American Express Travel Related Services Co. v. Kentucky
2011 U.S. App. LEXIS 9190
| 6th Cir. | 2011Background
- American Express challenges Kentucky's 2008 amendment shortening the presumptive abandonment period for traveler's checks from 15 to 7 years.
- Amex contends the 2008 amendment violates due process, takings, contracts, and retroactivity provisions, and argues state procedural defects in prior amendments are irrelevant to federal claims.
- District court granted Amex summary judgment on due process grounds, concluding the amendment lacked a rational basis and was a revenue-raising measure.
- The Sixth Circuit vacates and remands, holding the rational-basis review was misapplied and that the 2008 amendment is rationally related to a legitimate state objective.
- The court preserves the remaining constitutional challenges (takings, contracts, retroactivity) for remand and further proceedings.
- Factual background covers Amex's traveler's check business model, the issuance and redemption process, and the state's abandonment framework.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the 2008 amendment survives rational-basis review | Amex argues no rational basis ties seven-year period to legitimate state interests | Hollenbach asserts legitimate state interest in escheating abandoned property and a rational link to seven years | Yes; amendment survives rational-basis review |
| Scope of rational-basis review applied by court | District court employed heightened rational-basis scrutiny not required | Court may consider plausible state justifications even if not proven | Court adopted permissive rational-basis approach; standard remains deferential |
| Are other federal constitutional challenges (takings, contracts, retroactivity) ripe on appeal | Amex preserved these claims; district court denied but did not rule on them | Remand necessary for full record on those challenges | Remand for consideration of remaining challenges |
Key Cases Cited
- Anderson Nat'l Bank v. Luckett, 321 U.S. 233 (1944) (upholds state power to escheat abandoned deposits under proper process)
- United States v. Carolene Prods. Co., 304 U.S. 144 (1938) (rational basis review for economic regulatory enactments)
- Lehnhausen v. Lake Shore Auto Parts Co., 410 U.S. 356 (1973) (recognizes highly deferential rational basis review)
- Craigmiles v. Giles, 312 F.3d 220 (6th Cir. 2002) (allows rational-basis review to consider conceivable purposes)
- Berger v. City of Mayfield Heights, 154 F.3d 621 (6th Cir. 1998) (permits speculative rationales in rational-basis analysis)
- United States v. Sidamon-Eristoff, 755 F. Supp. 2d 556 (D.N.J. 2010) (reaffirmed deferential rational-basis approach in revenue-related statutes)
- United States Trust Co. of New York v. New Jersey, 431 U.S. 1 (1977) (rejected heightened scrutiny for revenue-related state measures)