96 A.D.3d 24
N.Y. App. Div.2012Background
- This NY appellate court examines whether federal law governing national savings associations preempts New York contract and consumer-protection claims related to electronic stored value systems (gift cards).
- Plaintiff infant allegedly received a gift card issued by MetaBank and marketed by Simon Property Group; initial balance $40, expired 2009, renewal fee later charged, leaving a small balance.
- Plaintiff sued on behalf of herself and others, asserting breach of contract, good faith and fair dealing, GBL §349 deception, and related claims for money had and received, conversion, and unjust enrichment.
- Litigation proceeded with Simon and MetaBank moving to dismiss as preempted by HOLA and OTS regulations; Supreme Court dismissed some claims as preempted, but the appellate court granted partial relief and remanded on others.
- OTS regulations assert field preemption over deposit-related activities (12 CFR 557.11–557.12), while 12 CFR 557.13 clarifies state contract, commercial, tort, or criminal law is not preempted to the extent it incidentally affects deposit activities.
- The court distinguishes the older program (Bank of America) from the new MetaBank program, noting the new program is controlled by MetaBank, a federal thrift, not Simon.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether HOLA/OTS preemption extends to state contract/consumer claims. | Plaintiff argues preemption is limited and contract/GBL §349 claims survive. | Defendants contend HOLA/OTS preempt all such claims under the old framework. | Not preempted for contract/consumer claims incidental to deposit activities. |
| Whether Abandoned Property Law-based claim is preempted. | Abandoned Property Law claims not preempted by HOLA/OTS. | OTS regulations preempt Abandoned Property Law claims. | Abandoned Property Law-based breach is preempted; other claims not premised on Abandoned Property Law survive. |
| Is the old gift card program (Simon with Bank of America) controlling for preemption analysis? | Cases from Goldman/Lonner show different control dynamics may limit preemption. | New program controlled by MetaBank changes the analysis; not preempted broadly. | New program controlled by MetaBank renders prior decisions inapposite; preemption analysis focuses on MetaBank program. |
| Are general application laws (GBL §349) preempted in actions against thrift defendants? | GBL §349 remedies not preempted and may be pursued. | General application laws should be preempted if they interfere with federal powers. | GBL §349 claims may be maintained; not preempted as to simple contract-related or deceptive-practice theories. |
Key Cases Cited
- Goldman Prop. Grp., Inc. v. Simon Prop. Group, Inc., 31 A.D.3d 382 (N.Y. App. Div. 2006) (preemption in older gift-card program; real party in interest)
- Goldman Prop. Grp., Inc. v. Simon Prop. Group, Inc., 58 A.D.3d 208 (N.Y. App. Div. 2008) (reaffirms separation of issuer and retailer for preemption)
- Lonner v. Simon Prop. Grp., Inc., 57 A.D.3d 100 (N.Y. App. Div. 2008) (preemption analysis in gift-card context)
- Lonner v. Simon Prop. Grp., Inc., 31 A.D.3d 398 (N.Y. App. Div. 2006) (preemption framework; context for older program)
- SPGGC, LLC v. Ayotte, 488 F.3d 525 (1st Cir. 2007) (preemption of state restrictions on gift cards with expiration/fees)
- SPGGC, LLC v. Blumenthal, 505 F.3d 183 (2d Cir. 2007) (contrast on preemption where enforcement affects powers)
- Fidelity Fed. Sav. & Loan Assn. v. De la Cuesta, 458 U.S. 141 (U.S. Supreme Court 1982) (agency preemption principles and field concepts)