February 14, 2017
appeal from the Department of the Treasury, Unclaimed
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).
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).
Judges Messano, Espinosa and Suter.
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.
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. 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.
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.
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.
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.
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.
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.
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.
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.
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 ...