Tuesday, January 24, 2012
In a Jan. 19, 2012, editorial titled Third Circuit Upholds Challenge to NJ Gift Card Escheat Law, Ballard Spahr lawyers Alan S. Kaplinsky and Jeremy T. Rosenblum said the court found that gift card issuers behind the November 2011 injunction had successfully argued that New Jersey's new escheatment rules, which passed into state law in June 2011, posed such significant threat to issuers (retailers that issue closed-loop gift cards and banks that issue open-loop, network-branded gift cards) that parts of the law needed to be blocked.
Ballard Spahr said the court of appeals agreed that the part of the law which addresses gift card regulations (contained in Chapter 25 of the unclaimed property regulations), "imposed unanticipated, retroactive obligations on the issuers" and would "substantially impair their contractual relationships." Additionally, the court found issuers would "suffer irreparable harm without the injunction," Ballard Spahr noted.
Ballard Spahr said, "According to the issuers, if New Jersey could enforce Chapter 25, they would either face prosecution and fines for noncompliance or, if they turned over funds, be precluded by state sovereign immunity from getting the funds back should Chapter 25 subsequently be invalidated."
However, Ballard Spahr added that the court rejected the issuers' argument that Chapter 25's two-year abandonment period was preempted by The Credit Card Accountability, Responsibility and Disclosure Act of 2009's requirement that gift card funds remain available for at least five years after the date a card is issued or the date on which funds are last loaded on a card. 
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