SPGGC, Inc. v. NHAG

2005 DNH 042

• Court: District Court, D. New Hampshire
• Decided: March 14, 2005
• Docket: CV-04-420-SM
• Status: Published

Opinion

SPGGC, Inc. v. NHAG CV-04-420-SM 03/14/05 UNITED STATES DISTRICT COURT

DISTRICT OF NEW HAMPSHIRE

SPGGC, Inc., Plaintiff

v. Civil No. 04-420-SM Opinion No. 2005 DNH 042 Kelly A. Ayotte, Attorney General, Defendant

O R D E R

SPGGC, Inc. brings this action seeking a judicial

declaration that provisions of New Hampshire's Consumer

Protection Act are preempted by the National Bank Act and,

therefore, do not apply to it as a seller of prepaid gift cards

issued by a national bank. It also seeks a declaration that

various provisions of that state statute, if enforced against it,

would violate the Commerce Clause of the United States

Constitution. The State moves to dismiss SPGGC's complaint,

asserting that this court lacks subject matter jurisdiction

and/or that SPGGC's claims are barred by the Eleventh Amendment.

See Fed. R. Civ. P. 12(b)(1). SPGGC objects. Standard of Review

When faced with a motion to dismiss for lack of subject

matter jurisdiction under Rule 12(b) (1), the plaintiff, as the

party invoking the court's jurisdiction, has the burden to

establish by competent proof that such jurisdiction exists. See

Bank of N.H. v. United States, 115 F. Supp. 2d 214, 215 (D.N.H.

2000). And, in determining whether that burden has been met, the

court must construe the complaint liberally, "treating all well-

pleaded facts as true and indulging all reasonable inferences in

favor of the plaintiff." Aversa v. United States, 99 F.3d 1200,

1210 (1st Cir. 1996). Importantly, however, the court may also

consider evidence submitted by the parties, such as depositions,

exhibits, and affidavits, without converting the motion to

dismiss into one for summary judgment.

In a situation where the parties dispute the predicate facts allegedly giving rise to the court's jurisdiction, the district court will often need to engage in some preliminary fact-finding. In that situation, the district court enjoys broad authority to order discovery, consider extrinsic evidence, and hold evidentiary hearings in order to determine its own jurisdiction. In such a case, the district court's findings of fact will be set aside only if clearly erroneous.

2 Skwira v. United States, 344 F.3d 64, 71-72 (1st Cir. 2003)

(citation and internal quotation marks omitted), cert. denied,

124 S.Ct. 2836 (2004) .

Background

SPGGC, Inc., a division of the Simon Property Group, is

responsible for issuing, distributing, and/or selling the Simon

Gift Card. The Simon Gift Card is a "stored-value card," issued

through the Bank of America. It is a "VISA" co-branded card

between the Bank of America and SPGGC, and bears the "VISA" logo.

It is accepted wherever VISA debit cards are accepted.

In November of 2004, the State notified Simon Property Group

that some of the terms and conditions under which the Simon Gift

Cards were being sold violated the New Hampshire Consumer

Protection Act, N.H. Rev. Stat. Ann. 358-A (the "CPA").

Specifically, the State informed Simon Property Group that, by

including an expiration date on the Simon Gift Card, and by

charging administrative fees (which reduced the redeemable value

of the card), it was violating state law. Parenthetically, the

court notes that the attorneys general of at least two other

3 states - New York and Massachusetts - share the view that various

terms and conditions applicable to the Simon Gift Card violate

state consumer protection laws (though it appears that the State

of New York recently settled its claims against Simon Property

Group and/or SPGGC).

Here, in response to the State's notice, and in anticipation

of state court litigation (which the Attorney General

threatened), SPGGC filed this action, seeking declaratory and

injunctive relief. Almost immediately thereafter, the State

filed an enforcement action against Simon Property Group (SPGGC's

parent) in state court, seeking to halt the sale of Simon Gift

Cards in New Hampshire.

As noted above, the State moves to dismiss SPGGC's

petition, asserting that while SPGGC "has pled that the CPA is

preempted by federal law, and that the enforcement of the CPA

would violate the Commerce Clause of the U.S. Constitution . . .

[t]hese are in fact defenses to the State's action, and as such

do not provide this court with subject matter jurisdiction."

State's Memorandum in Support of Motion to Dismiss (document no.

4 9) at 2. In the alternative, the State asserts that SPGGC's

claims are barred by the Eleventh Amendment. The court disagrees

on both points.

Discussion

In its amended complaint, SPGGC alleges that: (1) the

National Bank Act preempts those portions of the New Hampshire

CPA allegedly violated by the Simon Gift Card; and (2) to the

extent the State is attempting to apply provisions of the CPA to

the Simon Gift Card, the CPA interferes with interstate commerce,

in violation of the Commerce Clause of the United States

Constitution. Those allegations are plainly sufficient to invoke

this court's federal guestion subject matter jurisdiction. See

generally 28 U.S.C. § 1331. See also Verizon Md., Inc. v. PSC,

535 U.S. 635, 642-43 (2002); Shaw v. Delta Air Lines, Inc., 463

U.S. 85, 96 n. 14 (1983).

5 While the merits of SPGGC's claims are open to debate,1

those claims are not "so insubstantial, implausible, foreclosed

by prior decisions of [the Supreme] Court, or otherwise

completely devoid of merit as not to involve a federal

controversy." Steel Co. v. Citizens for a Better Env't, 523 U.S.

83, 89 (1998) (quoting Oneida Indian Nation v. County of Oneida,

414 U.S. 661, 666 (1974)). Nor are SPGGC's claims barred by the

Eleventh Amendment, as the State suggests. See, e.g., Verizon,

535 U.S. at 645-46.

Conclusion

Whether SPGGC will prevail on its preemption and commerce

clause claims is not a question currently before the court. The

sole question presented by the State's motion is whether SPGGC

has properly invoked this court's subject matter jurisdiction.

It has.

1 See, e.g.. Exhibit A to Defendant's motion to supplement its motion to dismiss (document 18), Letter from Daniel P. Stipano, Acting Chief Counsel to the Comptroller of the Currency, to Massachusetts Attorney General Thomas Reilly (expressing the view that the state consumer protection act claims asserted against Simon Property Group in the Massachusetts action are not preempted by the National Banking Act).

6 Accordingly, for the foregoing reasons, as well as those set

forth in plaintiff's memorandum in opposition to the motion to

dismiss (document no. 21), defendant's motion to dismiss

(document no. 9) is denied. Additionally, plaintiff's motion for

preliminary injunctive relief (document no. 3) is denied as moot.

See Plaintiff's memorandum in opposition to the motion to dismiss

at 6 n.3 (conceding that "the Attorney General's suit against

[Simon Property Group], filed the day after [SPGGC's federal]

Complaint, mooted the particular form of injunctive relief

[SPGGC] initially requested.").

SO ORDERED.

Steven J.'McAuliffe Chief Judge

March 14, 2005

cc: Margaret M. Pinkham, Esq. Paul W. Shaw, Esq. Marc R. Scheer, Esq. David A. Rienzo, Esq.