Premier Payments Online, Inc. v. Payment Sys. Worldwide, Civil Action Nos. 11–3429
| Decision Date | 27 January 2012 |
| Docket Number | 11–5272.,Civil Action Nos. 11–3429 |
| Citation | 848 F.Supp.2d 513 |
| Parties | PREMIER PAYMENTS ONLINE, INC., Plaintiff, v. PAYMENT SYSTEMS WORLDWIDE, Centerline International, LLC, Amtrak International, S.A., and Patriarc Holdings, Inc., Defendants. Payment Systems Worldwide, Plaintiff, v. Premier Payments Online, Inc., Defendant. |
| Court | U.S. District Court — Eastern District of Pennsylvania |
OPINION TEXT STARTS HERE
Bruce S. Marks, Maria Temkin, Thomas C. Sullivan, Marks & Sokolov, LLC, Philadelphia, PA, for Plaintiff.
Eric A. Linden, Jaffe Raitt Heuer & Weiss PC, Southfield, MI, Joseph J. Langkamer, Ralph G. Wellington, Schnader Harrison Segal and Lewis L.L.P., Philadelphia, PA, for Defendants.
MEMORANDUM RE: PREMIER PAYMENT ONLINE INC.'S MOTION TO DISMISS AND FOR A MORE DEFINITE STATEMENT
This case arises out of transactions between Premier Payments Online, Inc. (“PPO”), a Pennsylvania corporation that acts as an intermediary with banks to provide credit card processing services to merchants, and Payment Systems Worldwide (“PSW”) and Centerline International, LLC (“Centerline”), a California corporation and a Nevada limited liability company with a common owner that resell payment processing services to merchants. Under certain purported agreements, Centerline and, subsequently, PSW referred merchants to PPO in exchange for commissions on the fees PPO earned from the merchants. In June 2009, PPO began withholding fees allegedly owed to PSW due to actual and potential chargebacks by merchants.
On May 26, 2011, PPO commenced a civil action in this Court, No. 11–CV–3429 (the “Pennsylvania Action”), by filing a complaint (the “Pennsylvania Complaint”) against PSW and Centerline, among others, asserting causes of action for breach of contract, unjust enrichment, misrepresentation, and declaratory relief.1 About a month later, on June 29, 2011, PSW and Centerline moved to dismiss the Pennsylvania Complaint for lack of jurisdiction and for failure to state a claim. (No. 11–CV–3429, ECF No. 7.) That same day, PSW commenced a separate civil suit in the United States District Court for the Eastern District of California, No. 11–CV1082 (the “California Action”), by filing a complaint (the “California Complaint” or “Ca. Compl.”) against PPO, asserting causes of action for willful failure to pay commissions under the California Independent Wholesale Sales Representatives Contractual Relations Act, Cal. Civ.Code § 1738.15 (the “California Act” or the “Act”) (Count I), breach of contract (Count II), unjust enrichment (Count III), and declaratory relief (Count IV). Centerline is not a plaintiff in the California Action. On July 25, 2011, while PSW's and Centerline's motion to dismiss the Pennsylvania Complaint was still pending, PPO moved this Court to stay the California Action. (No. 11–CV–3429, ECF No. 13.)
On August 12, 2011, following briefing by the parties, the Court held oral argument on both the motion to dismiss and the motion to stay. The Court questioned counsel about a footnote in PSW's and Centerline's brief in response to PPO's motion to stay indicating that PSW and Centerline “have no desire to litigate in two fora” and “would stipulate to transfer the California action to Pennsylvania and consolidate it with [the Pennsylvania Action] if this Court does not grant [their] Motion to Dismiss.” (No. 11–CV–3429, ECF No. 17 n. 1.) The Court noted that the Pennsylvania Action and the California Action are basically mirror images of one another, and explained that it was authorized to stay the California Action under the first-filed rule. The parties discussed whether Pennsylvania's or California's choice-of-law rules would apply to the California Action if it were transferred to this Court, an issue that the Court explained did not need to be resolved at that time. Following this discussion, PSW and Centerline agreed to file a motion in the Eastern District of California to transfer the California Action to this Court and consolidate it with the Pennsylvania Action. On August 17, 2011, the parties stipulated to transfer the California Action to this Court, and it was docketed as a separate civil action (No. 11–CV–5272).
That same day, the Court issued an opinion, denying PPO's motion to stay as moot and noting that “[o]nce the California Action is transferred here, the Court anticipates realigning the parties so that the complaint in the California Action becomes a counterclaim in this action.” Premier Payments Online, Inc. v. Payment Sys. Worldwide, No. 11–CV–3429, 2011 WL 3652442, at *1 & n. 2 (E.D.Pa. Aug. 18, 2011). In the opinion, the Court also denied PSW's and Centerline's motion to dismiss. Id. at *4–*7.
On September 1, 2011, PSW and Centerline filed a counterclaim (the “Pennsylvania Counterclaim” or “Pa. Countercl.”) in the Pennsylvania Action, asserting causes of action for breach of contract (Counterclaim Count I), unjust enrichment (Counterclaim Count II), declaratory relief (Counterclaim Count III), and conversion (Counterclaim Count IV). (No. 11–CV–3429, ECF No. 29.) The allegations supporting the causes of action for breach of contract, unjust enrichment, and declaratory relief in the Pennsylvania Counterclaim are virtually identical to the affirmative claims asserted by PSW and Centerline in the California Complaint. The table below compares the causes of action asserted in the California Complaint with those asserted in the Pennsylvania Counterclaim.
As the table indicates, the only substantive difference between the California Complaint and the Pennsylvania Counterclaim is that the former asserts a cause of action for willful failure to pay commissions, whereas the latter asserts a cause of action for conversion.
On September 26, 2011, PPO filed a motion seeking dismissal of the California Complaint and certain counts of the Pennsylvania Counterclaim, as well as a more definite statement, pursuant to Rules 12(b)(6) and 12(e) of the Federal Rules of Civil Procedure. (No. 11–CV–3429, ECF No. 31; No. 11–CV–5272, ECF No. 7). On October 20, 2011, PSW and Centerline filed a response to PPO's motion. (No. 11–CV–3429, ECF No. 34; No. 11–CV–5272, ECF No. 9.) On October 31, 2011, PPO filed a reply in further support of the motion. (No. 11–CV–3429, ECF No. 35; No. 11–CV–5272, ECF No. 11.)
PPO markets and sells credit card processing services to merchants. (Ca. Compl. ¶ 8; Pa. Countercl. ¶ 5.) The fees PPO earns from providing these services are based primarily on the volume of credit card transactions processed by merchants. (Ca. Compl. ¶ 8; Pa. Countercl. ¶ 5.) PPO pays sales agents commissions to refer merchants to it. (Ca. Compl. ¶ 8; Pa. Countercl. ¶ 5.) The commissions a particular sales agent earns from PPO are based primarily on the volume of credit card transactions processed by merchants referred to PPO by the agent. (Ca. Compl. ¶ 8; Pa. Countercl. ¶ 5.) PSW is one such sales agent for PPO. (Ca. Compl. ¶ 9; Pa. Countercl. ¶ 6.)
Originally, PPO's predecessor, CNP International Incorporated (“CNP”), and Centerline entered into a written agreement under which Centerline would refer merchants to CNP in exchange for commissions on the fees CNP earned on credit card transactions processed by those merchants. (Ca. Compl. ¶ 10; Pa. Countercl. ¶ 7.) Under the agreement, Centerline allegedly was not responsible for merchant chargebacks. (Ca. Compl. ¶ 14; Pa. Countercl. ¶ 11.) The agreement between Centerline and CNP later terminated. (Ca. Compl. ¶ 10; Pa. Countercl. ¶ 7.)
Subsequently, PPO proposed a written agreement to PSW for the provision of merchant referrals. (Ca. Compl. ¶ 10; Pa. Countercl. ¶ 7.) PSW rejected the proposal because it found the terms of the agreement unacceptable. (Ca. Compl. ¶ 10; Pa. Countercl. ¶ 7.) However, PPO and PSW entered into an oral agreement under which PSW would act as a sales agent for PPO and earn commissions in accordance with the payment structure previously in place between Centerline and CNP. (Ca. Compl. ¶¶ 11, 13; Pa. Countercl. ¶¶ 8, 10.) Under the agreement, PPO allegedly was obligated to make payments to PSW once per month. (Ca. Compl. ¶ 13; Pa. Countercl. ¶ 10.) Moreover, PPO allegedly was obligated to evaluate the risks posed by merchants referred to it by PSW and bear the risk of any potential losses from chargebacks associated with merchants PSW referred to PPO. (Ca. Compl. ¶ 18; Pa. Countercl. ¶ 15.)
As sales agent, PSW identified and solicited largely internet-based merchants in need of credit card processing services and referred them to PPO. (Ca. Compl. ¶ 12; Pa. Countercl. ¶ 9.) From approximately March 2006 to June 2009, PPO paid PSW in accordance with the oral agreement. (Ca. Compl. ¶ 14; Pa. Countercl. ¶ 11.) However, on or about June 2009,...
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