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Roller v. Red Payments L.L.C.

United States District Court, E.D. Pennsylvania

August 12, 2019

BRIAN ROLLER d/b/a KALOS STREET L.L.C., Plaintiff,
v.
RED PAYMENTS L.L.C. and FIRST DATA GLOBAL LEASING, Defendants.

          MEMORANDUM OPINION

          Goldberg, J.

         This is a putative class action asserting claims for, among other things, fraud and unjust enrichment against two companies that provide credit and debit card processing equipment and services to merchants. The named Plaintiff, Brian Roller, owns a business that entered into an agreement with Defendants, Red Payments LLC (“Red Payments”) and First Data Global Leasing (“First Data”), to lease certain equipment. Thereafter, according to Plaintiff, he received and was charged for additional equipment that he did not agree to lease. Defendants allegedly refused to refund Plaintiff for these charges, continued to demand that Plaintiff pay for the unwanted equipment, and, when Plaintiff refused, referred the matter to a debt collector.

         First Data has moved to transfer this case to the United States District Court for the Eastern District of New York, pursuant to 28 U.S.C. § 1404(a), relying on a forum selection clause contained in a booklet that First Data contends was incorporated by reference into the parties' agreement. Plaintiff opposes transfer, arguing, among other things, that he never received the booklet containing the clause, and that this matter is not within the scope of the forum selection clause.

         For the reasons that follow, First Data's motion will be granted, and I will transfer the entire case to the Eastern District of New York.

         I. FACTUAL & PROCEDURAL BACKGROUND

         The following facts are derived from Plaintiff's Class Action Complaint and the parties' briefs on the transfer motion, along with the exhibits attached thereto.

         Plaintiff Brian Roller is a Pennsylvania resident who operates a retail gym in Broomall, Pennsylvania, through his company, Kalos Street, L.L.C. Defendants are Red Payments, a New York company, and First Data, a Delaware company with its principal place of business in Georgia. (Compl. ¶¶ 19-21.)

         Red Payments and First Data are in the business of providing credit and debit card processing equipment and services to merchants whose customers pay by card. Red Payments acts as a middleman for First Data by “marketing and selling payment processing services run by First Data. . . . Red Payments signs up small businesses, offering payment processing services to merchants throughout the country and customer service on those accounts.” First Data “actually performs the payment processing services sold by Red Payments, ” and “leases or sells the . . . equipment to facilitate credit or debit card transactions (e.g., card readers), and does all the invoicing and billing for the payment processing performed.” (Compl. ¶¶ 31, 34.)

         In the summer of 2016, Plaintiff decided to obtain card processing equipment and services through Red Payments, after being solicited by one of its sales representatives. Thereafter, on August 22, 2016, Plaintiff executed a document entitled “Merchant Application & Agreement.” Contained in this three-page agreement is a “Lease Order, ” providing that Plaintiff would lease from First Data certain card-processing equipment-specifically, a “Gateway Virtual Terminal” and a “USB Card Swiper.” (I will refer to this agreement hereinafter as the “Gateway Merchant Agreement.”) Plaintiff received the equipment listed in the Gateway Merchant Agreement and began using it for processing card payments. (Compl. ¶¶ 39-40, Ex. A.)

         According to the Complaint, “within the first week” of service, Plaintiff received a shipment containing additional card-processing equipment-specifically, “mobile payment card readers” that are “referred to as Vx520s.” Plaintiff alleges that he did not request this equipment or agree to lease it, but that Defendants nevertheless began to charge him for it. Plaintiff allegedly protested to his Red Payments sales representative, who allegedly responded that “the equipment was part of a scam perpetrated by Defendants to slam him with a second account.” (Compl. ¶¶ 42, 44.)

         Plaintiff claims that he made several failed attempts to obtain a refund from Defendants for these additional charges. Plaintiff also alleges that he refused to pay further invoices and that he “switched to a new payment processor, ” after which Red Payments added a cancelation fee to his account. According to Plaintiff, Defendants have continued to demand payment, and have sent the unpaid invoices to a debt collector. (Compl. ¶¶ 48, 50.)

         For its part, Red Payments asserts that Plaintiff signed a separate document with a lease order covering the allegedly unwanted Vx520s. This document, like the Gateway Merchant Agreement, is entitled “Merchant Application and Agreement.” And the document appears identical to the Gateway Merchant Agreement in every other way, except that it lists the Vx520s rather than the Gateway Virtual Terminal and USB Card Swiper as the equipment to be leased. Red Payments has provided Plaintiff with a copy of this document, which I will refer to hereinafter as the “Vx520 Merchant Agreement.” But Plaintiff maintains that this document is a forgery.[1]

         Plaintiff initiated this putative class action, asserting claims on behalf of himself and other “United States persons or entities for whom Defendants . . . opened an account . . . for payment processing services . . . that was never used . . . and was opened without that person or entity's lawfully-obtained consent.” (Compl. ¶ 53.) In addition to a claim seeking a judicial declaration that no binding contract exists as to the Vx520s, Plaintiff asserts claims for unjust enrichment, conversion, fraud, negligence, and violations of the Fair Credit Reporting Act and Electronic Funds Transfer Act.

         First Data has moved to transfer this matter to the United States District Court for the Eastern District of New York, pursuant to 28 U.S.C. § 1404(a), based on a forum selection clause that First Data contends Plaintiff agreed to when executing the Gateway Merchant Agreement.[2] Specifically, First Data contends that the Gateway Merchant Agreement incorporated by reference a document referred to as the “MA&A booklet” (hereinafter “the Booklet”). The Gateway Merchant Agreement includes an acknowledgment that Plaintiff received the Booklet and agreed to the terms contained in it. This acknowledgement appears just above Plaintiff's signature:

By its signature below, Client [i.e., Plaintiff] acknowledges that it has received (either in person, by facsimile, or by electronic transmission) the complete MA&A booklet consisting of 12 pages (including the confirmation).
Merchant [i.e., Plaintiff] further acknowledges reading and agreeing to all terms in the MA&A booklet, which shall be incorporated into the MA&A [i.e., Gateway Merchant Agreement] . . . .
Merchant understands that a copy of the MA&A terms booklet is also available for downloading from the Internet at:
https://www.mybackofficetools.com

(Compl., Ex. A., at 4.)

         Plaintiff did not attach the Booklet to his Complaint. But First Data has attached to its transfer motion a document that it contends is the Booklet. Within the Booklet is a two page “Lease Agreement” that includes both a choice-of-law clause and a forum selection clause, the latter of which is italicized below:

1.15 Governing Law; Venue; Miscellaneous. This Lease Agreement shall be governed by and will be construed in accordance with the laws of the State of New York (without applying its conflicts of laws principles). The exclusive venue for any actions or claims arising under or related to this Lease Agreement shall be in the appropriate state of federal court [sic, read “state or federal court”] located in Suffolk County, New York. If any part of this Lease Agreement is not enforceable, the remaining provisions will remain valid and enforceable.

(First Data.'s Mot., Ex. C., at 12, 14 (emphasis added).)

         Plaintiff opposes transfer, arguing that: (1) this action is outside the scope of the forum selection clause; (2) the Booklet containing the forum selection clause was not incorporated into the Gateway Merchant Agreement, because the Booklet was never provided; (3) First Data lacks standing to enforce the forum selection clause because it is not a party to the Booklet; and (4) the Booklet never went into effect because it was not signed by an entity called BMO Harris Bank, an entity that is not a party to this case.

         For the reasons set out below, I reject each of Plaintiff's arguments, and will enforce the forum selection clause, transferring this matter in its entirety to the Eastern District of New York.

         II. LEGAL STANDARD

         Under 28 U.S.C. § 1404(a), a district court may transfer an action to any other district “where it might have been brought” if this transfer is “for the convenience of parties and witnesses” and “in the interest of justice.” 28 U.S.C. § 1404(a). A court faced with a request to transfer venue under § 1404(a) typically undertakes a balancing test comprised of various public and private interest factors, including the preferences of the parties. See Jumara v. State Farm Ins. Co., 55 F.3d 873, 877-878 (3d Cir. 1995). But where the parties contractually agreed as to the appropriate forum for resolution of the dispute-through a valid forum selection clause-the analysis is different. See In re McGraw-Hill Global Educ. Holdings LLC, 909 F.3d 48, 57 (3d Cir. 2018). In that case, the court “does not consider arguments about the parties' private interests, ” but “[i]nstead . . . may consider arguments about public-interest factors only.” Id. (internal quotation marks omitted) (quoting Atl. Marine Constr. Co. v. U.S. Dist. Court, 571 U.S. 49, 64 (2013)).

         The public-interest factors include: (1) the enforceability of the judgment; (2) practical considerations that could make the trial easy, expeditious, or inexpensive; (3) considerations of administrative difficulty resulting from court congestion; (4) the local interest in deciding controversies at home; (5) the public policies of the fora; and (6) the familiarity of the trial judge with the applicable state law in diversity cases. Jumara, 55 F.3d at 879. But as the Supreme Court has explained, these factors “will rarely defeat a transfer motion” premised on a valid forum selection clause, and thus, “[i]n all but the most unusual cases, the parties will be held to their bargained-for choice of forum.” Atl. Marine Constr. Co., 571 U.S. at 64.

         The party seeking a transfer under § 1404(a) generally “bears the burden of persuasion.” In re McGraw-Hill Global Educ. Holdings LLC, 909 F.3d at 57. But where there is a valid forum selection clause covering the action, the party seeking to avoid the clause “must bear the burden of showing that the public-interest factors overwhelmingly disfavor a transfer.” Atl. Marine Constr. Co., 571 U.S. at 67.

         In deciding a § 1404(a) motion, a court is not limited to the pleadings, and may consider affidavits and other evidence. See Fellner ex rel. Estate of Fellner v. Phila. Toboggan Coasters, Inc., No. 05-cv-1052, 2005 WL 2660351, at *4 (E.D. Pa. Oct. 18, 2005); see also Atl. Marine Constr. Co., 571 U.S. at 61 n.4 (explaining that, unlike a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), a district judge considering a motion to transfer under § 1404(a) may resolve disputed issues of material fact).[3]

         III. DISCUSSION

         In opposing First Data's motion to transfer, Plaintiff challenges only the existence and applicability of the forum selection clause; he does not offer any reason why, assuming the forum selection clause is binding and applicable, the public-interest factors counsel against enforcing it under § 1404(a).

         Plaintiff offers four reasons why the forum selection clause is inapplicable to this action: (1) this action is outside the scope of the forum selection clause; (2) the Booklet containing the forum selection clause was not incorporated into the Gateway Merchant Agreement, because the Booklet was never provided to him; (3) First Data lacks standing to enforce the forum selection clause because it is not a party to the Booklet; and (4) the Booklet never became effective because it was not signed by an entity called BMO Harris Bank, an entity that is not a party to this case. For the following reasons, none of these arguments prevents transfer.

         A. This Action Is Within the Scope of the Forum Selection Clause.

         Plaintiff first argues that this action is outside the scope of the forum selection clause contained in the Booklet. Plaintiff's argument is two-fold. First, Plaintiff contends that the Vx520 Merchant Agreement is a forgery, and thus the terms of the Booklet-including the forum selection clause contained in it-cannot be applied to Plaintiff's claims concerning the allegedly unwanted Vx520s. This argument is easily dispensed with, as First Data does not rely on the allegedly forged Vx520 Merchant Agreement in seeking enforcement of the forum selection clause. Rather, First Data contends that the Booklet was incorporated by reference into ...


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