and 11-1170 NEW JERSEY RETAIL MERCHANTS ASSOCIATION v. ANDREW P. SIDAMON-ERISTOFF, Treasurer of the State of New Jersey

PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
______
Nos. 10-4551, 10-4552, 10-4553, 10-4714,
10-4715, 10-4716, 11-1141, 11-1164 and 11-1170
______
NEW JERSEY RETAIL MERCHANTS ASSOCIATION
v.
ANDREW P. SIDAMON-ERISTOFF,
Treasurer of the State of New Jersey;
STEVEN R. HARRIS, Administrator of
Unclaimed Property of the State of New Jersey,
Appellants in 10-4551
______
NEW JERSEY FOOD COUNCIL,
a New Jersey Not-for-Profit Entity
v.
STATE OF NEW JERSEY;
ANDREW P. SIDAMON-ERISTOFF,
Treasurer of the State of New Jersey;
STEVEN R. HARRIS, Administrator of
Unclaimed Property of the State of New Jersey,

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Appellants in 10-4552
______
AMERICAN EXPRESS PREPAID
CARD MANAGEMENT CORPORATION
v.
ANDREW P. SIDAMON-ERISTOFF,
as Treasurer of the State of New Jersey;
STEVEN R. HARRIS, as Administrator of
Unclaimed Property of the State of New Jersey
Appellants in 10-4553
______
NEW JERSEY RETAIL MERCHANTS ASSOCIATION,
Appellant in 10-4714
v.
ANDREW P. SIDAMON-ERISTOFF,
as Treasurer of the State of New Jersey;
STEVEN R. HARRIS, as Administrator of
Unclaimed Property of the State of New Jersey
______
NEW JERSEY FOOD COUNCIL,
a New Jersey Not-for-Profit Entity,
Appellant in 10-4715

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v.
STATE OF NEW JERSEY;
ANDREW P. SIDAMON-ERISTOFF,
Treasurer of the State of New Jersey;
STEVEN R. HARRIS, Administrator of
Unclaimed Property of the State of New Jersey
______
AMERICAN EXPRESS PREPAID
CARD MANAGEMENT CORPORATION,
Appellant in 10-4716
v.
ANDREW P. SIDAMON-ERISTOFF,
as Treasurer of the State of New Jersey;
STEVEN R. HARRIS, as Administrator of
Unclaimed Property of the State of New Jersey
______
AMERICAN EXPRESS PREPAID
CARD MANAGEMENT CORPORATION,
Appellant in 11-1141
v.
ANDREW P. SIDAMON-ERISTOFF,
as Treasurer of the State of New Jersey;
STEVEN R. HARRIS, as Administrator of
Unclaimed Property of the State of New Jersey

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______
NEW JERSEY FOOD COUNCIL,
a New Jersey Not-for-Profit Entity,
Appellant in 11-1164
v.
STATE OF NEW JERSEY;
ANDREW P. SIDAMON-ERISTOFF,
Treasurer of the State of New Jersey;
STEVEN R. HARRIS, Administrator of
Unclaimed Property of the State of New Jersey
______
NEW JERSEY RETAIL MERCHANTS ASSOCIATION,
Appellant in 11-1170
v.
ANDREW P. SIDAMON-ERISTOFF,
as Treasurer of the State of New Jersey;
STEVEN R. HARRIS, as Administrator of
Unclaimed Property of the State of New Jersey
______
On Appeal from the United States District Court
for the District of New Jersey
(D.C. Nos. 3-10-cv-05059,
3-10-cv-05123 and 3-10-cv-05206)
District Judge: Honorable Freda L. Wolfson

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______
Argued September 12, 2011
Before: SCIRICA, SMITH and FISHER, Circuit Judges.
(Filed: January 5, 2012)
Robert T. Lougy (Argued)
Gregory A. Spellmeyer
Office of Attorney General of New Jersey
25 Market Street
Richard J. Hughes Complex
Trenton, NJ 08625
Counsel for Andrew P. Sidamon-Eristoff,
Steven R. Harris and the State of New Jersey
Jennifer Borek
James M. Burns (Argued)
Genova Burns
494 Broad Street, 6th Floor
Newark, NJ 07102
Counsel for New Jersey Retail Merchants
Association
Edward T. Kole (Argued)
Wilentz, Goldman & Spitzer
90 Woodbridge Center Drive
Suite 900, Box 10
Woodbridge, NJ 07095
Counsel for New Jersey Food Council

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Philip R. Sellinger (Argued)
Louis Smith
Greenberg Traurig
200 Park Avenue
P.O. Box 677
Florham Park, NJ 07932
Edward J. Reich
Richard M. Zuckerman (Argued)
SNR Denton US
1221 Avenue of the Americas, 24th Floor
New York, NY 10020
Counsel for American Express
Prepaid Card Management Corporation
Joseph R. Scholz
McCarter & English
100 Mulberry Street
Four Gateway Center, 14th Floor
Newark, NJ 07102-0652
Counsel for Amicus Appellee, Limited Brands, Inc.
Paul J. Watford
Henry Weissmann
Munger, Tolles & Olson
355 South Grand Avenue, 35th Floor
Los Angeles, CA 90071
Counsel for Amicus Appellee, Chamber of
Commerce of the United States

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Michael Houghton
Morris, Nichols, Arsht & Tunnell
1201 North Market Street
P.O. Box 1347
Wilmington, DE 19899
Counsel for Amicus Curiae, Unclaimed
Property Professionals Organization
______
OPINION OF THE COURT
______
FISHER, Circuit Judge.
In this consolidated appeal, New Jersey Retail
Merchants Association (“Retail Merchants”), New Jersey
Food Council (“Food Council”), and American Express
Prepaid Card Management Corporation (“Amex Prepaid”)
(collectively, “SVC Issuers”) challenge the constitutionality
of 2010 N.J. Laws Chapter 25 (“Chapter 25”), which
amended New Jersey’s unclaimed property statute, N.J. Stat.
Ann. § 46:30B (2002), and provided for the custodial escheat
of stored value cards (“SVCs” or “gift cards”) for the first
time.1
1 This opinion is limited to the challenge brought
against 2010 N.J. Laws Chapter 25 (“Chapter 25”) with
respect to stored value cards (“SVCs”). We discuss the
companion case challenging Chapter 25 with respect to
travelers checks, Am. Express Travel Related Services Co.,
Inc. v. Sidamon-Eristoff, No. 10-4328, in a separate opinion.
SVC Issuers filed a motion for preliminary injunction
against New Jersey Treasurer Andrew P. Sidamon-Eristoff

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(“Treasurer”) and New Jersey Unclaimed Property
Administrator Steven R. Harris (collectively, “New Jersey” or
“State”) in the United States District Court on the basis that
Chapter 25 violates the Contract Clause, the Takings Clause,
the Supremacy Clause, the Substantive Due Process Clause,
and the Commerce Clause2
I. Background
of the United States Constitution.
The District Court granted the motion in part and denied it in
part. For the reasons discussed below, we will affirm.
SVCs, often called gift cards, are forms of electronic
payment that come in two varieties: “closed loop” and “open
loop” cards. Closed loop cards may be redeemed only for
merchandise or services from the retailer that issued the card.
Retail Merchants and Food Council issue only closed loop
cards. Open loop cards may be redeemed at a variety of retail
stores, including Internet sites, not affiliated with the issuer of
2 The District Court held that SVC Issuers failed to
show a likelihood of success on the Commerce Clause claim.
SVC Issuers do not raise this issue on appeal. The issue is
only raised in an amicus brief filed by Limited Brands, Inc.
“Although an amicus brief can be helpful in elaborating
issues properly presented by the parties, it is normally not a
method for injecting new issues into an appeal, at least in
cases where the parties are competently represented by
counsel.” Universal City Studios, Inc. v. Corley, 273 F.3d
429, 445 (2d Cir. 2001) (citation omitted); see also Olmstead
v. Pruco Life Ins. Co. of N.J., 283 F.3d 429, 436 n.5 (2d Cir.
2002) (stating “an issue raised only by an amicus curiae is
normally not considered on appeal”). Accordingly, we
decline to address the Commerce Clause claim.

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the card. Amex Prepaid issues open loop cards. Some open
loop cards are redeemable for cash, but most open loop cards
issued by Amex Prepaid are only redeemable for merchandise
or services.
When the purchaser tenders payment for the face value
of the SVC, the issuer, in exchange, “promises to provide to
the bearer [of the gift card] merchandise of equal value to the
remaining balance” on the card. N.J. Stat. Ann. 56:8-110c
(2006). The funds for the SVCs are held in a bank account
maintained by the card issuers or in a separate database.
Some issuers issue the cards directly, while others use
subsidiaries, vendors, or cooperatives to issue the cards.
Once the SVC is redeemed for purchase, each issuer
recognizes a profit based on the difference between the
issuer’s cost of acquiring the goods or of offering the services
and the retail price paid by the customer.
All fifty states, and the District of Columbia, have a set
of unclaimed property laws (often called escheat laws), most
of which are based on a version of the Uniform Unclaimed
Property Act (“UUPA”). These laws require that once
property has been deemed abandoned, the holder turn it over
to the state; however, the original property owner still
maintains the right to the property. The purpose of unclaimed
property laws is to provide for the safekeeping of abandoned
property and then to reunite the abandoned property with its
owner. Usually, before turning over abandoned property to
the state, the holder must attempt to return the property by
contacting the owner, using the owner’s name and last known
address. If the holder is unable to return the property to the
owner and turns it over to the state, the holder provides the
state with the name and last known address of the owner. The
holder is no longer liable to the property owner once it turns

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over the property to the state. The state then makes an effort
to reunite the owner with the property. Under New Jersey’s
custodial escheat statute, the rightful owner may file a claim
to recover the property at any time after the property is turned
over to the State.
Prior to the enactment of Chapter 25, gift certificates
(the predecessors to SVCs) were not covered by New Jersey’s
escheat statute. See In re November 8, 1996, Determination
of the State of N.J., Dept. of the Treasury, Unclaimed Prop.
Office, 706 A.2d 1177, 1179-81 (N.J. Super. Ct. App. Div.
1998). This was a departure from the UUPA, which did
provide for the escheat of gift certificates. Id. at 1179. The
key reason New Jersey did not escheat gift certificates was
that they were not redeemable for cash. Id. at 1179-80. If the
State were to escheat gift certificates, the issuers would have
had to turn over the value of the gift certificates in cash to the
State, when they were originally bound to turn over only
merchandise or services to the owner. Id. at 1179. The
Superior Court of New Jersey found that the State’s escheat
law was not intended to “impose an obligation different from
the obligation undertaken to the original owner” of the gift
certificates. Id. at 1180.
Chapter 25 now provides for the escheat of SVCs,
which include closed loop cards, open loop cards redeemable
only for merchandise or services, and open loop cards
redeemable only for cash. N.J. Stat. Ann. 46:30B-6t (2010).
When an SVC is presumed abandoned, “the amount
presumed abandoned is the amount credited to the recipient,”
which is the entire remaining balance on the gift cards. N.J.
Stat. Ann. 46:30B-43 (2002). Chapter 25 also authorizes the
Treasurer to grant exemptions to certain classes of businesses
based on good cause. N.J. Stat. Ann. 46:30B-42.1f (2010).

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Finally, the statute does not apply to SVCs “issued under a
promotional or customer loyalty program or a charitable
program for which no consideration has been tendered.” N.J.
Stat. Ann. 46:30B-42.1e (2010). Neither does it apply to
SVCs issued by an issuer that sold less than $250,000 worth
of SVCs in the past year. Id.
Pertinent to this case, Chapter 25 presumes SVCs to be
abandoned after two years of inactivity and requires issuers to
transfer to the State the remaining value on the SVCs at the
end of the two-year abandonment period. N.J. Stat. Ann.
46:30B-42.1a (2010) (Chapter 25, § 5a). Under Chapter 25,
issuers “shall obtain the name and address of the purchaser or
owner of each stored value card issued or sold and shall, at a
minimum, maintain a record of the zip code of the owner or
purchaser.” N.J. Stat. Ann. 46:30B-42.1c (2010) (Chapter 25,
§ 5c). We will refer to this as the “data collection provision.”
In addition, the same subsection provides that
[i]f the issuer of a stored value card does not
have the name and address of the purchaser or
owner of the stored value card, the address of
the owner or purchaser of the stored value card
shall assume the address of the place where the
stored value card was purchased or issued and
shall be reported to New Jersey if the place of
business where the stored value card was sold
or issued is located in New Jersey.
Id. This provision will be referenced as the “place-of-
purchase presumption.”
Since Chapter 25 was enacted, the Treasurer has issued
several guidances interpreting the statute. Notably, the

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Treasury Guidance dated September 23, 2010 elaborates on
the place-of-purchase presumption found in Chapter 5, § 5c:
• If the issuer is domiciled in New Jersey, any
unredeemed balances of stored value cards
issued prior to the date of this announcement
where the names and addresses or zip code
of the purchasers or owners were not
recorded must be reported to New Jersey.
• If the issuer is not domiciled in New Jersey,
any unredeemed balances of stored value
cards issued prior to the date of this
announcement where the names and
addresses or zip code of the purchasers or
owners were not recorded should be
reported to the state in which the issuer is
domiciled in accordance with that state’s
unclaimed property laws.
• If the issuer is not domiciled in New Jersey
and the issuer’s state of domicile exempts
this type of property from its unclaimed
property statute, any unredeemed balances
of stored value cards issued prior to the date
of this announcement where the names and
addresses or zip code of the purchasers or
owners were not recorded must be reported
to New Jersey if the cards were issued or
sold in New Jersey. In these instances, the
issuer must maintain the address of the
business where the stored value card was
purchased or issued.

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Office of the State Treasurer, State of New Jersey, Treasury
Announcement FY 2011-03, Guidance on Implementation
and Notice of Exemption from Certain Provisions of L.2010,
c.25, at 3 (September 23, 2010) (emphasis added) (“Treasury
Guidance”).
Beginning in September 2010, Retail Merchants, Food
Council, and Amex Prepaid filed separate complaints in the
United States District Court for the District of New Jersey,
seeking declaratory and injunctive relief. They challenged
Chapter 25 under the Supremacy Clause, the Due Process
Clause, the Commerce Clause, the Contract Clause, and the
Takings Clause of the Constitution. They also filed motions
for preliminary injunction to prevent the State from enforcing
Chapter 25 while the case was pending. In a consolidated
November 13, 2010 opinion, the District Court preliminarily
enjoined the retroactive application of Chapter 25 to SVCs
redeemable for merchandise or services that were issued
before the enactment of Chapter 25. The Court also enjoined
the prospective enforcement of the place-of-purchase
presumption under Chapter 25, § 5c and the Treasury
Guidance dated September 23, 2010. The Court, however,
declined to prospectively enjoin the data collection provision
found in the same subsection, holding that the provision was

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severable.3
The State appeals the District Court’s grant of
preliminary injunction with respect to the retroactive
enforcement of Chapter 25 and the prospective enforcement
of the place-of-purchase presumption and the accompanying
Treasury Guidance. SVC Issuers cross-appeal the District
Court’s denial of preliminary injunction as to the data
collection provision and the two-year abandonment period.
For the reasons discussed below, we will affirm the District
Court’s orders.
Finally, the Court declined to prospectively
enjoin the two-year abandonment period provision under
Chapter 25, § 5a.
II. Standard of Review
“We generally review a district court’s [grant or]
denial of a preliminary injunction for abuse of discretion[,]
but review the underlying factual findings for clear error and
3 The District Court’s November 13, 2010 opinion
stated that it was “preliminarily enjoin[ing the State] from
enforcing subsection 5c of Chapter 25 and Treasury Guidance
dated September 23, 2010, which apply a place-of-purchase
presumption for all stored value cards . . . .” Am. Express
Travel Related Servs. Co., Inc. v. Sidamon-Eristoff, 755 F.
Supp. 2d 556, 616-17 (D. N.J. 2010). SVC Issuers filed a
motion for clarification or construction of the November 13
order. On January 14, 2011, the District Court clarified that it
was preliminarily enjoining the place-of-purchase
presumption found in Chapter 25, §5c but not the data
collection provision under the same subsection because the
latter was severable. Id. at 619.

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examine legal conclusions de novo.” Brown v. City of
Pittsburgh, 586 F.3d 263, 268 (3d Cir. 2009) (citation
omitted). “We have jurisdiction to review the order [granting
or] denying a preliminary injunction under 28 U.S.C.
§ 1292(a)(1).” Id. at 268 n.6.
III. Discussion
A court must consider four factors when ruling on a
motion for preliminary injunction: “(1) whether the movant
has shown a reasonable probability of success on the merits;
(2) whether the movant will be irreparably injured by denial
of the relief; (3) whether granting preliminary relief will
result in even greater harm to the nonmoving party; and
(4) whether granting preliminary relief will be in the public
interest.” Crissman v. Dover Downs Entm’t Inc., 239 F.3d
357, 364 (3d Cir. 2001). We will examine these factors with
respect to each constitutional challenge.
A. Contract Clause
The Contract Clause under Article I, Section 10,
Clause 1 of the U.S. Constitution provides that “[n]o State
shall . . . pass any . . . Law impairing the Obligation of
Contracts.” To ascertain whether there has been a Contract
Clause violation, a court must first inquire whether the
change in State law has “operated as a substantial impairment
of a contractual relationship.” Gen. Motors Corp. v. Romein,
503 U.S. 181, 186 (1992) (citations omitted); Nieves v. Hess
Oil Virgin Islands Corp., 819 F.2d 1237, 1243 (3d Cir. 1987)
(citations omitted). If this threshold inquiry is met, the court
must then determine “whether the law at issue has a
legitimate and important public purpose.” Transport Workers
Union of Am., Local 290 v. S.E. Pa. Transp. Auth., 145 F.3d

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619, 621 (3d Cir. 1998). If so, the court must ascertain
“whether the adjustment of the rights of the parties to the
contractual relationship was reasonable and appropriate in
light of that purpose.” Id. Because the Contract Clause only
protects existing contractual relationships and legitimate
expectations based on the law in effect at the time of the
contract, see Troy Ltd. v. Renna, 727 F.2d 287, 296-99 (3d
Cir. 1984), a preliminary injunction based on a Contract
Clause violation would only apply retroactively to SVCs
issued before the enactment of Chapter 25. We hold that
SVC Issuers showed a reasonable likelihood of success on the
merits of their Contract Clause claim with respect to SVCs
that are redeemable for merchandise or services.4
First, under the threshold inquiry, Chapter 25 operates
a substantial impairment on the contractual relationships of
SVC Issuers. In assessing substantial impairment, the court
looks to “the legitimate expectations of the contracting
parties,” U.S. Trust Co. of N.Y. v. New Jersey, 431 U.S. 1, 19
n. 17 (1977), and whether the modification imposes an
obligation or liability that was unexpected at the time the
4 The District Court held that the SVC Issuers that sell
prepaid SVCs redeemable for cash failed to show a
reasonable likelihood of success on the merits of their
Contract Clause claim because they did not point to “any
express or implied contractual obligation between themselves
and prepaid SVC purchasers that [was] impaired by Chapter
25.” Am. Express Travel Related Servs., 755 F. Supp. 2d at
609. On appeal, SVC Issuers raise no argument regarding
this determination. As such, their Contract Clause claim with
respect to SVCs redeemable for cash is waived. See Gonzalez
v. AMR, 549 F.3d 219, 225 (3d Cir. 2008).

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parties entered into the contract and relied on its terms. Allied
Structural Steel Co. v. Spannaus, 438 U.S. 234, 247 (1978).
The contractual agreement between SVC Issuers and
purchasers provides that the balance on the gift card may be
redeemed only for merchandise or services; thus, Issuers of
closed loop SVCs expected to realize a profit when the bearer
redeemed the card for the Issuers’ merchandise or services,
and the Issuers of open loop SVCs expected to realize a
merchant fee, which is a fee Issuers like Amex retained from
retailers, when the bearer redeemed the card from retailers
that accept open loop SVCs. Decl. of Stefan Happ at 2, Am.
Express Travel Related Servs. v. Sidamon-Eristoff, 755 F.
Supp. 2d 556 (D. N.J. 2010) (No. 10-5206). Chapter 25
requires SVC Issuers to submit the value of the SVCs in cash
to the State at the end of the abandonment period, even
though the SVCs are not redeemable for cash under the SVC
Issuers’ contract with the customer. Because the value of the
SVCs includes the expected profit or merchant fee, requiring
SVC Issuers to turn over the entire value of the SVC in cash
effectively transfers their expected benefits to state custody.
By imposing such an unexpected obligation on SVC Issuers,
Chapter 25 impaired their contractual relationship.5
5 The State submits that even after the value of the
SVCs have been turned over to the State, SVC Issuers that
wish to profit from the gift card transactions can honor the
card when presented and seek reimbursement from the State.
However, if the owner never presents the card and instead
directly files a claim with the State, SVC Issuers are removed
entirely from the transaction and are unable to collect their
expected profits or merchant fee. The same result occurs if
the owner does not present the card or file a claim with the
State.
See

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Allied Structural Steel, 438 U.S. at 247 (holding state law
retroactively modifying compensation the company had
agreed to pay to its employees impaired its contractual
relationship by imposing a completely unexpected liability).
This impairment was substantial because SVC Issuers’
reliance on the expected profit or merchant fee was vital to its
contractual relationship. In Allied Structural Steel,
Minnesota’s Private Pension Benefits Protection Act
retroactively modified the company’s statutory vesting
requirement in the funding of a pension plan, such that “the
company’s past contributions [to the pension plan] were
adequate when made” but “not adequate when computed
under the [new] statutory vesting requirement.” Id. at 246.
Because the company’s reliance on such contribution
requirement was vital to the contract, id., and the Minnesota
law imposed a completely unanticipated retroactive
obligation upon the company by “[e]ntering a field it had
never before sought to regulate,” the Court held that the State
law substantially impaired the company’s contractual
relationship. Id. at 249. Similarly, SVC Issuers’ reliance on
the expected profit or merchant fee was vital to their
contractual relationships; the expected benefits supported the
administrative cost of issuing and processing SVCs and
allowed them to issue SVCs without charging the purchaser
additional fees beyond the face value of the gift cards.
Moreover, Chapter 25 imposed retroactive obligations on
SVC Issuers that were unanticipated because New Jersey law
never before provided for the escheat of SVCs. Therefore,
Chapter 25 substantially impaired the SVC Issuers’
contractual relationship by imposing unexpected obligations
in an area where reliance was vital.

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With respect to the second inquiry, it has been
recognized that the custodial escheat of abandoned property is
a significant and legitimate public purpose. See Anderson
Nat’l Bank, 321 U.S. 233, 240 (1944) (“[I]t is no longer open
to doubt that a state, by a procedure satisfying constitutional
requirements, may compel surrender to it of deposit balances,
when there is substantial ground for belief that they have been
abandoned . . . .”). State escheat law works to remedy the
“broad and general social . . . problem” of reuniting
abandoned property with its owners. See Energy Reserves
Grp. v. Kan. Power and Light Co., 459 U.S. 400, 412 (1983).
Chapter 25 furthers this public purpose by requiring SVC
Issuers to retain the name and address of the purchaser or
owner and securing State custody of the abandoned funds in
perpetuity for the owners to reclaim.
However, under the third inquiry, Chapter 25 does not
reasonably accommodate the rights of the contracting parties
in light of the State’s public purpose because it fails to allow
SVC issuers to collect their bargained-for expected profits or
merchant fees. See Transport Workers Union of Am., Local
290, 145 F.3d at 621. Unless the state is a contracting party,
courts ordinarily “defer to legislative judgment as to the
necessity and reasonableness of a particular measure.”
Energy Reserves Grp., 459 U.S. at 413 (internal quotation
marks and citation omitted). Although New Jersey is not a
contracting party in the present case, “complete deference to a
legislative assessment of reasonableness and necessity is not
appropriate [where] the State’s self-interest is at stake.” U.S.
Trust Co. of N.Y., 431 U.S. at 26.
Here, under the contractual relationship, SVC Issuers
had an expectation of realizing a profit or merchant fee when
the owner redeemed the gift card. Notably, the purchaser

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implicitly accepted that the SVC Issuers had an expectation of
realizing a profit or merchant fee when the purchaser agreed
to redeem the gift card only in exchange for merchandise or
services. Serving the State’s public purpose of reuniting
abandoned property with owners did not require the State to
entirely deprive SVC Issuers of this bargained-for benefit.
Like many other states that escheat gift cards, New Jersey
could have accommodated the SVC Issuers’ expectations by
requiring them to turn over a percentage of the value of the
abandoned gift card, reflecting a discount based on the
expected profit or merchant fee, rather than the card’s entire
remaining value. See, e.g., Ala. Code § 35-12-72(a)(17)
(escheating 60% of value of gift cards redeemable only for
merchandise). This would still allow the State to escheat the
owner’s bargained-for value of the SVC in order to reunite
the funds with the owner. Accordingly, SVC Issuers
established there was a reasonable probability that the State
violated the Contract Clause by failing to make
accommodations that were reasonable and appropriate in light
of Chapter 25’s purpose.
Having shown a likelihood of success on the merits of
their Contract Clause claim, SVC Issuers must also show that
they will be irreparably injured by a denial of the preliminary
injunction; granting the preliminary injunction will not result
in even greater harm to the nonmoving party; and granting the
preliminary injunction will be in the public interest. See
Crissman, 239 F.3d at 364. SVC Issuers will suffer
irreparable harm if the preliminary injunction is denied. If the
State enforces Chapter 25, SVC Issuers must either face
prosecution and fines for noncompliance or turn over, in cash,
the remaining value of existing gift cards that have not been
redeemed within two years. They would not be entitled to

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receive those funds back if Chapter 25 is later found to be
unconstitutional, due to state sovereign immunity. See
Edelman v. Jordan, 415 U.S. 651, 663 (1974) (stating “suit by
private parties seeking to impose a liability which must be
paid from public funds in the state treasury is barred by the
Eleventh Amendment”). Granting the preliminary injunction
would not result in a greater harm to the State because the
State “does not have an interest in the enforcement of an
unconstitutional law[.]” Am. Civil Liberties Union v.
Ashcroft, 322 F.3d 240, 247 (3d Cir. 2003) (internal quotation
marks and citation omitted). Finally, granting a preliminary
injunction would be in the public’s interest, including those of
retailers and customers, because “the public interest [is] not
served by the enforcement of an unconstitutional law.” Id.
All four preliminary injunction conditions having been met,
the District Court did not abuse its discretion in enjoining the
State from retroactively enforcing Chapter 25 with respect to
existing SVCs redeemable for merchandise or services.6
6 Although the District Court held that “Chapter 25
could conceivably effect a taking of the gift card sale and
redemption,” the Court did not need to “rest its decision to
grant a preliminary injunction on the Takings claim in light of
the . . . Contract[] Clause analysis” in favor of SVC Issuers.
Am. Express Travel Related Servs., 755 F. Supp. 2d at 612.
Because we affirm the District Court’s grant of preliminary
injunction based on SVC Issuers’ Contract Clause claim, we
need not reach the Takings Clause claim. For the same
reasons, we do not reach Food Council’s argument that
Chapter 25 violates the derivative rights rule and the manifest
injustice rule under the New Jersey state constitution.

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22
B. Federal statutory preemption under Credit
CARD Act
Under the Supremacy Clause of the U.S. Constitution,
“the Laws of the United States . . . shall be the supreme law
of the Land,” and state law is invalid if federal law preempts
state law. U.S. Const. art. VI, cl. 2. “Express preemption
occurs when a federal law contains express language
providing for the preemption of any conflicting state law.”
Kurns v. A.W. Chesterton Inc., 620 F.3d 392, 395 (3d Cir.
2010) (citation omitted). “Implied conflict preemption occurs
when it is either impossible for a private party to comply with
both state and federal requirements, or where state law stands
as an obstacle to the accomplishment and execution of the full
purposes and objectives of Congress.” Id. at 395-96 (internal
quotation marks and citations omitted). We address SVC
Issuers’ arguments regarding express preemption and implied
preemption in turn.
1. Express preemption
SVC Issuers failed to show a reasonable likelihood of
success on the merits of their claim that Chapter 25’s two-
year abandonment period is expressly preempted by the
federal Credit CARD Act of 2009 (“CARD Act”). 15 U.S.C.
§ 1693l-1(c). Under the CARD Act, a “State law is not
inconsistent with this subchapter if the protection such law
affords any consumer is greater than the protection afforded
by this subchapter.” 15 U.S.C. § 1693q. The District Court
found that “Chapter 25 affords consumers greater protection

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23
than that provided by the CARD Act’s expiration provision”7
SVC Issuers submit on appeal that the “greater
protection” analysis inappropriately allows the District Court
to weigh the relative benefits of different types of consumer
protection mechanisms and rewrite the CARD Act, thus,
depriving the consumer of the benefits Congress decided to
provide and replacing them with different ones. However,
ultimately, the controlling language in the CARD Act is clear:
“[a] State law is not inconsistent with this subchapter if the
protection such law affords any consumer is greater than the
protection afforded by this subchapter.” 15 U.S.C. § 1693q.
Congress authorized the weighing of relative consumer
because “Chapter 25 imposes no time restriction on the
consumer’s right to recover his or her funds” and allows the
consumer holding the SVC to receive “cash back after the
abandonment period—a right the holder did not possess under
his or her agreement with the SVC issuer.” Am. Express
Travel Related Servs. v. Sidamon-Eristoff, 755 F. Supp. 2d
556, 592 (D. N.J. 2010). According to the District Court,
“[w]hile Chapter 25 may make it a more cumbersome process
for a consumer to access his/her funds once the funds are
presumed abandoned, it ultimately provides greater protection
to the consumer. . . .” Id.
7 Under the Credit CARD Act, “it shall be unlawful for
any person to sell or issue a gift certificate, store gift card, or
general-use prepaid card that is subject to an expiration date
. . . [unless] the expiration date is not earlier than 5 years after
the date on which the gift certificate was issued, or the date
on which card funds were last loaded to a store gift card or
general-use prepaid card; and . . . the terms of expiration are
clearly and conspicuously stated.” 15 U.S.C. § 1693l-1(c).

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benefits when it explicitly allowed state laws that provided
greater protection than the Act to be shielded from federal
preemption. See id.
In the alternative, SVC Issuers submit that even if the
District Court had the authority to assess whether the State
law provided greater consumer protection, Chapter 25 does
not actually provide greater protection for consumers. We
review the District Court’s factual findings for clear error.
Brown, 586 F.3d at 268. Under this standard, we accept the
District Court’s ultimate factual determinations unless “that
determination either (1) is completely devoid of minimum
evidentiary support displaying some hue of credibility, or
(2) bears no rational relationship to the supportive evidentiary
data.” Krasnov v. Dinan, 465 F.2d 1298, 1302 (3d Cir.
1972). Specifically, SVC Issuers argue that it is unclear how
the State will use the zip code of the purchaser to reunite the
owner with the escheated gift card funds. However, the data
collection provision first and foremost requires SVC Issuers
to retain the name and address of the purchaser or owner,
which helps the State reunite the property with the owner.
Chapter 25, § 5c. Moreover, even if the specific process the
State uses to operate its escheat law is unclear, we do not
believe that this negates the overall protection Chapter 25
provides to consumers. First, the CARD Act only requires
the funds to be available for five years whereas Chapter 25
protects the funds in perpetuity. Second, even with respect to
non-expiring gift cards, Chapter 25 still provides greater
protection because the consumer is able to reclaim the full
cash value of the SVC under Chapter 25 after two years,
whereas he would have been able to redeem only
merchandise or services using the SVC. Thus, the District
Court’s finding that Chapter 25 provides greater protection to

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25
consumers than the CARD Act was supported by a reasonable
reading of the federal law and state law and was not clearly
erroneous.
SVC Issuers’ reliance on the language of the Federal
Reserve Board’s regulation is also misplaced. The Federal
Reserve Board, which is responsible for “prescribe[ing]
regulations to carry out the purposes of the Act,” 15 U.S.C.
§ 1693b(a), issued a regulation stating that “State law is
inconsistent with the requirements of the [CARD Act] . . . if it
(i) Requires or permits a practice or act prohibited by the
federal law.” 12 C.F.R. § 205.12(b)(2). SVC Issuers argue
that under Chapter 25, they are “permitted” to dishonor SVCs
when the funds are escheated after the two-year abandonment
period, and this is “a practice or act prohibited by [the CARD
Act],” which requires a minimum five-year expiration period
(unless certain disclosure requirements are met). Id. Thus,
they submit that the two-year abandonment period is
inconsistent with and preempted by the CARD Act.
However, the Federal Reserve Board explicitly refused to
make a general preemption determination based on
abandonment periods, despite recognizing that many state
laws provide for an abandonment period of shorter than five
years. Board of Governors of the Federal Reserve System,
Final Rule, Regulation E (12 CFR 205), Docket No. R-1377,
at 69 (Aug. 22, 2010) (“certain state laws require issuers of
unused gift cards to remit the remaining funds to the state . . .
after a period of time – typically three to five years after the
card is sold or used”). The Board reasoned that “state escheat
laws vary significantly” and “the regulation provides that a
state law is not inconsistent with any provision if it is more
protective of consumers.” Id. at 70. Therefore, the Board
recognized that a state law is not preempted simply because it

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26
provides for an abandonment period shorter than five years, if
the state law is ultimately more protective of consumers. This
reading of the Board’s regulation and explanation supports
the District Court’s “greater consumer protection” analysis.
2. Implied preemption
SVC Issuers also failed to show that Chapter 25 is
likely to be impliedly preempted by the CARD Act. Implied
conflict preemption occurs when state law “stands as an
obstacle to the accomplishment and execution of the full
purposes and objectives of Congress.” English v. Gen. Elec.
Co., 496 U.S. 72, 79 (1990) (citations omitted). SVC Issuers
contend that Chapter 25 thwarts Congress’ consumer
protection objective by preventing consumers from easily
accessing the SVC funds from the retailer and instead
requiring them to file a claim with the state after two years.
We reject this argument. The five-year expiration provision
was designed to ensure that consumers had access to their
funds for at least the first five years after purchasing the gift
cards. 15 U.S.C. § 1693l-1(c). Chapter 25’s two-year
abandonment period furthers this interest by protecting the
funds in perpetuity and allowing consumers to access those
funds in cash by filing a claim with the State. SVC Issuers
failed to present any evidence that Congress was concerned
with the exact method by which consumers could access
those funds.
In addition, SVC Issuers submit that the two-year
abandonment period would deprive them of the economic
incentive to adopt longer expiration periods because their
expected profit would be turned over to the State at the end of
the two-year period, regardless of the SVC’s expiration date.
And because longer expiration periods benefit customers,

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27
they argue that Chapter 25’s effect on this incentive structure
stands as an obstacle to the customer protection purpose of
the CARD Act. But the new abandonment period renders
longer expiration periods unnecessary because after two years
from the date of purchasing or using the SVC, the customers
can access the funds in cash in perpetuity. Thus, the two-year
abandonment period does not stand as an obstacle to the
congressional purpose of protecting customer interests.
Because we agree with the District Court that SVC
Issuers failed to show a likelihood of success on their federal
statutory preemption claim with respect to the two-year-
abandonment period found in Chapter 25, Section 5a, we
need not address the remaining preliminary injunction factors.
C. Federal common law preemption under
Texas v. New Jersey
SVC Issuers submit that Chapter 25 and the Treasury
Guidance are preempted by the escheat priority rules
announced in Texas v. New Jersey (Texas), 379 U.S. 674,
681-82 (1965), and reaffirmed in Pennsylvania v. New York
(Pennsylvania), 407 U.S. 206, 217-18 (1972), and Delaware
v. New York (Delaware), 507 U.S. 490, 499-500 (1993). The
State contends that its implementation of Chapter 25 through
the Treasury Guidance comports with the priority rules
established by the Supreme Court. We agree with the District
Court that SVC Issuers demonstrated a reasonable likelihood
of success on their claim that Chapter 25’s place-of-purchase
presumption as well as the Treasury Guidance are preempted
under federal common law. The language of Chapter 25’s
place-of-purchase presumption directly contradicts the second
priority rule announced in Texas. And even if the Guidance

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28
were a proper exercise of the Treasurer’s power8
1. Chapter 25
, it is also
preempted under Texas. Moreover, we agree that the data
collection provision is severable from the place-of-purchase
presumption; thus, the data collection provision may stand
alone even if the place-of-purchase presumption is preempted
under federal common law.
Under the Supremacy Clause of the U.S. Constitution,
“the Laws of the United States . . . shall be the supreme law
of the Land,” and state law is invalid if federal law preempts
state law. U.S. Const. art. VI, cl. 2. It is undisputed that state
law can be preempted by federal common law as well as
federal statutes. Boyle v. United Techs. Corp., 487 U.S. 500,
518 (1988) (Brennan, J., dissenting) (stating federal common
law can displace state law in limited instances, such as areas
involving interstate disputes). “Implied conflict preemption
occurs when it is either impossible for a private party to
comply with both state and federal requirements, or where
state law stands as an obstacle to the accomplishment and
execution of the full purposes and objectives of Congress.”
Kurns, 620 F.3d at 395-96 (internal quotation marks and
citations omitted).
8 The District Court held that the Treasury Guidance
was a proper exercise of the Treasurer’s power. Am. Express
Travel Related Servs., 755 F. Supp. 2d at 602-03. We need
not address this issue because we hold that SVC Issuers
showed a likelihood of success on their claim that the
Treasury Guidance is preempted under federal common law.

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29
In Texas, the Supreme Court established two priority
rules to resolve conflicts among states over unclaimed
intangible property. 379 U.S. at 680-82. When a property is
deemed abandoned, the first opportunity to escheat the
property belongs to “the State of the last known address of the
creditor, as shown by the debtor’s books and records.” Id. at
682. We refer to this as the primary rule. If the primary rule
fails because there is no record of any address for a creditor
or because the creditor’s last known address is in a State
which does not provide for the escheat of abandoned
property, the secondary rule gives the right to escheat to the
State in which the debtor is incorporated until another state
comes forward with proof that it has a superior right to
escheat. Id.
Under Chapter 25’s place-of-purchase presumption, in
all instances where the address of the purchaser is unknown,
the address of the place of purchase is substituted for the
address of the purchaser.9
9 Chapter 25’s place-of-purchase presumption provides
that “[i]f the issuer of a stored value card does not have the
name and address of the purchaser or owner . . . the address
of the owner or purchaser of the stored value card shall
assume the address of the place where the stored value card
was purchased.” N.J. Stat. Ann. 46:30B-42.1c (Chapter 25,
§ 5c).
Then, in cases where the address
of the purchaser for an SVC purchased in New Jersey is
unknown, New Jersey would escheat the property under
Chapter 25; however, under the secondary rule in Texas, the
SVC Issuer’s state of incorporation would escheat the
property. Therefore, when the SVC Issuer is not incorporated
in New Jersey, it would be impossible for the Issuer to

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30
comply with both Chapter 25’s place-of-purchase
presumption and federal common law under Texas because
two states cannot both escheat the same abandoned property.
See Texas, 379 U.S. at 676 (citing W. Union Tel. Co. v.
Pennsylvania, 368 U.S. 71, 82 (1961)) (“[T]he Due Process
Clause of the Fourteenth Amendment prevents more than one
State from escheating a given item of property. . . .”).
Accordingly, the place-of-purchase presumption is preempted
under Texas. See Kurns, 620 F.3d at 395-96.
2. Treasury Guidance
On appeal, the State contends that Chapter 25, as
implemented through the Treasury Guidance, comports with
the Texas priority rules. For the following reasons, we hold
that SVC Issuers met their burden of showing that both
Chapter 25 and the Treasury Guidance are likely preempted
under the Supreme Court precedent in Texas, Pennsylvania,
and Delaware.
To evaluate SVC Issuers’ federal preemption claim
regarding the Treasury Guidance, we find it helpful to first
review the federal common law in question. In Texas v. New
Jersey, the Supreme Court resolved a claim brought by Texas
against New Jersey, Pennsylvania, and the Sun Oil Company
for declaratory and injunctive relief regarding the right to
claim abandoned intangible property through escheat. 379
U.S. at 675. Four different possible rules were submitted by
the parties regarding the priority in which states should be
allowed to escheat abandoned property. Id. at 678. Texas
argued that the State with the “most significant ‘contacts’
with the debt” should be given the right to escheat, id., while
Pennsylvania contended that the state in which the debtor’s
principal office is located should have priority to escheat over

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other states. Id. at 680. The Supreme Court rejected both
options because these tests created too much uncertainty and
would inevitably have led the courts to make case-by-case
determinations based on specific facts. Id. at 678-80. This
result would directly contradict the Court’s intent to settle the
escheat disputes “once and for all by a clear rule which
[would] govern all types of intangible obligations like these
and to which all States may refer with confidence.” Id. at
678. In the end, the Court adopted Florida’s proposed rule,10
giving the state of the creditor’s last known address the first
priority right to escheat, because this rule fairly recognized
that the creditor, not the holder, was the owner of the
property, and the “rule involves a factual issue simple and
easy to resolve, and leaves no legal issue to be decided.” Id.
at 681. The Court gave the debtor’s domiciliary state the
second right to escheat the abandoned property, until another
state proved its superior right to escheat, because this rule had
the “obvious virtue of clarity and ease of application” that
created the “needed certainty” in this area of dispute among
states. 11
10 The Texas v. New Jersey Court permitted Florida to
intervene “since it claimed the right to escheat the portion of
Sun [Oil]’s escheatable obligations owing to persons whose
last known address was in Florida.” Texas v. New Jersey, 379
U.S. 674, 677 (1965).
Id. at 680, 682.
11 However, the Court declined to give the debtor’s
domiciliary state the first priority right to escheat, as proposed
by New Jersey, because it would not have been fair to let such
a “minor factor” allow a fortuitous state in which the debtor
“happened to incorporate itself” to claim rights to abandoned
property all over the country. Texas, 379 U.S. at 680.

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32
As evidenced by the Texas Court’s rationale behind
fashioning the priority rules, its primary concern was to
unambiguously and definitively resolve disputes among states
regarding the right to escheat abandoned property. Indeed,
the Court explicitly recognized that the “case could have been
resolved otherwise, for the issue here [was] not controlled by
statutory or constitutional provisions or by past decisions.
. . .” Id. at 683. The Court’s ultimate resolution was
“fundamentally a question of ease of administration and of
equity.” Id.
The Supreme Court reaffirmed the Texas priority rules
in two subsequent cases: Pennsylvania v. New York, 407 U.S.
at 214-15, and Delaware v. New York, 507 U.S. at 498-99. In
Pennsylvania, because Western Union did not keep records of
the creditor’s identity or last known address, the debtor’s state
of incorporation was positioned to claim a large portion of the
unclaimed funds. 407 U.S. at 211-12. In response,
Pennsylvania proposed that for cases involving transactions
where the debtor does not keep records showing the address
of the creditor, “the[s]tate of origin of the transaction,” i.e.,
the state of the place of purchase, should have the right to
escheat the abandoned property, rather than the state of the
debtor’s domicile as was required under the second priority
rule in Texas. Id. at 213-14. The Court rejected
Pennsylvania’s request, recognizing that “the place-of-
purchase . . . rule[] might permit intangible property rights to
be ‘cut off or adversely affected by . . . a forum having no
continuing relationship to any of the parties’” to the
transaction. Id. at 213. In addition to finding that the state of
purchase had insufficient ties to the creditor or debtor to
justify giving it the right to escheat, the Court held that “the
likelihood of a ‘windfall’ for [the state of the debtor’s

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33
domicile was not] a sufficient reason for carving out an
exception to the Texas rule.” Id. at 214.
In the present case, New Jersey similarly adopts a
place-of-purchase presumption, which, under the Treasury
Guidance, allows the State to escheat abandoned property by
virtue of the fact that the property was purchased in New
Jersey.12
The State submits that without the place-of-purchase
presumption, SVC Issuers that are incorporated in states that
do not escheat abandoned property would unfairly have the
But New Jersey, as the state in which the SVC was
purchased, does not have a sufficient connection with any of
the parties to the transaction to claim a right to escheat the
abandoned property. See Pennsylvania 407 U.S. at 213. As
the Court denied Pennsylvania’s place-of-purchase rule
because “only a [s]tate with a clear connection to the creditor
or debtor may escheat,” Delaware, 507 U.S. at 504
(discussing Court’s holding in Pennsylvania), the District
Court correctly enjoined New Jersey’s place-of-purchase
presumption that would have allowed the State to escheat
SVCs when it lacked a clear connection to the owner or
issuer.
12 Under the Treasury Guidance, the place-of-purchase
assumption applies when the issuer does not have the name
and address of the owner or purchaser, the issuer is not
domiciled in New Jersey, and the state of domicile exempts
the property from its unclaimed property statute. Office of
the State Treasurer, State of New Jersey, Treasury
Announcement FY 2011-03, Guidance on Implementation
and Notice of Exemption from Certain Provisions of L.2010,
c.25, at 3 (September 23, 2010) (“Treasury Guidance”).

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34
right to retain the abandoned property. But the Pennsylvania
Court held that “the likelihood of a ‘windfall’ for [the state of
the debtor’s domicile was not] a sufficient reason for carving
out an exception to the Texas rule.” 407 U.S. at 214.
Likewise, the potential of a windfall for the SVC Issuers that
are incorporated in states that do not escheat abandoned
property does not merit departing from the established
priority rules. To depart from the Texas priority rules here
would require us “to do precisely what [the Supreme Court]
said should be avoided – that is, ‘to decide each escheat case
on the basis of its particular facts or to devise new rules of
law to apply to ever-developing new categories of facts.’” Id.
at 215 (citing Texas, 379 U.S. at 679).
Our analysis is consistent with the Supreme Court’s
recognition that a state’s power to escheat is derived from the
principle of sovereignty. As the Delaware Court recognized,
“the secondary rule protects the interests of the debtor’s
[s]tate as sovereign over the remaining party to the underlying
transaction.” 507 U.S. at 504 (emphasis added). The
Supreme Court has long recognized that the sovereign
maintains authority over abandoned property, including the
right to escheat the property. See Texas, 379 U.S. at 675.
The ability to escheat necessarily entails the ability not to
escheat. To say otherwise could force a state to escheat
against its will, leading to a result inconsistent with the basic
principle of sovereignty. Various considerations might
motivate states not to exercise custodial escheat. For
example, because companies might find the absence of state
custodial escheat attractive, states may want to incentivize
companies to incorporate in their jurisdiction by choosing not
to escheat abandoned property. In reaffirming the Texas rule,
the Supreme Court “detect[ed] no inequity in rewarding a

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35
State whose laws prove[d] more attractive to firms that wish
to incorporate.” Delaware, 507 U.S. at 507. Accordingly,
the Court intended that a state’s decision, regarding the
exercise of custodial escheat under the secondary rule, would
be respected under the principle of sovereignty.
But the place-of-purchase presumption, executed in
accordance with the Treasury Guidance, allows New Jersey to
infringe on the sovereign authority of other states. Even
when states decide not to exercise custodial escheat with the
intent of allowing the holders to maintain custody of the
property, the place-of-purchase presumption gives New
Jersey the right to make the holder, SVC Issuers in this case,
turn over the property to the State. When fashioning the
priority rules, the Supreme Court did not intend such a result,
which would give states the right to override other states’
sovereign decisions regarding the exercise of custodial
escheat.
Finally, we must remember that the Texas Court’s
primary concern was to clearly and definitively resolve
disputes among states regarding the right to escheat
abandoned property. 379 U.S. 678-83. However, allowing
states to implement additional priority rules like the one
proposed by New Jersey would result in competing state
claims to abandoned property. If we assume that Chapter
25’s place-of-purchase presumption were to apply in New
Jersey and that another state enacted a law that escheated
property based on the issuer’s principal place of business, the
two states’ laws would collide when an SVC issuer with its
principal place of business in the other state sold an SVC in
New Jersey. This would result in “so much uncertainty and
threaten so much expensive litigation that the States might
find that they would lose more in litigation expenses than

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36
they might gain in escheats.” Texas, 379 U.S. at 679. Such
conflict would offend the Supreme Court’s intent to use the
two priority rules to resolve disputes among states with
administrative ease and equity. See Texas, 379 U.S. at 683.
Because the State law would stand as an obstacle to executing
the purpose of the federal law, see Kurns, 620 F.3d at 395-96,
SVC Issuers satisfied their burden of showing that Chapter
25’s place-of-purchase presumption and the Treasury
Guidance are likely preempted under Texas, Pennsylvania,
and Delaware. SVC Issuers also satisfied the remaining
preliminary injunction factors for the same reasons set forth
in our discussion of their Contract Clause claim. All four
preliminary injunction conditions having been met, the
District Court did not abuse its discretion in preliminarily
enjoining Chapter 25’s place-of-purchase presumption.
3. Severability of the data collection
provision
SVC Issuers moved for clarification or construction of
the District Court’s November 13 Order, which provided that
“the State is preliminarily enjoined from enforcing subsection
5c of Chapter 25 and Treasurer Guidance dated September
23, 2010, which apply a place-of-purchase presumption for
all stored value cards . . . .” Am. Express Travel Related
Servs., 755 F. Supp. 2d at 616-17. The District Court
clarified that its order preliminarily enjoined the place-of-
purchase presumption of subsection 5c of Chapter 25 but not

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37
the data collection provision13
The issue of severability of a state statute is a question
of state law, Old Coach Dev. Corp. v. Tanzman, 881 F.2d
1227, 1234 (3d Cir. 1989), and requires an inquiry into
legislative intent. Affiliated Distillers Brands Corp. v. Sills,
289 A.2d 257, 258 (N.J. 1972) (per curiam). Under this
inquiry, we must determine whether “the objectionable
feature [can] be excised without substantial impairment of or
conflict with the over-all legislative purpose . . . .” N.J.
Chapter, Am. Inst. of Planners v. N.J. State Bd. of Prof’l
Planners, 227 A.2d 313, 319 (N.J. 1967). To sever a part of a
statute, “there must be such a manifest independence of the
parts as to clearly indicate a legislative intention that the
constitutional insufficiency of the one part would not render
the remainder inoperative.” Affiliated Distillers Brands
Corp., 289 A.2d at 259 (internal quotation marks and
citations omitted).
under the same subsection
because the latter was severable. Id. at 619. In addition, it
concluded that SVC Issuers failed to meet their burden of
showing that the data collection provision should be
preliminarily enjoined. Id. at 623.
SVC Issuers submit that the data collection provision
was not meant to be a stand-alone provision. They argue that
13 The data collection provision states that issuers
“shall obtain the name and address of the purchaser or owner
of each stored value card issued or sold and shall, at a
minimum, maintain a record of the zip code of the owner or
purchaser.” N.J. Stat. Ann. 46:30B-42.1c (Chapter 25, § 5c).
It precedes the place-of-purchase presumption provision
under the same subsection.

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38
the State Legislature enacted the place-of-purchase
presumption as a safe harbor to the data collection provision,
thereby allowing SVC Issuers that find the data collection
provision too onerous to opt-out and rely on the place-of-
purchase presumption. We reject their argument because the
consumer protection purpose of Chapter 25 evinces that the
State Legislature intended the data collection provision to
stand alone in case a related provision were struck down.
Chapter 25 was enacted to ensure that SVC owners’ rights to
the funds would be not forfeited by the passage of time and to
reunite customers with their property. The data collection
provision requiring issuers to maintain records of the
purchaser or owner furthers this purpose by making it more
likely that the State will be able to reunite the owner with the
abandoned SVC funds. Thus, the Legislature did not intend
the constitutional insufficiency of the place-of-purchase
presumption to render the data collection inoperative.
When “different parts of the statute are not so
intimately connected with and dependent upon each other so
as to make the statute one composite whole[,]
unconstitutional parts may be rejected and the constitutional
parts may stand.” Lane Distr. v. Tilton, 81 A.2d 786, 796-97
(N.J. 1951) (citations omitted). An example of the sort of
dependency that makes the statute one composite whole is
where a provision defining terms used in the statute cannot be
severed from the remainder of the statute without rendering
the statute meaningless or confusing. Id. at 797. However in
the instant case, the data collection requirement is not so
intimately connected with the place-of-purchase presumption.
Although the latter works to override the Texas priority
scheme by presuming that the address of the purchaser is that
of the place of purchase, the former aids the State in

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39
determining what state is entitled to escheat the SVC in
accordance with the Texas priority scheme.
SVC Issuers argue, in the alternative, that the data
collection provision itself is preempted by federal common
law because it does not further the Texas priority scheme. In
their view, the Texas line of cases requires states to determine
the last known address of the actual owner of the abandoned
property in order to properly apply the first priority rule.
They submit that retaining the zip code of the purchaser does
nothing to reunite the abandoned property with the actual
owner, often the recipient, of the gift card. We agree with the
District Court’s rejection of this argument. Texas and its
progeny “authorize [s]tates to require issuers of intangible
property to collect the last known address of the purchaser
and to rely on that address in reuniting the ‘owner’ with the
abandoned property.” Am. Express Travel Related Servs.,
755 F. Supp. 2d at 621. Moreover, the Supreme Court
explained, “either a payee or a sender” may redeem a money
order because either can be considered the creditor.
Delaware, 507 U.S. at 503 (citing Pennsylvania, 407 U.S. at
213). Similarly, either the purchaser or recipient of the gift
card may redeem the gift card because either can be
considered the creditor. And the Supreme Court “has
consistently permitted states to escheat based on the last
known address of the purchaser.” Am. Express Travel
Related Servs., 755 F. Supp. 2d at 621 (citing Pennsylvania,
407 U.S. at 215 and Delaware, 507 U.S. at 503).
In sum, the District Court did not abuse its discretion
in denying a preliminary injunction of the data collection
provision. Analysis of the State Legislature’s intent suggests
that Chapter 25’s data collection provision is severable from
the place-of-purchase presumption. In addition, SVC Issuers

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did not meet their burden of showing that the data collection
provision on its own is likely preempted by federal common
law. Accordingly, we affirm the District Court.
D. Substantive Due Process Claim
The Due Process Clause of the Fourteenth Amendment
provides that no state shall “deprive any person of life,
liberty, or property, without due process of law.” U.S. Const.
Amend. XIV, § 1. It is well established that the Due Process
Clause contains both a procedural and substantive
component. Nicholas v. Pa. State Univ., 227 F.3d 133, 139
(3d Cir. 2000) (citing Planned Parenthood of S.E. Pa. v.
Casey, 505 U.S. 833, 846-47 (1992)). Substantive due
process contains two lines of inquiry, one that applies when a
party challenges the validity of a legislative act, and one that
applies to the challenge of a non-legislative action. Id. In a
case challenging a legislative act, as here, the act will
withstand scrutiny if (1) there is a legitimate state interest that
(2) could be rationally furthered by the statute. Id. (citation
omitted). The rational basis test, although “not a toothless
one,” Mathews v. Lucas, 427 U.S. 495, 510 (1976), requires
significant deference to the legislature’s decision-making and
assumptions. Sammon v. N.J. Bd. of Med. Exam’rs, 66 F.3d
639, 645 (3d Cir. 1995). “[T]hose attacking the rationality of
the legislative classification have the burden ‘to negative
every conceivable basis which might support it[.]’” FCC v.
Beach Commc’ns, Inc., 508 U.S. 307, 315 (1993) (quoting
Lehnhausen v. Lake Shore Auto Parts Co., 410 U.S. 356, 364
(1973)).
We first address whether there is a legitimate state
interest. The State identifies several legitimate interests
relevant to our analysis. In general, taking custody of

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abandoned property is a legitimate state interest. See
Delaware, 507 U.S. at 497 (“States as sovereigns may take
custody of or assume title to abandoned personal property. . .
.”). Specifically, the State has a legitimate interest in
protecting New Jersey customers and modernizing its
unclaimed property laws, which were the purposes explicitly
identified by the State Legislature. Assemb. Budget
Committee, Statement to Assemb. No. 3002, June 24, 2010
(stating that “the primary purposes of [Chapter 25] are to
protect New Jersey consumers from certain commercial
dormancy fee practices and modernize the State’s unclaimed
property laws”).
SVC Issuers protest that the primary purpose of
enacting Chapter 25 was to raise revenue for the State, which
is not a legitimate state interest. But even if revenue-raising
was the primary purpose behind enacting Chapter 25, as long
as it was not the only legitimate purpose underlying the
legislation, Chapter 25 will pass rational basis examination.
See Malmed v. Thornburgh, 621 F.2d 565, 569 (3d Cir. 1980)
(stating the “legitimate purpose justifying the provision need
not be the primary purpose of the provision”). Here, the State
has sufficiently identified several state interests, including
protecting consumers and modernizing its unclaimed property
laws. Thus, we now examine whether these purposes are
rationally furthered by Chapter 25. See Nicholas, 227 F.3d at
139.
SVC Issuers submit that even if Chapter 25 was
enacted to further a legitimate state interest, the two-year
abandonment period, the two exemptions to Chapter 25, and
the data collection provision do not rationally relate to that
goal. We review each challenged provision in turn.

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SVC Issuers first argue that the two-year abandonment
period is not rationally related to protecting consumers when
consumers are better protected under a five-year
abandonment period under the CARD Act. Thus, they
contend that the State had no rational basis for choosing an
abandonment period of two years rather than an abandonment
period of at least five years. However, the District Court
correctly found that “Chapter 25 affords consumers greater
protection than that provided by the CARD Act’s expiration
provision” because “Chapter 25 imposes no time restriction
on the consumer’s right to recover his or her funds” and
allows the consumer holding the SVC to receive “cash back
after the abandonment period—a right the holder did not
possess under his or her agreement with the SVC issuer.”
Am. Express Travel Related Servs., 755 F. Supp. 2d at 592.
Although the SVC Issuers argue that there was no legislative
finding regarding this two-year abandonment period, under
rational basis review, “legislative choice . . . may be based on
rational speculation unsupported by evidence or empirical
data.” Beach Commc’ns, 508 U.S. at 315 (citations omitted).
Thus, Chapter 25’s two-year abandonment period, even
without specific legislative findings, rationally relates to the
legitimate state interest of protecting consumers.
SVC Issuers next contend that Chapter 25’s two
exemptions to New Jersey’s escheat laws are not rationally
related to a legitimate state interest. Under the first
exemption, single issuers that sell less than $250,000 in gift
cards in any given year are exempt from Chapter 25.
According to the SVC Issuers, small businesses that sell more
than $250,000 in gift cards or that are franchised are not
exempt from Chapter 25, so they are placed at a competitive
disadvantage for no rational reason. This argument fails to

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defeat rational basis scrutiny, as it merely reflects SVC
Issuers’ policy disagreement with the New Jersey Legislature.
See Casey, 505 U.S. at 849 (holding that under the rational
basis scrutiny for substantive due process, courts are not free
to invalidate state law because they disagree with the
underlying policy decisions). The State could conceivably
want to protect smaller businesses and businesses that do not
derive substantial revenue from gift cards. Requiring these
businesses to implement procedures to retain the purchaser
information in accordance with the data collection provision
could be prohibitively expensive compared to the revenue
generated from gift card sales and drive them out of business.
Also, the State could have rationally decided to apply its
escheat laws to small businesses operating as franchises under
a common trade name; these businesses are able to market
that trade name in selling SVCs redeemable at other
locations, which allows them to be more profitable and to
operate without state protection offered by the exemption.
Under the second exemption, gift cards issued under a
promotional or customer loyalty program or a charitable
program, where the owner of the card did not tender any
monetary or other consideration, are not subject to Chapter
25. SVC Issuers argue that this exemption irrationally applies
only to issuers that do not receive any payment but does not
apply to issuers that receive partial payment for the card.
Again, this argument only reflects the SVC Issuers’ policy
disagreement with the New Jersey Legislature and fails to
defeat rational basis scrutiny. See Casey, 505 U.S. at 849.
The Legislature could have rationally concluded that an issuer
offering cards for charitable purposes in exchange for
monetary or other consideration may seek to obtain a tax
benefit for the difference between the payment received and

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the full value of the card. In this case, the issuer would not
need additional protection through Chapter 25’s exemption
provision. The Legislature also may have rationally decided
to encourage issuers to receive no consideration in exchange
for cards issued under promotional, loyalty, or charitable
programs.
Finally, SVC Issuers contend that the data collection
provision does not rationally relate to the legitimate state
interest of protecting consumers because retaining the zip
code of the purchaser does not help the State reunite the
property with the true owner of the gift card, which is usually
the recipient of the card. However, retaining the zip code of
the purchaser or owner rationally furthers the State’s
legitimate interest in determining which state has the right to
escheat the abandoned property under the first priority rule in
Texas. See Papasan v. Allain, 478 U.S. 265, 289 (1986)
(stating state has legitimate interest in taking steps to
implement valid federal law); Delaware, 507 U.S. at 497-98
(holding, under the primary rule, “the power to escheat the
debt should be accorded to the State of the creditor’s last
known address”). Moreover, even when the property cannot
be returned to the owner, the State’s unclaimed property law
rationally relates to the goal of protecting the abandoned
property by safeguarding it in a trust account and making it
available for consumers to reclaim in perpetuity. For all the
reasons stated, we agree with the District Court that SVC
Issuers failed to establish a reasonable likelihood of success
on their substantive due process claim. Thus, we need not
address the remaining preliminary injunction factors.

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IV. Conclusion
We hold that SVC Issuers met their burden of showing
a reasonable likelihood of success on the merits of their
Contract Clause claim and satisfied the remaining preliminary
injunction factors; accordingly, we affirm the District Court’s
order preliminarily enjoining Chapter 25’s retroactive
application with respect to existing SVCs redeemable for
merchandise or services. SVC Issuers also successfully
established that the place-of-purchase presumption and the
accompanying Treasury Guidance are likely preempted by
federal common law; thus, we affirm the District Court’s
grant of preliminary injunction with respect to the prospective
application of the place-of-purchase presumption and the
accompanying Treasury Guidance. We also hold that the data
collection provision is severable from the place-of-purchase
presumption, so the District Court did not err in enjoining the
latter without enjoining the former. Finally, we hold that
SVC Issuers failed to show a reasonable likelihood of success
on the merits of their federal statutory preemption claim and
their substantive due process claim. For all the foregoing
reasons, we will affirm the District Court’s orders.

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