American Express Travel Related Services, Inc. v. Sidamon-Eristoff

PRECEDENTIAL

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

______

No. 10-4328

______

AMERICAN EXPRESS TRAVEL RELATED SERVICES,

INC.,

Appellant

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. No. 3-10-cv-04890)

District Judge: Honorable Freda L. Wolfson

______

Argued September 12, 2011

Before: SCIRICA, SMITH and FISHER, Circuit Judges.

(Filed: January 5, 2012)

Philip R. Sellinger (Argued)

Louis Smith

Greenberg Traurig

200 Park Avenue

P.O. Box 677

Florham Park, NJ 07932

Richard M. Zuckerman (Argued)

SNR Denton US

1221 Avenue of the Americas, 24th Floor

New York, NY 10020

Counsel for Appellant

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 Appellees

______

OPINION OF THE COURT

______

FISHER, Circuit Judge.

American Express Travel Related Services (“Amex”)

challenges 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

retroactively reduced the period after which travelers checks

2

are presumed abandoned from fifteen years to three years. 1

Amex filed a motion for preliminary injunction against New

Jersey Treasurer Andrew P. Sidamon-Eristoff (“Treasurer”)

and New Jersey Unclaimed Property Administrator Steven R.

Harris (collectively, “New Jersey” or “State”) in the District

Court on the grounds that Chapter 25’s provision reducing the

abandonment period for travelers checks violates the Due

Process Clause, the Contract Clause, the Takings Clause, and

the Commerce Clause of the United States Constitution. The

District Court denied Amex’s motion, holding that Amex

failed to show a likelihood of success on the merits of its

claims. Amex filed a timely appeal. For the reasons

discussed below, we will affirm the District Court’s order.

I. Background and Procedural History

Amex Travelers Cheques (“TCs”) 2 are preprinted

checks for amounts ranging from $20 to $100. Each one is

identifiable based on a unique serial number. Amex

maintains that the TCs never expire, so they are contractually

obligated to honor the TCs once they are issued. Amex sells

TCs for the face value amount, normally through a third party

1

This opinion addresses the challenge brought against

2010 N.J. Laws Chapter 25 (“Chapter 25”) with respect to

travelers checks. We discuss the appeal filed by New Jersey

Retail Merchants Association, New Jersey Food Council, and

American Express Prepaid Card Management Corporation,

seeking to enjoin Chapter 25 with respect to stored value

cards (“SVCs”), in a separate opinion.

2

We use “TCs” to refer to Amex Travelers Cheques

specifically, as opposed to travelers checks generally.

3

bank or travel service. The third party can charge a small fee,

which it retains, but Amex does not charge a fee beyond the

face value of the TCs. Amex claims that it can sell TCs

without charging a fee because its contractual relationship

with TC owners gives Amex the right to retain, use, and

invest funds from the sale of TCs from the date of sale until

the date the TCs are cashed or used. Amex asserts that this

right to invest the funds is integral to the contract between TC

owners and Amex, and that it relies on these invested funds to

remain profitable in the TC business.

When a TC is sold, the third party seller transmits the

funds to Amex and provides Amex with the TC’s serial

number, its amount, and the date and place of sale.

Generally, the seller does not provide the purchaser’s name,

address, or any other identifying information. When Amex

sells TCs directly to consumers, it retains only the same

information that it receives from third party sellers.

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 while 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

4

longer liable to the property owner once it turns 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.

However, travelers checks operate differently because

issuers like Amex generally do not obtain the names or

addresses of the purchasers. Thus, the requirement that

holders send notice to the owner at the last known address

before turning over such property to the State does not apply

to travelers checks. Travelers check issuers are also

exempted from the requirement to include the owner’s name

and last known address on unclaimed property reports. N.J.

Stat. Ann. § 46:30B-47 (2002). Amex sends only the serial

number, amount, and date of sale when TCs are sent to the

State as unclaimed property. If Amex determines that a

cashed TC has a serial number indicating that it has been paid

to a state as unclaimed property, Amex seeks to reclaim those

funds from that state. In New Jersey, when such claims are

filed, the Treasurer returns the funds with interest.

5

Until recently, all fifty states had a fifteen-year

abandonment period for travelers checks. 3 But on June 24,

2010, the New Jersey Legislature passed Chapter 25, which

shortened the abandonment period for travelers checks from

fifteen years to three years. N.J. Stat. Ann. § 46:30B-11

(2010). The purpose of the statute was to “protect New

Jersey consumers from certain commercial dormancy fee

practices and to modernize New Jersey’s unclaimed property

laws.” State of N.J. Assemb. Budget Comm., Statement to

Assembly, No. 3002, 214th Leg., at 1 (June 24, 2010). Under

the State’s unclaimed property law, after an issuer transfers

the presumed abandoned property to the State, the property is

then administered through New Jersey’s unclaimed property

system. The State preserves the property in perpetuity for the

owner, N.J. Stat. Ann. § 46:30B-9 (2002), or for another state

that can prove a superior right of escheat. N.J. Stat. Ann.

§ 46:30B-81 (2002).

On September 23, 2010, Amex filed a complaint in the

United States District Court for the District of New Jersey,

alleging that Chapter 25 violated the Due Process Clause, the

Contract Clause, the Takings Clause, and the Commerce

Clause of the Constitution. Amex also filed a motion for

3

Recently, Kentucky also shortened its abandonment

period for travelers checks from fifteen years to seven years.

Although Amex successfully challenged Kentucky’s statute

in federal district court on substantive due process grounds,

Am. Express Travel Related Serv. v. Kentucky, 597 F. Supp.

2d 717 (E.D. Ky. 2009), the United States Court of Appeals

for the Sixth Circuit reversed and remanded, holding that the

statute withstood rational basis scrutiny. Am. Express Travel

Related Servs. v. Kentucky, 641 F.3d 685 (6th Cir. 2011).

6

preliminary injunction, seeking to enjoin the State from

enforcing Chapter 25. On November 13, 2010, the District

Court denied Amex’s motion for preliminary injunction with

respect to travelers checks. Amex filed a timely appeal.

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

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). The moving party’s failure to show

a likelihood of success on the merits “must necessarily result

in the denial of a preliminary injunction.” In re Arthur

Treacher’s Franchisee Litig., 689 F.2d 1137, 1143 (3d Cir.

1982). We evaluate the likelihood of success on the merits of

Amex’s four constitutional claims accordingly.

7

A. Substantive Due Process Clause

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 must

withstand rational basis review. Id. To do so, the defendant

must demonstrate (1) the existence of 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)).

Amex argues that the sole purpose behind enacting

Chapter 25 was to raise revenue for the State, which is not a

legitimate state interest. But under rational basis scrutiny, a

court’s inquiry is limited to whether the law “rationally

furthers any legitimate state objective.” Malmed v.

Thornburgh, 621 F.2d 565, 569 (3d Cir. 1980) (emphasis

8

added). It is enough that the State offers a conceivable

rational basis for its action, and “[t]he court may even

hypothesize the motivations of the state legislature to find a

legitimate objective promoted by the provision under attack.”

Id. (citation omitted). It is “constitutionally irrelevant

whether this reasoning in fact underlay the legislative

decision . . . .” Fleming v. Nestor, 363 U.S. 603, 612 (1960).

The State submits that Chapter 25 was enacted to

modernize the State’s unclaimed property laws by making the

abandonment period for travelers checks more consistent with

that of other property. The State also argues that Chapter 25

provides greater protection for property owners. They reason

that shortening the abandonment period will facilitate the

transfer of the property from a private company to the State at

an earlier time; this would provide greater protection for

property owners because private companies are subject to

greater economic instability compared to a perpetually

solvent government entity. In general, taking custody of

abandoned property is a legitimate state interest. See

Delaware v. New York, 507 U.S. 490, 497 (1993) (“States as

sovereigns may take custody of or assume title to abandoned

personal property. . . .”). We agree that, as a corollary, the

State has a legitimate interest in protecting its property

owners and modernizing its unclaimed property laws to

promote consistency. Accordingly, we reject Amex’s

contention that Chapter 25 lacks a legitimate state interest.

Amex contests that even if there are legitimate state

interests, Chapter 25 fails to rationally further these goals.

Because Amex has the burden of rebutting every conceivable

rational basis, see Beach Commc’ns, 508 U.S. at 315, we

examine each of Amex’s arguments in turn.

9

Amex first argues that shortening the abandonment

period has no rational relationship to increasing property

protection because 90% of travelers checks not used after

three years are used within fifteen years. Thus, Amex

contends, it is irrational to conclude that travelers checks can

be presumed abandoned after three years. But the statistics

also show that over 96% of all travelers checks are redeemed

within three years. Decl. of Susan Helms at 3, Am. Express

Travel Related Servs., 755 F. Supp. 2d 556 (D. N.J. 2010)

(No. 10-4328). Even if Amex disagrees with the State

Legislature’s presumption that travelers checks unredeemed

after three years are abandoned, the rational basis test does

not require mathematical precision in the legislature’s

decisions. See Heller v. Doe, 509 U.S. 312, 321 (1993).

“[L]egislative choice . . . may be based on rational

speculation unsupported by evidence or empirical data.”

Beach Commc’ns, 508 U.S. at 315. Thus, Amex’s argument

is insufficient to overcome rational basis scrutiny.

Amex next argues that shortening the abandonment

period for travelers checks does not further Chapter 25’s

stated purpose of modernizing the State’s unclaimed property

laws. But the State has a conceivable legitimate interest in

making its unclaimed property laws more consistent for ease

of administration. Chapter 25 accomplishes this by making

the abandonment period for travelers checks the same as

checks, drafts, and other similar negotiable instruments. See

N.J. Stat. Ann. § 46:30B-16 (2002). Amex responds that

unclaimed property laws require establishing different time

periods based upon the nature of the property, so consistency

is not a rational basis for selecting an abandonment period.

But state laws cannot be invalidated based on mere policy

disagreements. See Casey, 505 U.S. at 849 (holding that

10

under rational basis scrutiny, courts are not free to invalidate

state law because they disagree with the underlying policy

decisions). Because modernizing unclaimed property laws

through consistent abandonment periods is a conceivable

rational basis for enacting Chapter 25, Amex fails to

overcome rational basis scrutiny. 4

In addition, the State Legislature could have rationally

believed that the shorter abandonment period better protected

customers by giving custody of the property to the State at an

earlier time. Conceivably, there are benefits to having

property safeguarded by a perpetually-solvent sovereign

instead of a private entity with a greater risk of insolvency. In

addition, the State can hold the travelers check funds in

perpetuity and must invest unclaimed property funds more

conservatively than Amex is required to invest its TC funds.

Compare N.J. Stat. Ann. § 17:15C-2 (2000) (permitting

investment in “any investment which is rated in one of the

three highest rating categories by a nationally recognized

statistical rating organization”) with N.J. Stat. Ann. § 46:30B-

75 (2000) (restricting investments of funds of Unclaimed

Property Trust Fund to government bonds or interest-bearing

notes or obligations). The State has offered several legitimate

interests that justify shortening the abandonment period for

travelers checks from fifteen years to three years. Chapter 25

4

Amex also contends that changing the abandonment

period does not rationally further the statute’s purpose of

reuniting property with its owners because the State does not

have the names and addresses of travelers check purchasers.

But, as discussed above, changing the abandonment period

conceivably furthers other rational bases, which is sufficient

for Chapter 25 to survive rational basis scrutiny.

11

rationally furthers these interests, and Amex does not meet its

burden of defeating every conceivable basis that might

support Chapter 25’s enactment. See Beach Commc’ns, 508

U.S. at 315. Therefore, Amex fails to show a likelihood of

success on the merits of its substantive due process claim.

B. 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

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. Where the contract is between

private parties, courts may “defer to legislative judgment as to

the necessity and reasonableness of a particular measure.”

U.S. Trust Co. of N.Y. v. New Jersey, 431 U.S. 1, 23 (1977).

But this review of legislative judgment is more exacting than

the rational basis standard applied in the due process analysis.

Pension Benefit Guar. Corp. v. R.A. Gray & Co., 467 U.S.

717, 733 (1984).

12

Amex fails to show that Chapter 25 imposes a

substantial impairment on Amex’s contractual relationships

with TC owners. While Amex has the right to use and invest

TC funds until the date the TC is cashed or sold, the duration

of use is further subject to the lawful abandonment period set

by unclaimed property laws. The Supreme Court has long

established that

the contract of deposit does not give the banks a

tontine right to retain the money in the event

that it is not called for by the depositor. It gives

the bank merely the right to use the depositor’s

money until called for by him or some other

person duly authorized. If the deposit is turned

over to the state in obedience to a valid law, the

obligation of the bank to the depositor is

discharged.

Sec. Sav. Bank v. California, 263 U.S. 282, 286 (1923)

(citation omitted). In Anderson National Bank v. Luckett, the

Supreme Court again stated that “[s]ince the bank is a debtor

to its depositors, it can interpose no due process or contract

clause objection to payment of the claimed deposits to the

state, if the state is lawfully entitled to demand payment . . . .”

321 U.S. 233, 242-43 (1944) (citation omitted). Like banks,

Amex, as a debtor to the TC purchasers, only has the right to

use the funds received from issuing a TC until either the

owner or the State, under a valid law, claims the funds.

Accordingly, a state’s ability to claim abandoned property in

the travelers check context does not ordinarily substantially

impair travelers check issuers’ contractual relationships or

13

otherwise violate the Contract Clause. 5 See Sec. Sav. Bank,

263 U.S. at 285-86.

In assessing substantial impairment under the Contract

Clause, we look to “the legitimate expectations of the

contracting parties,” U.S. Trust Co. of N.Y., 431 U.S. at 19

n.17 (1977), and whether the modification imposes an

obligation or liability that was unexpected at the time the

parties entered into the contract and relied on its terms. See

Allied Structural Steel Co. v. Spannaus, 438 U.S. 234, 247

(1978). An important factor in determining the substantiality

of any contractual impairment is whether the parties were

operating in a regulated industry. See Energy Reserves Grp.,

Inc. v. Kansas Power and Light Co., 459 U.S. 400, 411

(1983) (citing Allied Structural Steel Co., 438 U.S. at 242

n.13). When a party enters an industry that is regulated in a

particular manner, it is entering subject to further legislation

in the area, and changes in the regulation that may affect its

contractual relationships are foreseeable. See id. New Jersey

has consistently regulated travelers checks, both generally

under the Money Transmitter Law, N.J. Stat. Ann. § 17:15C

(2000), and as abandoned property under the unclaimed

property statute, N.J. Stat. Ann. § 46:30B-11 (2010). Given

such consistent regulation, Chapter 25’s amendment of the

abandonment period did not upset Amex’s legitimate

5

This analysis differs from the analysis with respect to

issuers of SVCs because, unlike travelers checks or bank

deposits, SVCs are not redeemable for cash. Thus, the

relationship between SVC purchasers and their issuers is

distinguishable from the relationship between depositors and

banks, which are required to turn over the value of the deposit

in cash upon the depositor’s demand.

14

expectations as the contracting party or impose an unexpected

change in its contractual obligations. U.S. Trust, 431 U.S. at

19 n.17 (stating “a reasonable modification of statutes . . . is

much less likely to upset expectations than a law adjusting the

express terms of an agreement”).

Amex next claims that the fifteen-year abandonment

period was an implied term of the contract for TCs that were

sold prior to the enactment of Chapter 25. It is true that the

terms of a contract often include the state law relating to the

contract. See Farmers & Merchs. Bank of Monroe v. Fed.

Reserve Bank of Richmond, 262 U.S. 649, 660 (1923). But

not all “state regulations are implied terms of every contract

entered into while they are effective, especially when the

regulations themselves cannot be fairly interpreted to require

such incorporation.” Gen. Motors, 503 U.S. at 189. And

“state laws are implied into private contracts regardless of the

assent of the parties only when those laws affect the validity,

construction, and enforcement of contracts.” Id. (citation

omitted). Critically, the adjustment of the abandonment

period merely shortens the time during which Amex can

invest the TC funds, without affecting the validity,

construction, and enforcement of the contract between Amex

and its customers. Amex also fails to show how New Jersey

law pertaining to unclaimed property can be interpreted to

15

require incorporation into Amex’s contract with its customer. 6

Because Amex has not shown that Chapter 25 constitutes a

substantial impairment on this contractual relationship, it did

not succeed in showing a likelihood of success on its Contract

Clause claim.

C. Takings Clause

The Takings Clause of the Fifth Amendment prohibits

the federal government from taking private property for

public use without providing just compensation. U.S. Const.

Amend. V. The Takings Clause applies to state action

through the Fourteenth Amendment. Webb’s Fabulous

Pharmacies, Inc. v. Beckwith, 449 U.S. 155, 160 (1980)

(citing Chicago, B. & Q. R. Co. v. Chicago, 166 U.S. 226,

239 (1897) and Penn Cent. Transp. Co. v. New York City, 438

U.S. 104, 122 (1978)). When a state directly appropriates

private property, it is considered a per se taking, and the state

has a duty to compensate the owner. Tahoe-Sierra Pres.

6

Amex’s reliance on Nieves v. Hess Oil Virgin Is.

Corp., 819 F.2d 1237 (3d Cir. 1987) is misplaced. In Nieves,

a 1986 amendment to the Virgin Island’s Workmen’s

Compensation Act retroactively eliminated an employer’s

immunity from tort actions. 819 F.2d at 1248. Because the

employer had immunity under the law at the time of the

contract, this amendment exposed the employer to significant

additional tort liability that was unexpected. Id. Chapter 25,

however, does not impose an unexpected liability on Amex

that would “completely destroy[] its contractual

expectations.” Id. at 1248. It only seeks to retroactively

claim abandoned travelers checks that ultimately belong to

the purchasers, not Amex.

16

Council v. Tahoe Reg’l Planning Agency, 535 U.S. 302, 322

(2002). Where, as here, a party asserts a regulatory taking,

there is no set formula. Rather, courts must engage in a

factual inquiry to determine whether a taking has been

effected. New Jersey v. United States, 91 F.3d 463, 468 (3d

Cir. 1996) (citing Lucas v. S.C. Coastal Council, 505 U.S.

1003, 1015 (1992)).

To succeed on a takings claim, Amex must show that

the State’s action affected a “legally cognizable property

interest.” Prometheus Radio Project v. FCC, 373 F.3d 372,

428 (3d Cir. 2004) (citing Cleveland Bd. of Educ. v.

Loudermill, 470 U.S. 532, 538 (1985) and Webb’s, 449 U.S.

at 160-61 (1980)). “Relevant considerations include ‘[t]he

economic impact of the regulation on the claimant and . . . the

extent to which the regulation has interfered with distinct

investment-backed expectations.’” New Jersey v. United

States, 91 F.3d at 463 (quoting Penn Cent., 438 U.S. at 124).

The character of the state action is also relevant:

unlike “a physical invasion of land[,] . . . a public program

adjusting the benefits and burdens of economic life to

promote the common good . . . ordinarily will not be

compensable.” Id. (internal quotation marks and citation

omitted). Thus, that a regulation “adversely affect[s]

recognized economic values” is not enough to constitute a

taking. Id. Even a regulation that prohibits the most

beneficial use of property, or prevents an individual from

operating an otherwise lawful business, does not necessarily

violate the Takings Clause. Penn Cent., 438 U.S. at 125-26.

We agree with the District Court that Amex failed to

show a likelihood of success on the merits of its takings

claim. Amex maintains that it has both a right to invest the

17

proceeds from the sale of TCs and a property interest in the

income generated. Amex argues that the retroactive

application of Chapter 25 constitutes a taking because it

interferes with Amex’s investment-backed expectation that

TCs already sold would have an abandonment period of

fifteen years, which would have allowed Amex to invest the

proceeds for fifteen years unless the owner redeemed the

check. 7 However, Amex’s claim that Chapter 25 interferes

with its investment-backed expectations cannot stand because

Amex’s TC business has long been subject to regulation by

New Jersey. The Supreme Court has established that

“‘[t]hose who do business in the regulated field cannot object

if the legislative scheme is buttressed by subsequent

amendments to achieve the legislative end.’” Connolly v.

Pension Ben. Guar. Corp., 475 U.S. 211, 227 (1986) (quoting

FHA v. The Darlington, Inc., 358 U.S. 84, 91 (1958)). Since

Chapter 25 is a subsequent amendment to achieve the

legislative end of assuming custody of abandoned property,

Amex has no ground to claim interference with its

investment-backed expectations.

Lastly, the fact that Amex has a contractual right to

invest TC funds does not necessarily render Chapter 25 an

7

Contrary to Amex’s contention, E. Enterp. v. Apfel,

524 U.S. 498 (1998), is distinguishable from this case. In E.

Enterp., the Supreme Court held that the Coal Industry

Retiree Health Benefit Act was an unconstitutional taking

because it imposed on the employer retroactive pension

liability for retired miners. Id. at 532. But here, Chapter 25

does not impose any further liability on Amex. It only

requires that issuers like Amex turn over property owned by

the travelers check owners to State custody.

18

unconstitutional taking. The State has considerable authority

to enact legislation, including “the power to affect contractual

commitments between private parties.” See E. Enterp., 524

U.S. 498, 528 (1998). Amex’s ability to utilize TC funds is

constrained by the owner’s ability to redeem a TC on demand

and by the terms of the State’s unclaimed property laws. See

Security Sav. Bank, 263 U.S. at 286. In Delaware v. New

York, the Supreme Court delineated the property right of

debtors with regard to state escheat laws:

Funds held by a debtor become subject to

escheat because the debtor has no interest in the

funds – precisely the opposite of having “a

claim to the funds as an asset.” We have

recognized as much in cases upholding a State’s

power to escheat neglected bank deposits.

Charters, bylaws, and contracts of deposit do

not give a bank the right to retain abandoned

deposits, and a law requiring the delivery of

such deposits to the State affects no property

interest belonging to the bank. [Sec. Sav. Bank,

263 U.S. at 285-86]; Provident Institution for

Sav. v. Malone, 221 U.S. 660, 665-66 (1911).

Thus, “deposits are debtor obligations of the

bank,” and a State may “protect the interests of

depositors” as creditors by assuming custody

over accounts “inactive so long as to be

presumptively abandoned.” [Anderson Nat.

Bank, 321 U.S. at 241] (emphasis added). Such

“disposition of abandoned property is a function

of the state,” a sovereign “exercise of a

regulatory power” over property and the private

legal obligations inherent in property.

19

[Standard Oil Co. v. New Jersey, 341 U.S. 428,

436 (1951)].

507 U.S. 490, 502 (1993). Thus, Amex, as debtor to TC

owners, has no right to retain the funds once they are deemed

abandoned under the State’s unclaimed property laws.

Accordingly, the District Court did not err in finding that

Amex failed to show a reasonable probability of success on

its Takings Clause claim.

D. Commerce Clause

Under the Commerce Clause, Congress has the power

to “regulate Commerce . . . among the several States.” U.S.

Const. Art. I, § 8, cl. 3. “This clause also has an implied

requirement (often called the ‘negative’ or ‘dormant’ aspect

of the clause) that the states not ‘mandate differential

treatment of in-state and out-of-state economic interests that

benefits the former and burdens the latter.’” Cloverland-

Green Spring Dairies, Inc. v. Pa. Milk Mktg. Bd., 462 F.3d

249, 261 (3d Cir. 2006) (citing Granholm v. Heald, 533 U.S.

460, 472 (2005)). Our inquiry as to whether a state law

violates the dormant Commerce Clause is twofold: first, we

determine whether heightened scrutiny applies, and, if not,

then we determine whether the law is invalid under the Pike

v. Bruce Church, Inc., 397 U.S. 137 (1970), balancing test.

Cloverland-Green, 462 F.3d at 261 (citation omitted). We

apply heightened scrutiny when a law “discriminates against

interstate commerce” in purpose or effect. C & A Carbone,

Inc. v. Town of Clarkstown, 511 U.S. 383, 390 (1994).

Because Amex has not alleged that heightened scrutiny

applies, we look to the Pike balancing test. Under this test,

courts will uphold nondiscriminatory regulations that only

incidentally affect interstate commerce unless “the burden

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imposed on [interstate] commerce is clearly excessive in

relation to the putative local benefits.” Pike, 397 U.S. at 142.

Amex contends that Chapter 25, if implemented, will

violate the dormant Commerce Clause because its effects will

be projected into other states. Specifically, Amex claims that

it will be forced to choose between: (a) selling TCs in New

Jersey at a marginal profit or at a loss; (b) not selling TCs in

New Jersey; (c) charging a fee for selling TCs in New Jersey;

or (d) charging a fee to sell TCs throughout the country so

that it can maintain uniform conditions. If it chooses to

charge a fee to sell TCs throughout the country, Amex argues,

then Chapter 25 will have dictated commercial activity in

other states.

Amex compares such a result to laws the Supreme

Court struck down on dormant Commerce Clause grounds in

Brown-Forman Distillers Corp. v. N.Y. State Liquor Auth.,

476 U.S. 573, 582 (1986) and Healy v. Beer Institute, Inc.,

491 U.S. 324, 336 (1989). In Brown-Forman, the Supreme

Court found that New York had “project[ed] its legislation

into [other States]” by requiring distillers to seek the approval

of the New York State Liquor Authority before lowering

prices in other states. 476 U.S. 583-84 (internal quotation

marks and citation omitted) (second alteration in original).

Similarly, in Healy, the Supreme Court struck down a

Connecticut statute that “require[d] out-of-state shippers of

beer to affirm that their posted prices for products sold to

Connecticut wholesalers [were] . . . no higher than the prices

at which those products are sold in [neighboring states.]” 491

U.S. at 326. The Court held both statutes to be

unconstitutional because “States may not deprive businesses

and consumers in other States of ‘whatever competitive

advantages they may possess based on the conditions of the

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local market.” Healy, 491 U.S. at 339 (quoting Brown-

Forman, 476 U.S. at 580).

Unlike these statutes, Chapter 25 does not directly

regulate travelers checks sold in other states or force Amex to

conform its out-of-state practices to less favorable in-state

conditions. Nothing prevents other states from regulating

travelers checks differently from the way New Jersey has

chosen to do in Chapter 25. And by Amex’s own admission,

the costs of compliance could be passed on to New Jersey

travelers check customers or be absorbed by issuers like

Amex. 8 Under the Pike balancing test, when the costs of a

regulation may be born solely by those in the state enacting it,

the burden imposed on interstate commerce is minimal, and

not excessive in relation to the putative local benefits

articulated by the State. See United Haulers Ass’n, Inc. v.

8

Amex argues that requiring it to change its TC

business so that it operates differently in New Jersey than it

does in other jurisdictions (e.g., charging a fee in New Jersey)

would substantially burden interstate commerce based on the

Supreme Court’s decision in Bibb v. Navajo Freight Lines,

Inc., 359 U.S. 520, 529-30 (1959). But the Supreme Court

acknowledged that Bibb was an exceptional case because the

state law obstructed the literal movement of goods between

states by requiring trucks to alter their safety equipment upon

entering Illinois. Id. at 529. The Court maintained that states

have “great leeway in providing safety regulations for all

vehicles—interstate as well as local[,]” but in that case, the

burden on the interstate movement of trucks passed “the

permissible limits even for safety regulations.” Id. at 530.

Amex has not shown that Chapter 25 imposes a similarly

heavy burden for this to be considered an exceptional case.

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Oneida-Herkimer Solid Waste Mgmt. Auth., 550 U.S. 330,

345 (2007) (holding when “the very people who voted for the

laws” bear the costs attributable to those laws, the costs of the

regulation do not fall outside the state). Therefore, Amex

failed to show a reasonable probability of success on the

merits of its Commerce Clause claim.

E. Remaining preliminary injunction factors

Because Amex was unable to show a likelihood of

success on the merits of its claims, we need not address the

remaining preliminary injunction factors, see Crissman, 239

F.3d at 364 (listing preliminary injunction factors), and the

District Court’s denial of Amex’s motion for preliminary

injunction must be affirmed. See In re Arthur Treacher’s

Franchisee Litig., 689 F.2d at 1143.

IV. Conclusion

We hold that Amex failed to show a likelihood of

success on the merits of its Due Process Clause, Contract

Clause, Takings Clause, and Commerce Clause claims. Thus,

the motion for preliminary injunction of Chapter 25 must be

denied. For the foregoing reasons, we will affirm the order of

the District Court.

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