New York Appellate Court Holds that Federal Law Does Not Preempt State Contract and Consumer Protection Laws in Gift Card Suit Reply

E-Commerce News provided by BuckleySandler LLP for informational purposes only, and should not be construed as legal advice on any subject matter.

April 28, 2012

On April 17, 2012, the Appellate Division of the New York Supreme Court held that federal laws and regulations do not preempt state contract and consumer protection laws, reversing an earlier trial court decision dismissing a lawsuit concerning gift card expiration dates and renewal fees. Sharabani v. Simon Property Group, Inc., No. 2010-07552, 2012 WL 1320067 (N.Y. App. Div. Apr. 17, 2012). The plaintiff filed an action based on New York state law to recover damages arising out of a gift card that required a “reactivation fee” for use after its expiration date. The defendant, a federally chartered thrift that managed the gift card program, and its co-defendant moved to dismiss the lawsuit on various grounds, including that all of the plaintiff’s state law claims were preempted by federal law. The court held that although Office of Thrift Supervision (OTS)   regulations permitted the issuance of gift cards with administrative fees, the OTS has explicitly stated that its regulations do not preempt state contract law, commercial law, tort law, or criminal law to the extent those laws are consistent with the OTS’s intent to occupy the field of federal savings associations’ deposit-related regulations. Based on this regulatory guidance, the court determined that only the claim based on New York’s abandoned property law was preempted by federal law because the OTS has specific regulations regarding abandoned accounts. The court affirmed dismissal of the abandoned property claim and remanded the remaining claims based on state contract and consumer protection laws to the trial court for evaluation under the remaining prongs of the defendants’ motion to dismiss.

Tenth Circuit Finds Emails Provide Sufficient Evidence of a Contract Reply

E-Commerce News provided by BuckleySandler LLP for informational purposes only, and should not be construed as legal advice on any subject matter.

April 26, 2012

On April 12, the U.S. Court of Appeals for the Tenth Circuit held that a series of emails taken as a whole provided sufficient evidence that the parties intended to form a contract. Republic Bank, Inc. v. West Penn Allegheny Health Sys., Inc., No 10-4145, 2012 WL 1223933 (10th Cir. Apr. 12, 2012). In this case, a Utah bank that acquired certain medical equipment after a borrower defaulted on an equipment lease identified a hospital as a potential buyer. The hospital subsequently made an offer via email to purchase certain pieces of equipment. A bank representative accepted the offer, also by email, and subsequently agreed to prepare a written agreement. Eventually the hospital informed the bank that it would not be able to make the purchase and the bank was forced to auction the equipment. The bank then sued the hospital for breach of contract. The court applied the Uniform Commercial Code to uphold the district court’s ruling that a contract had been formed and breached. The UCC standard relies on “objective, observable manifestations of intent to contract.” Evidence of intent requires a signed writing that need only contain the essential terms of the agreement. In this case, an email from the hospital offering to purchase the items and an email from the bank accepting that offer, combined with multiple, subsequent references to a binding agreement by the bank that the hospital did not refute, as a whole, provided sufficient evidence of a contract.