New Jersey Retail Merchants Ass'n v. Sidamon-Eristoff
669 F.3d 374
| 3rd Cir. | 2012Background
- Chapter 25 (2010) amended New Jersey unclaimed property laws to escheat stored value cards after two years, including open loop cards redeemable for cash.
- The act requires issuers to collect purchaser/owner names and addresses and introduces a place-of-purchase presumption when address is unknown.
- Treasury Guidance explains when to report unredeemed balances based on issuer domicile and exemptions; some issuers are exempt or subject to different reporting rules.
- Retail Merchants, Food Council, and Amex Prepaid challenged Chapter 25 as violative of the Contract Clause, Takings, Supremacy, Substantive Due Process, and Commerce Clause.
- District Court preliminarily enjoined retroactive enforcement for merchandise/services SVCs and the place-of-purchase presumption/Treasury Guidance, while deeming data collection severable.
- This consolidated Third Circuit appeal affirms in part and addresses preemption theories and severability, upholding injunctions on certain provisions.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Contract Clause impairment | SVC issuers: substantial impairment of contracts; reliance on profits/fees erased. | State has legitimate public purpose; reasonable adjustment to escheat policy allowed. | Likely Contract Clause violation for merchandise/services SVCs |
| Express preemption under CARD Act | Chapter 25 two-year abandonment preempted by CARD Act protections. | Chapter 25 affords greater consumer protection; not preempted. | Not likely preempted on the two-year period |
| Implied preemption under CARD Act | Two-year period undermines Congress's protections; obstacle to CARD Act goals. | Two-year period furthers consumer protection; not an obstacle. | Not likely impliedly preempted |
| Federal common law preemption (Texas priority) – place-of-purchase presumption | Place-of-purchase presumption conflicts with Texas priority rules; preempted. | Guidance aligns with Texas framework; not preempted if severable. | Likely preempted under Texas/Delaware; data collection severable |
| Substantive due process | Two-year period and exemptions irrational; harms contractual expectations. | Legitimate state interests; rational basis suffices. | Not likely to succeed on substantive due process |
Key Cases Cited
- Allied Structural Steel Co. v. Spannaus, 438 U.S. 234 (U.S. 1978) (substantial impairment from unexpected retroactive obligations)
- U.S. Trust Co. of N.Y. v. New Jersey, 431 U.S. 1 (U.S. 1977) (legitimate public purpose & reasonableness in Contract Clause analysis)
- Energy Reserves Grp. v. Kan. Power & Light Co., 459 U.S. 400 (U.S. 1983) (custodial escheat as a legitimate public purpose)
- Anderson Nat'l Bank v. Luckett, 321 U.S. 233 (U.S. 1944) (state may take custody of abandoned property)
- Texas v. New Jersey, 379 U.S. 674 (U.S. 1965) (two priority rules for escheat of intangible property)
- Pennsylvania v. New York, 407 U.S. 206 (U.S. 1972) (place-of-purchase rule reconsidered; windfall concerns)
- Delaware v. New York, 507 U.S. 490 (U.S. 1993) (secondary priority rule and sovereignty in escheat)