In a June 28, 2011 decision by Justice Warshawsky, the court denied the defendants’ motion to dismiss a class action which alleged that the defendants engaged in deception and wrongful business practices when it charged monthly “dormancy fees” and an “account closure fee” for purchased gift cards. The defendants specifically asserted that the causes of action for breach of contract, breach of the implied covenant of good faith and fair dealing, indebtedness, unjust enrichment, and violation of GBL § 349 were preempted by federal regulation of banks chartered under the National Bank Act. The court disagreed, noting that several federal courts already addressed that very issue and held that nothing in the federal law preempted general statutes prohibiting deceptive practices. Finding that the National Bank Act does not exclusively regulate national banks and that federal law only preempts those state laws that specifically conflict with the National Bank Act, the court held that the class action complaint alleged claims predicated on state law of general applicability and there was no reason to conclude that GBL § 349 would interfere with the Office of the Comptroller of Currency’s regulation of banking operations.

Sheinkin v Simon Prop. Group, Inc. Sup Ct, Nassau County, June 28, 2011, Warshawsky, J, Index No. 022038/10