L & J Crew Station v. Banco Popular De Puerto Rico

• Decision Date: 20 August 2003
• Docket Number: No. CIV.2003-11.,CIV.2003-11.
• Citation: 278 F.Supp.2d 547
• Court: U.S. District Court — Virgin Islands
• Parties: L & J CREW STATION, LLC Plaintiff, v. BANCO POPULAR DE PUERTO RICO, and First Bank Puerto Rico, Defendants.

Page 547

278 F.Supp.2d 547

L & J CREW STATION, LLC Plaintiff, v. BANCO POPULAR DE PUERTO RICO, and First Bank Puerto Rico, Defendants.

No. CIV.2003-11.

District Court, Virgin Islands, D. St. Thomas and St. John.

August 20, 2003.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

Clive Rivers, St. Thomas, VI, for the plaintiff.

Gregory Hodges, St. Thomas, VI, for the defendants.

MEMORANDUM

MOORE, District Judge.

Defendants Banco Popular de Puerto Rico ["Banco Popular"] and FirstBank Puerto Rico ["FirstBank"] [collectively "Banks" or "defendants"] move to dismiss the first amended complaint of plaintiff L & J Crew Station, LLC ["L & J" or "plaintiff"] for failure to state a claim pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. For the reasons set forth below, I will grant defendants' motion to dismiss.

I. FACTUAL BACKGROUND

L & J opened two accounts, 193-041763 and 193-041861, with Banco Popular [collectively, the "Banco Popular Accounts"] on June 25, 2002 and July 12, 2002, respectively. In the process of opening these accounts, L & J signed addenda to the Deposit Accounts Agreement Handbook for Banco Popular [the "BP Handbook"], by which it acknowledged and agreed that

[t]he provisions of this Agreement will be in full force until one of the parties notifies the other of its intention to cancel the Service. Any of the Parties may cancel this Agreement upon written notification to the other. The Bank acknowledges the right to cancel the Service at any time. Depositor agrees that the cancellation notice provided by the Bank at least ten (10) days prior to the termination date will be considered reasonable notice. Notice of cancellation will be sent by regular mail. The Bank will not be liable for the payment of Payment Orders after the cancellation notice is mailed. Depositor is liable for charges or any other obligation incurred in relation to this Agreement, before the cancellation date is effective. Questions and concerns regarding this Agreement or the Addendum may be made by calling Popular Telebank.

When L & J opened the Banco Popular Accounts, it did not inform Banco Popular that it was in the money transmitting business. By August 2002, Banco Popular became concerned regarding the nature, volume, and amounts of the transactions passing through the Banco Popular Accounts. On August 26, 2002, Raymond L. Green ["Green"], Banco Popular's Operations Manager for the Virgin Islands Region, visited the plaintiff's business premises to, among other things, learn more about the nature of its business, its banking needs, and its financial controls and reporting. Green learned that L & J had little or no internal controls or procedures and that it had no, or did not follow, an anti-money laundering compliance program for money services businesses. As a result of that visit and subsequent telephone conversations between Banco Popular and L & J, Banco Popular sent plaintiff a letter dated September 30, 2002, giving L & J notice of Banco Popular's decision to terminate its banking services with plaintiff on the ground "that continued maintenance of L & J's accounts pose[d] an undue regulatory and compliance burden."

In response to the letter, plaintiff sent Banco Popular a letter dated October 7, 2002 from Express Padala (USA), Inc. ["Express Padala"], wherein Express Padala requested, on behalf of L & J, an extension of the deadline for account closing until October 31, 2002. On October 15, L & J itself petitioned Banco Popular by letter for a 60-day extension of the account closing deadline and advised that if an immediate closing of the accounts took place, it would be irreparably harmed. The following day, Banco Popular responded to plaintiff's letter stating that it would extend the account-closing deadline until October 31, 2002, provided that L & J acknowledged and agreed to certain conditions set forth in that letter, in particular notice of Express Padala's anti-money laundering compliance policies and procedures. Banco Popular also reserved the right to reject these compliance policies and procedures after review and proceed with the closing of L & J's account. On October 29, 2002, L & J provided Banco Popular with a certificate of Express Padala's qualification as a foreign corporation and a designation of Leo Lim d/b/a L & J as Express Padala's agent for service of process. After reviewing the documents submitted by plaintiff, Banco Popular informed L & J in a letter dated November 22, 2002 that it intended to proceed to close the Banco Popular Accounts. On December 4, 2002, Banco Popular closed the Banco Popular Accounts and remitted to L & J the balance remaining in these accounts at closing.

On November 21, 2002, L & J opened account number 7191381934 ["Account 1934"] at FirstBank. Just as with Banco Popular, L & J did not inform FirstBank that it was in the money services or transmitting business. In addition, plaintiff did not, tell FirstBank that Banco Popular had given notice of its intent to close L & J's accounts. By early December, FirstBank also became concerned about the nature, the volume, and the amounts of the transactions in Account 1934. On December 5, 2002, representatives of L & J and its counsel met with Ariane Joseph-Lewis ["Joseph-Lewis"], FirstBank's Manager of its USVI Branches. At this meeting, plaintiff disclosed to FirstBank, for the first time, that it was in the money transmitting business. Joseph-Lewis expressed concerns about whether FirstBank would be able to continue banking relations with L & J under these circumstances, but said that she would contact L & J after consulting with the bank's senior executive. Notwithstanding this statement of reservation regarding any continued banking relationship, on December 9, 2002, plaintiff managed to open another account at FirstBank, account number 7191382134 ["Account 2134"].

In opening both of these accounts [collectively the "FirstBank Accounts"], plaintiff executed an agreement that permitted FirstBank to close its accounts at will.

Closing Accounts. We may close your Account at any time in our sole discretion. FirstBank will not be required to provide advance written notice to you of our intent to close your Account, but if such notice is provided, FirstBank will not be required to pay checks or other orders of withdrawals drawn on your Account that are dated more than ten (10) business days after the notice is mailed to you. If your Account is closed, FirstBank will mail any balance on your account to your last known mailing address, as it appears in our records. You will be considered to have closed your savings account, if your savings account balance is drawn to zero at any time.

During the week of December 16, 2002, Joseph-Lewis informed plaintiff that FirstBank had a policy of not doing business with money transmitters and that FirstBank would be discontinuing business relations with L & J. On January 15, 2003, FirstBank sent L & J notice of its intent to close plaintiff's accounts by January 31, 2003. FirstBank later reconfirmed this decision by letter on January 30, 2003. Upon closing these accounts on January 31, FirstBank mailed plaintiff checks for the balances remaining in the FirstBank Accounts at closing. That same day, L & J sued defendants in this Court alleging various antitrust claims under the Sherman Act and the Clayton Act. This Court has federal question jurisdiction under section 22(a) of the Revised Organic Act of 1954¹ and 28 U.S.C. § 1331.

II. DISCUSSION

A. Rule 12(b)(6) Standard.

In considering the defendants' motion to dismiss under Rule 12(b)(6), a court "may dismiss [the] complaint if it appears certain the plaintiff cannot prove any set of facts in support of [her] claims which would entitle [her] to relief." See Bostic v. AT & T of the Virgin Islands, 166 F.Supp.2d 350, 354 (D.Vi.2001) (internal quotations omitted); see also Julien v. Committee of Bar Examiners, 34 V.I. 281, 286, 923 F.Supp. 707, 713 (D.Vi.1996); FED. R. CIV. P. 12(b)(6). I must accept as true all well-pled factual allegations and draw all reasonable inferences in the plaintiff's favor. See Bostic, 166 F.Supp.2d at 354; Julien, 34 V.I. at 286-87, 923 F.Supp. at 713.

B. Sections 2(e) and 3 of Clayton Act Only Apply to Commodities Bought for Resale.

1. Claims Under Section 2(e) Must Be Based on Sale of Commodities.

Count I of plaintiff's complaint alleges that the Banks have violated section 2(e) of the Clayton Act, 15 U.S.C. § 13(e). By its plain terms, section 2(e) applies only to the sale of "commodit[ies] bought for resale."

It shall be unlawful for any person to discriminate in favor of one purchaser against another purchaser or purchasers of a commodity bought for resale, with or without processing, by contracting to furnish or furnishing, or by contributing to the furnishing of, any services or facilities connected with the processing, handling, sale or offering for sale of such commodity so purchased upon terms not accorded to all purchasers on proportionally equal terms.

15 U.S.C. § 13(e). In order to state a claim for relief under the Clayton Act, therefore, the plaintiff's allegation must relate to discriminatory practices involving the purchase of some tangible commodity for resale. See Fleetway v. Public Serv. Interstate Transp. Co., 72 F.2d 761, 763 (3d Cir.1934) (affirming denial of injunctive relief where plaintiffs claim related to services and not commodities because the Clayton Act "clearly refers to a commodity such as merchandise"); Kennedy Theater Ticket Serv., v. Ticketron, Inc., 342 F.Supp. 922 (E.D.Pa.1972) (affirming dismissal of complaint where plaintiffs claims related to services, not commodities); Gaylord Shops, Inc. v. Pittsburgh Miracle Mile Town & Country Shopping Ctr., Inc., 219 F.Supp. 400, 403 (W.D.Pa.1963) (holding that there can be no violation of the Clayton Act "where the agreement is not for the transfer of...