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Liberty Salad, Inc. v. Groundhog Enterprises, Inc.

United States District Court, E.D. Pennsylvania

July 7, 2017

LIBERTY SALAD, INC.,
v.
GROUNDHOG ENTERPRISES, INC.

          MEMORANDUM AND ORDER

          Ditter, J.

         The plaintiffs, Liberty Salad, Inc. and 18th Street Salad, Inc., are two businesses that engaged the defendant Groundhog Enterprises, Inc., to provide debit and credit card payment processing services. Plaintiffs have filed a class action complaint seeking a declaratory judgment that no contract between the parties exists or if there is, that certain terms of the contract are invalid. Plaintiffs also raise claims of unjust enrichment, breach of contract, and fraud. Defendant has filed a motion to dismiss the complaint.

         For the reasons discussed below, the motion to dismiss will be denied.

         I. Factual background

         Plaintiffs contend they represent merchants who have been unfairly and deceptively overcharged for debit and credit card payment processing services by the defendant. Plaintiffs claim Defendant entices merchants to engage them with promises of transparency and substantial savings, including promising a single, all-inclusive flat rate. Once the merchant switches to the defendant's service, additional, unexplained fees are imposed unilaterally.

         To obtain the services of the defendant, merchants complete a pre-printed application form. Defendant contends that the Application, along with the “Program Guide” available on its web address, (collectively referred to as the Agreement), constitute the contract between the parties. However, the Application provides, in part:

By signing below, Merchant and the Undersigned agree, acknowledge and understand that: a) The Agreement will not take effect unless and until Merchant has been approved by Bank and IPayment and Merchant is assigned and issued a Merchant Account Number; b) Any alteration, strikeover, or modification to the preprinted text of this Application or any part of the Agreement shall be of no effect whatsoever and at Bank's and IPayment's discretion may render the Agreement invalid . . .

         Below there is a place for the Bank and a separate place for Ipayment to sign showing Approval/Acceptance. Neither is signed.

         Clearly then the Agreement, i.e. the Application and the Program Guide, did not take effect which ends all of Defendant's contract assertions. However, it is undisputed that although it never signed any of the forms it provided to Plaintiffs, Defendant is and has been processing Plaintiffs' credit card transactions.

         2. Standard of Review

         I may dismiss a complaint for failure to state a claim only if it is clear that no relief would be granted under any set of facts consistent with the allegations of the complaint. For purposes of this motion, I accept as true all well-pleaded facts and will view them in the light most favorable to the nonmoving party.

         3. Discussion

         Plaintiffs have raised claims that first, seek to invalidate any contract between the parties and/or specific provisions of the alleged contract, and alternatively, raise breach of contract claims.

         Plaintiffs' first two claims are based on a finding that there is no enforceable contract between the parties. In Count I, Plaintiffs seek a declaration the there is no binding contract between the parties. In Count 2, Plaintiffs assert that since there was no ...


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