Thursday, May 5, 2011

Breaking News: Federal Appeals Court Reverses Kentucky Travelers Check Injunction

The U.S. Court of Appeals for the Sixth Circuit released an opinion today in which it reversed a Kentucky federal court decision preventing Kentucky from shortening the dormancy periods for traveler's checks to seven years down from 15.  In so doing, the court ruled that the district court erred by not scrutinizing under the legislation under a straightforward "rational basis" standard of review.  Under a "rational basis" standard, a court will not invalidate legislation so long as it is in furtherance of some legitimate government purpose.  In the earlier proceedings, the district court (i.e., the lower court) ruled that the legislation was required to pass a more restrictive standard. 

This does not end the case.  The appeals court sent the case back to the district court to consider AmEx's other challenges to the law.  The court did not decide those claims in its prior opinions because it had invalidated the law on due process grounds.

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