Staples, Inc. v. Cook
2012 Del. Ch. LEXIS 18
| Del. Ch. | 2012Background
- Staples, Inc. challenges a Delaware Escheat Statute demand by the State for unclaimed rebates issued to Staples’ business customers.
- State audit under 12 Del. C. §1155 began October 2005 and sought payment for abandoned property, including unclaimed rebates, for years 1995–2003.
- Rebates were granted to customers as minimum-volume rebates and could be paid as negotiable checks or as credits against amounts owed.
- Staples contends rebates are not escheatable because, if not enumerated, the owner’s claim would be time-barred and the Escheat Statute does not permit escheat when the owner’s claim is time-barred.
- The court found the rebates fit within two enumerated categories in §1198(11) — bills of exchange and credits — making them escheatable.
- Oral argument established rebates were issued as either negotiable checks or credits, supporting their classification under §1198(11).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether rebates are escheatable property under §1198(11). | Staples argues rebates are not escheatable property. | State contends rebates are enumerated property (bills of exchange or credits). | Yes; rebates are enumerated property and escheatable. |
| If rebates are not enumerated, whether statute of limitations governs escheat liability. | Owner’s claim may be time-barred, limiting escheat. | Even if not enumerated, other provisions interplay; but enumeration controls. | Issue unnecessary to decide because rebates are enumerated, so statute of limitations does not apply. |
Key Cases Cited
- Dir. of Revenue v. CNA Holdings, Inc., 818 A.2d 953 (Del. 2003) (statute-of-limitations interplay with escheat)
- A.W. Fin. Servs., S.A. v. Empire Res., Inc., 981 A.2d 1114 (Del. 2009) (statutory interpretation of escheat)
- Desert Equities, Inc. v. Morgan Stanley Leveraged Equity Fund, II, L.P., 624 A.2d 1199 (Del. 1993) (escheat framework and dormancy concepts)
- West Coast Mgmt. & Capital, LLC v. Carrier Access Corp., 914 A.2d 636 (Del. Ch. 2006) (interplay of escheat provisions and limitations)