Spggc, Inc. v. Blumenthal

• Decision Date: 06 January 2006
• Docket Number: No. Civ.A. 3:04CV1919.,Civ.A. 3:04CV1919.
• Citation: 408 F.Supp.2d 87
• Court: U.S. District Court — District of Connecticut
• Parties: SPGGC, INC., Plaintiff, v. Richard BLUMENTHAL, Defendant.

408 F.Supp.2d 87

SPGGC, INC., Plaintiff, v. Richard BLUMENTHAL, Defendant.

No. Civ.A. 3:04CV1919.

United States District Court, D. Connecticut.

January 6, 2006.

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Margaret M. Pinkham, Brown Rudnick Berlack Israels, Boston, MA, for Plaintiff.

Jane R. Rosenberg, Perry A. Zinn Rowthorn, Susan Quinn Cobb, Attorney General's Office, Hartford, CT, for Defendant.

RULING ON MOTION FOR RECONSIDERATION

UNDERHILL, District Judge.

The plaintiff, SPGGC, Inc. ("SPGGC"), has moved pursuant to Rule 7(c) of the Local Rules of Civil Procedure for reconsideration of the court's July 28, 2005 ruling on defendant Attorney General Richard Blumenthal's Motion to Dismiss ("Ruling"). The Ruling dismissed SPGGC's complaint, thereby rejecting SPGGC's claim that the Connecticut Gift Card Law ("CGCL")¹ is preempted by the National Bank Act ("NBA")² or violates the Commerce Clause. Although I grant the motion for reconsideration, I deny the relief requested.

I. Standard of Review

A. Reconsideration

In general, there are three grounds that may justify reconsideration: (1) an intervening change of controlling law; (2) the availability of new evidence; or (3) the need to correct a clear error or prevent manifest injustice. Virgin Atlantic Airways, Ltd. v. National Mediation Bd., 956 F.2d 1245, 1255 (2d Cir.1992). The standard for granting a motion for reconsideration is strict. Shrader v. CSX Transp., Inc., 70 F.3d 255, 257 (2d Cir.1995). A "motion for reconsideration may not be used to plug gaps in an original argument or to argue in the alternative once a decision has been made." Lopez v. Smiley, 375 F.Supp.2d 19, 21-22 (D.Conn.2005). It is also not appropriate to use a motion to reconsider solely to re-litigate an issue already decided. Id. A motion to reconsider should be denied, "unless the moving party can point to controlling decisions or data that the court overlooked — matters, in other words, that might reasonably be expected to alter the conclusion reached by the court." Id.

B. Failure to State a Claim

A motion to dismiss for failure to state a claim pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure should be granted only if "it is clear that no relief could be granted under any set of facts that could be proved consistent with the allegations." Hishon v. Spalding, 467 U.S. 69, 73, 104 S.Ct. 2229, 81 L.Ed.2d 59 (1984). The function of a motion to dismiss is "merely to assess the legal feasibility of a complaint not to assay the weight of evidence which might be offered in support thereof." Ryder Energy Distribution Corp. v. Merrill Lynch Commodities, Inc., 748 F.2d 774, 779 (2d Cir.1984). The motion must therefore be decided solely on the facts alleged. See Goldman v. Belden, 754 F.2d 1059, 1065 (2d Cir.1985).

When deciding a motion to dismiss for failure to state a claim upon which relief can be granted, the court must accept the material facts alleged in the complaint as true, and must draw all reasonable inferences and view them in the light most favorable to the plaintiff. Leeds v. Meltz, 85 F.3d 51, 53 (2d Cir.1996). The court "must not dismiss the action unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Cohen v. Koenig, 25 F.3d 1168, 1172 (2d Cir.1994). The issue is not whether the plaintiff will prevail, but whether he should have the opportunity to prove his claims. See Conley v. Gibson, 355 U.S. 41, 45, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957).

II. Discussion

A. Preemption

The CGCL does not irreconcilably conflict with the NBA, because (1) compliance with both is physically possible, and (2) compliance with the CGCL is not an obstacle to the execution of the full purposes and objectives of Congress in enacting the NBA.

In analyzing a preemption claim, courts must "start with the assumption that the historic police powers of the States [are] not to be superseded by [federal law] unless that [is] the clear and manifest purpose of Congress." Rice v. Santa Fe Elevator Corp., 331 U.S. 218, 230, 67 S.Ct. 1146, 91 L.Ed. 1447 (1947); Cliff v. Payco General American Credits, Inc., 363 F.3d 1113, 1122 (11th Cir.2004); Maryland v. Louisiana, 451 U.S. 725, 746, 101 S.Ct. 2114, 68 L.Ed.2d 576 (1981). If the preemption claim is potentially valid, courts must narrowly interpret it. Medtronic, Inc. v. Lohr, 518 U.S. 470, 485, 116 S.Ct. 2240, 135 L.Ed.2d 700 (1996). That is because the power to preempt state law is an extraordinary power "that we must assume Congress does not exercise lightly." Gregory v. Ashcroft, 501 U.S. 452, 460, 111 S.Ct. 2395, 115 L.Ed.2d 410 (1991). One historic police power is consumer protection, which is an area traditionally regulated by the states. Cliff v. Payco General American Credits, Inc., 363 F.3d 1113, 1125 (11th Cir.2004); Florida Lime & Avocado Growers, Inc. v. Paul, 373 U.S. 132, 135, 83 S.Ct. 1210, 10 L.Ed.2d 248 (1963).

Preemption can occur in three ways: (1) when there is language revealing an explicit intent by Congress to preempt state law; (2) in the absence of explicit language, when the federal statute's structure and purpose or nonspecific statutory language nonetheless reveal a clear, but implicit, preemptive intent, i.e., where, based on the pervasiveness of the federal statute, it is reasonable to infer that Congress intended to leave no room for state law; or (3) when the federal law is in "irreconcilable conflict" with the state law, meaning either compliance with both laws is a physical impossibility or where the state law is an obstacle to the "accomplishment and execution of the full purposes and objectives of Congress." Barnett Bank v. Nelson, 517 U.S. 25, 31, 116 S.Ct. 1103, 134 L.Ed.2d 237 (1996) (holding that where a federal statute authorized an activity that the state statute forbid, the two laws were in irreconcilable conflict with one another).

The third type of preemption, "conflict preemption," is potentially at issue in this case. Conflict preemption encompasses two types of conflict: (1) where compliance with both the federal and state law is a physical impossibility, and (2) where compliance with the state law is an obstacle to the full purposes and objectives of Congress. Here, compliance with the CGCL and the NBA is not a physical impossibility. It is possible for Connecticut to regulate gift card sales more strictly than the federal government and for SPGGC to comply with both laws. Where the NBA is either silent or authorizes a particular activity that the CGCL restricts, SPGGC can physically comply with both.

Additionally, complying with both laws would not frustrate the purpose and objectives of Congress in enacting the NBA In defining the preemptive scope of statutes and regulations granting a power to national banks:

normally Congress would not want States to forbid, or to impair significantly, the exercise of a power that Congress explicitly granted. To say this is not to deprive States of the power to regulate national banks, where ... doing so does not prevent or significantly interfere with the national bank's exercise of its powers.

Id. at 33, 116 S.Ct. 1103. In addition to federal statutes, federal regulations also have preemptive effect. Wachovia Bank, N.A. v. Burke, 414 F.3d 305, 314 (2d Cir. 2005). That is because Congress has recognized the Office of the Comptroller of the Currency's ("OCC") power to preempt state laws by issuing opinion letters and interpretive rulings. Id. The OCC has issued a regulation providing that "[e]xcept where made applicable by Federal law, state laws that obstruct, impair, or condition a bank's ability to fully exercise its powers authorized under federal law do not apply to national banks." 12 C.F.R. § 7.4009(b) (2004).

SPGGC contends that the CGCL, in regulating expiration dates and fees associated with gift cards, conflicts with federal law in several major ways: (1) federal law allows national banks to charge non-interest fees; (2) federal law allows national banks to issue stored electronic value cards; and (3) federal law allows national banks to issue such cards with expiration dates. Indeed, the OCC has authorized national banks to impose fees on their customers: "[a] national bank may charge its customers non-interest charges and fees...." 12 C.F.R. § 7.4002 (2001). The OCC has also authorized national banks to provide electronic stored value systems. 12 C.F.R. § 7.5002(a)(3) (2004). Because the OCC explicitly authorizes national banks to charge its customers fees, any state law that impairs a national bank from exercising its federally authorized power to charge fees could arguably be preempted by the NBA. The rationale underlying that conclusion is that Congress has clearly expressed its intent for national banks to be regulated by federal authority. Wachovia Bank, 414 F.3d at 314. Complying with both laws could cause an irreconcilable conflict, because the OCC has ruled that, when it explicitly authorizes a national bank to exercise a power, a state may not infringe that authorization.

Notwithstanding the possibility that federal law might authorize national banks to engage in the activities described above, SPGGC's compliance with the CGCL as applied in this case is not an obstacle to the purposes and objectives of Congress in enacting the NBA. The purpose of the NBA is to regulate national banks, not SPGGC, which is a non-bank affiliate of a national bank, and the CGCL does not purport to regulate national banks.

The purpose of the NBA is to regulate national banks. Weiner v. Bank of King of Prussia, 358 F.Supp. 684, 687 (E.D.Pa.1973) (confirming that the purpose of the NBA is to regulate national banks and only national banks); Wiley v. Federal Land Bank of Louisville, 657 F.Supp. 964, 965 (S.D.Ind.1987); Criswell v. Production Credit Assoc., 660 F.Supp. 14, 16 (S.D.Ohio 1985) ("[i]t is well settled that the ...