill Vineyards, LLC v. Lilly, 553 F.3d 423 (6th Cir.) (standards for de novo review of state statute challenges under U.S. Constitution)
- Sidamon‑Eristoff v. American Express Travel Related Servs., Inc., 669 F.3d 359 (3d Cir. 2012) (denial of preliminary relief in challenge to New Jersey TC statute)
- Int’l Dairy Foods Ass’n v. Boggs, 622 F.3d 628 (6th Cir. 2010) (dormant Commerce Clause framework discussion)
- Brown‑Forman Distillers Corp. v. N.Y. State Liquor Auth., 476 U.S. 573 (state law that controls out‑of‑state price effects can violate Commerce Clause)
- Pike v. Bruce Church, Inc., 397 U.S. 137 (balancing test where statute regulates evenhandedly with incidental burdens on interstate commerce)
- Healy v. Beer Inst., 491 U.S. 324 (state regulation that effectively controls commerce outside the state violates Commerce Clause)
- United Haulers Ass’n, Inc. v. Oneida‑Herkimer Solid Waste Mgmt. Auth., 550 U.S. 330 (state revenue or civic interests can be legitimate local benefits under Pike)
- Abbott Labs. v. Andrx Pharms., Inc., 473 F.3d 1196 (Fed. Cir.) (preliminary injunction denials generally not given preclusive effect)
- Pfeil v. State St. Bank & Trust Co., 671 F.3d 585 (6th Cir.) (preclusion requires a final judgment on the merits)