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BBB Value Services, Inc. v. Treasurer

Superior Court of New Jersey, Appellate Division

September 21, 2017

BBB VALUE SERVICES, INC., Appellant,
v.
TREASURER, STATE OF NEW JERSEY, DEPARTMENT OF THE TREASURY; ADMINISTRATOR, STATE OF NEW JERSEY UNCLAIMED PROPERTY ADMINISTRATION, Respondent. BED BATH & BEYOND INC., Appellant,
v.
TREASURER, STATE OF NEW JERSEY, DEPARTMENT OF THE TREASURY; ADMINISTRATOR, STATE OF NEW JERSEY UNCLAIMED PROPERTY ADMINISTRATION, Respondent.

          Argued February 14, 2017

         On appeal from the Department of the Treasury, Unclaimed Property Administration.

          Ethan D. Millar (Alston & Bird, LLP) of the California bar, admitted pro hac vice, argued the cause for appellants (Alston & Bird, LLP, and Mr. Millar, attorneys; Karl Geercken, Matthew C. Decker, Steven L. Penaro, Michael M. Giovannini (Alston & Bird, LLP) of the North Carolina bar, admitted pro hac vice, and Mr. Millar, on the briefs in A-2973-14; Mr. Geercken, Mr. Penaro, Mr. Giovannini and Mr. Millar, on the briefs in A-4880-14).

          Marc Alan Krefetz, Deputy Attorney General, argued the cause for respondent (Christopher S. Porrino, Attorney General, attorney; Melissa H. Raksa, Assistant Attorney General, of counsel; Mr. Krefetz, on the briefs).

          Before Judges Messano, Espinosa and Suter.

          SUTER, J.A.D.

         In A-4880-14, Bed Bath & Beyond, Inc. (BB&B) appeals the May 21, 2015 final agency decision of the Treasury Department's Unclaimed Property Administration (UPA) that denied BB&B's claim for a refund of the value of certain unclaimed merchandise return certificates (certificates). In A-2973-14, BBB Value Services, Inc. (BBB-VSI) appeals the UPA's January 14, 2015 denial of a similar refund claim. We reverse the UPA's denial in A-4880-14 because BB&B was not required by New Jersey's Uniform Unclaimed Property Act, N.J.S.A. 46:30B-1 to -109 (UUPA), to remit these unclaimed certificates. In A-2973-14, we reverse for other reasons, concluding that the certificates constitute "stored value cards" within the meaning of the UUPA, but that their value was remitted prematurely.

         I.

         BB&B is a large, nationwide retailer of domestic merchandise and home furnishings. BBB-VSI is a wholly owned subsidiary of BB&B. For customers who return merchandise to BB&B without a receipt, BB&B issues a certificate, which is redeemable at BB&B or an affiliated store for other merchandise or services, but not for cash except as may be required by state consumer protection laws. Issued certificates include a bar code referencing data stored on BB&B's network and system database.[2] Customers who have receipts are able to obtain a refund in cash. Here, the cases involve only certificates issued for returns made without a receipt.

         Some customers in New Jersey have not redeemed their certificates. From July 1, 1999 to June 30, 2010, the unused balances of these certificates had a remaining value, taken together, of $939, 341.16. From 2004 and continuing annually until 2 012, BB&B reported and remitted the value of the unredeemed certificates to the UPA as unclaimed property.

         In January 2015, BB&B requested a refund of the value of these certificates, claiming "[s]ince the merchandise return certificates are . . . not redeemable for cash, they are not 'claims for the payment of money' and thus are . . . not covered by the UUPA" and "remain the property of BB&B." The UPA denied the request, treating the certificates as "credit memoranda" under the UUPA because they involved the "return[] of sold goods" and "not original sales." Concluding that BB&B had "an expectation of paying cash in this type of transaction, " the UPA stated that "it is the underlying obligation that determines the correct statutory provision that applies and not the form of the instrument used to record the credit." Credit memoranda are presumed abandoned after three years of inactivity. Therefore, the UPA found that BB&B properly reported the unclaimed funds, and denied the refund. BB&B appeals the UPA's May 21, 2015 denial.

         From July 1, 2010 to June 30, 2011, BBB-VSI issued the same type of certificates to customers with New Jersey addresses, who returned merchandise without a receipt. The unused portion of those certificates totaled $244, 552.57. In November 2014, BBB-VSI reported these as credit memoranda and remitted their aggregate value ($244, 552.57) to the UPA.

         In early January 2015, BBB-VSI requested a refund, claiming it had erred. It advised the UPA that the certificates constituted "stored value cards" under the UUPA. As such, they were not presumed abandoned until after five years of inactivity, and even then the amount presumed abandoned is "60% of the value of the card on the date the stored value card is presumed abandoned." Thus, BBB-VSI's position was that it had reported the unredeemed value too soon and paid too much.

         The UPA denied the requested refund on January 14, 2015, contending that the certificates were credit memoranda under the UUPA. BBB-VSI appealed. With leave granted, the UPA filed an amplification of reasons that reiterated its contention that the "certificates do not represent original sales of services or merchandise but rather refunds for returned merchandise previously sold" and should be treated as credit memoranda under the UUPA.

         With respect to the certificates issued before July 1, 2010, BB&B contends on appeal that the UPA erred in denying its requested refund. The certificates "do not represent obligations to pay money, " they are not property within the scope of the UUPA, as construed by this court, and the escheat of these funds is inconsistent with New Jersey's consumer protection law involving refunds. Further, it contends the decision not to grant a refund violates a federal court injunction, and the decision violates provisions of the New Jersey and federal constitutions including the single-object rule, the contract clause, the takings clause, the due process clause and the federal common law. BB&B seeks interest on any refunded monies.

         With respect to the certificates issued after July 1, 2010, BBB-VSI claims it had no obligation to remit funds for these stored value cards in 2 014 and remitted forty percent more than required. If these are not stored value cards, then they are not subject to the UUPA at all because the certificates are not obligations to pay money. BBB-VSI contends that the escheat of the value of the stored value cards violates the federal and state constitutions.[3]

         II.

         Our scope of review of these administrative agency decisions is limited. Agency decisions are sustained unless they are arbitrary, capricious, or unreasonable; unsupported by substantial credible evidence in the record; or contrary to express or implied legislative policies. Saccone v. Bd. of Trs. of Police and Firemen's Ret. Sys., 219 N.J. 369, 380 (2014); Lavezzi v. State, 219 N.J. 163, 171 (2014). "The burden of demonstrating that the agency's action was arbitrary, capricious or unreasonable rests upon the [party] challenging the administrative action." In re Arenas, 385 N.J.Super. 440, 443-44 (App. Div.), certif. Denied, 188 N.J. 219 (2006). "[G]enerally, when construing language of a statutory scheme, deference is given to the interpretation of statutory language by the agency charged with the expertise and responsibility to administer the scheme." Acoli v. N.J. State Parole Bd., 224 N.J. 213, 229 (2016) (citing U.S. Bank, N.A. v. Hough, 210 N.J. 187, 199 (2012)). However, we ...


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