Urging Rejection of “Emergency” Regulations of the Massachusetts Treasurer Effectively Negating the Business-To-Business Exemption under the Massachusetts Abandoned Property Statute
NELF attempted without success to file a memorandum of law on behalf of itself and the Associated Industries of Massachusetts supporting Biogen’s position in this appeal of an administrative decision. Judge van Gestel, sitting in the Suffolk County Business Litigation Session, declined to accept amici’s memorandum, citing the limited nature of judicial review of administrative decisions and the rarity of amicus participation at the trial-court level. The court, in a February 27 Memorandum and Order, nonetheless allowed Biogen’s motion for judgment on the pleadings.
At issue was the so-called “business-to-business” exemption under the Massachusetts Abandoned Property Act, G.L. c.200A, § 5, excluding from the Act’s purview “any outstanding credit balances” between businesses arising in the ordinary course of business, including outstanding accounts payable remaining on old books. The exemption was enacted as an amendment to the Act in 2000 in the wake of attempts by a number of state treasurers to treat such credit balances as abandoned property that must be transferred to the state. AIM and others had argued successfully for the statutory exemption on the dual grounds that these outstanding accounts payable remaining on old books are often in error and, to the extent they are accurate, businesses have the means and incentive to recover any monies owed without state intervention. In 2001 then State Treasurer O’Brien promulgated regulations appropriately applying the exemption to “credits either current or past that are or were owing to a vendor or commercial customer . . . .” In 2004, however, Treasurer Cahill, during an ongoing audit of Biogen, issued “emergency” regulations redefining the exemption as applying only to “[o]utstanding balances that are recorded as current accounts receivable or accounts payable . . . .”
NELF and AIM argued in their amicus memorandum, inter alia, that Treasurer Cahill’s new regulatory definition rendered the statutory exemption meaningless. Since property is not deemed abandoned under the Act until the passage of three years, “current” accounts payable are by definition not abandoned property and require no exemption. While Judge van Gestel did not address this point, he declined to apply Treasurer Cahill’s regulation retroactively to Biogen. He also noted that Treasurer O’Brien’s 2001 regulations “best comport” with the apparent intent and purpose of the statutory exemption and rejected Treasurer Cahill’s contrary interpretation on the ground that it would “hobble the statute’s effectiveness.” Should the Treasurer appeal Judge van Gestel’s decision, NELF and AIM will have an opportunity to present their arguments in an amicus brief.
NELF attempted without success to file a memorandum of law on behalf of itself and the Associated Industries of Massachusetts supporting Biogen’s position in this appeal of an administrative decision. Judge van Gestel, sitting in the Suffolk County Business Litigation Session, declined to accept amici’s memorandum, citing the limited nature of judicial review of administrative decisions and the rarity of amicus participation at the trial-court level. The court, in a February 27 Memorandum and Order, nonetheless allowed Biogen’s motion for judgment on the pleadings.
At issue was the so-called “business-to-business” exemption under the Massachusetts Abandoned Property Act, G.L. c.200A, § 5, excluding from the Act’s purview “any outstanding credit balances” between businesses arising in the ordinary course of business, including outstanding accounts payable remaining on old books. The exemption was enacted as an amendment to the Act in 2000 in the wake of attempts by a number of state treasurers to treat such credit balances as abandoned property that must be transferred to the state. AIM and others had argued successfully for the statutory exemption on the dual grounds that these outstanding accounts payable remaining on old books are often in error and, to the extent they are accurate, businesses have the means and incentive to recover any monies owed without state intervention. In 2001 then State Treasurer O’Brien promulgated regulations appropriately applying the exemption to “credits either current or past that are or were owing to a vendor or commercial customer . . . .” In 2004, however, Treasurer Cahill, during an ongoing audit of Biogen, issued “emergency” regulations redefining the exemption as applying only to “[o]utstanding balances that are recorded as current accounts receivable or accounts payable . . . .”
NELF and AIM argued in their amicus memorandum, inter alia, that Treasurer Cahill’s new regulatory definition rendered the statutory exemption meaningless. Since property is not deemed abandoned under the Act until the passage of three years, “current” accounts payable are by definition not abandoned property and require no exemption. While Judge van Gestel did not address this point, he declined to apply Treasurer Cahill’s regulation retroactively to Biogen. He also noted that Treasurer O’Brien’s 2001 regulations “best comport” with the apparent intent and purpose of the statutory exemption and rejected Treasurer Cahill’s contrary interpretation on the ground that it would “hobble the statute’s effectiveness.” Should the Treasurer appeal Judge van Gestel’s decision, NELF and AIM will have an opportunity to present their arguments in an amicus brief.
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