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Inc. v. Paymentech, LLC

United States District Court, E.D. Missouri, Eastern Division

August 2, 2019

MNG 2005, INC., Plaintiff,
v.
PAYMENTECH, LLC, et al., Defendants.

          MEMORANDUM AND ORDER

          JOHN A. ROSS UNITED STATES DISTRICT JUDGE

         This matter is before the Court on Motions to Dismiss filed by Defendants Paymentech, LLC (Doc. 46), JP Morgan Chase Bank, N.A. (“Chase”) (Doc. 56), and Visa USA, Inc. (“Visa”) (Doc. 58). The motions are fully briefed (Docs. 47, 55, 59, 63-66), and ready for disposition. Because the motions involve similar factual issues and legal arguments, the Court will consider them together.

         Background

         Plaintiff makes the following allegations in its Amended Complaint (Doc. 24): Plaintiff is a Missouri corporation operating an online cooking-oil business. In April, 2018, Plaintiff entered into a contract with Chase and Paymentech-a wholly-owned subsidiary of Chase-for credit card processing services (the “Merchant Agreement”).[1] (Doc. 57-1.)

         Under the TERMS AND CONDITIONS of the Merchant Agreement, Plaintiff agreed to comply with “all applicable Payment Brand Rules in effect from time to time.” (Doc. 59-1 at § 1.3(a).) In addition, Plaintiff promised it would not “submit[] any Transaction that [it] knows or should have known to be either fraudulent, illegal, [or] damaging to the Payment Brand(s).” (Id. at § 1.4(n).) Likewise, Plaintiff authorized Chase and Paymentech to “temporarily suspend or delay payment to [Plaintiff] of amounts due under this Agreement, ” until Plaintiff satisfies its obligations under the Merchant and “executes all documents reasonably requested by Chase [and] Paymentech.” (Id. at § 4.6(q)(i)-(ii).) Finally, Plaintiff agreed that Chase and Paymentech “may terminate [the Merchant Agreement] immediately if . . . [Plaintiff] engages in conduct that creates or could tend to create harm or loss to the goodwill of any Payment Brand.” (Id. at § 10.3(i)(i).) Visa is a “Payment Brand.” (Id. at § 18.)

         Less than one month after entering into the Merchant Agreement, Chase stopped processing Plaintiff's credit card transactions. Prior to that, Chase withheld more than $66, 000 in payments related to purchases by Plaintiff's customers using Visa cards. Chase informed Plaintiff that it had stopped processing transactions and would withhold the payments pursuant to Sections 4.6 and 10.3 of the Merchant Agreement, concluding that the transactions “tend to create harm or loss to the good will of the payment brand.” (Id. at ¶ 13.) Chase represents that it took action after it was informed by Visa of potentially harmful transactions. (Doc. 57 at 3.)

         Plaintiff filed suit in Missouri state court and obtained a temporary restraining order against Defendants, prohibiting them from withholding payments and from “making false and defamatory statements about Plaintiff that Plaintiff is engaged in criminal behavior.” (Doc. 1-1 at 23.) Defendants removed the case to this Court on the basis of diversity jurisdiction and the temporary restraining order was dissolved by consent of the parties. (Docs. 1, 22.)

         Thereafter, Plaintiff was granted leave to file an Amended Complaint, in which it advanced five claims for relief:

Count I - Breach of Contract by Paymentech and Chase;
Count II - Libel and Slander by Paymentech;
Count III - Conversion by Paymentech;
Count IV - Breach of Contract by Visa; and
Count VI[2] - Tortious Interference with Contract by Paymentech, Chase, and Visa.

         All three Defendants filed motions to dismiss, arguing that the cessation of processing services and withholding of fees were expressly authorized by the Merchant Agreement and that because none of them was aware of any contract between Plaintiff and any third party they could not be liable for interference.

         Legal Standards

         To survive a motion to dismiss under Rule 12(b)(6), “a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A claim is facially plausible “when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. (citing Twombly, 550 U.S. at 556). “While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff's obligation to provide the ‘grounds' of his ‘entitle[ment] to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Twombly, 550 U.S. at 555, 127 S.Ct. 1955 (alteration in original) (citations omitted). “When ruling on a motion to dismiss ...


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