Story v. Heartland Payment Sys., LLC
Decision Date | 20 May 2020 |
Docket Number | Case No. 3:19-cv-724-J-32JBT |
Citation | 461 F.Supp.3d 1216 |
Parties | Max STORY, Nancy Murrey-Settle, Allen Call and James Eke, on behalf of themselves and all others similarly situated, Plaintiffs, v. HEARTLAND PAYMENT SYSTEMS, LLC, Defendant. |
Court | U.S. District Court — Middle District of Florida |
Brian W. Warwick, Janet R. Varnell, Varnell & Warwick, PA, Tampa, FL, Jennifer D. Bennett, Pro Hac Vice, Public Justice PC, Oakland, CA, Stephanie Glaberson, Public Justice PC, Washington, DC, Steven Thomas Simmons, Jr., Steven Simmons, P.A., Lynn Haven, FL, for Plaintiff Max Story.
Janet R. Varnell, Varnell & Warwick, PA, Tampa, FL, for Plaintiffs Nancy Murrey-Settle, Allen Call, James Eke.
Jonathan R. Chally, Timothy H. Lee, Pro Hac Vice, King & Spalding, LLP, Steven J. Rosenwasser, Pro Hac Vice, Greenberg Traurig, LLP, Atlanta, GA, Kathleen Crowley, Michael Fox Orr, Dawson | Orr | Cook | Fix | Stewart P.L., Jacksonville, FL, for Defendant.
In this putative class action lawsuit, plaintiffs are parents whose children attend public schools that use an electronic payment service (MySchoolBucks) provided by defendant Heartland Payment Systems, LLC, to process payments for items such as school lunches, after-school programs, bus passes, and athletic fees. Heartland often charges a "program fee" when a parent uses the service. The usual fee is $2.49 per transaction, but is sometimes more. Plaintiffs allege that Heartland's misleading representations about the program fee violate New Jersey consumer fraud statutes and are a breach of contract under New Jersey law, which governs the terms of the MySchoolBucks agreement.
The Court held a hearing on October 25, 2019, the record of which is incorporated by reference. See Transcript, Doc. 52. At the time, the Court took two of the pending motions under advisement. Thereafter, additional plaintiffs joined Max Story, the original plaintiff, and they filed an amended complaint, which Heartland now moves to dismiss.
First, as discussed at the hearing, Heartland attempted to short-circuit this case early on by making changes to its terms of service and depositing a sum of money ($40,000) into Story's credit card account, to which it had access through his MySchoolBucks account. Heartland immediately moved for judgment on the pleadings (Doc. 12), arguing the case was moot because Story had received all the relief to which he could possibly be entitled. Story opposed the motion (Docs. 26 & 27) and was able to reverse the charges so he no longer has the money.
Heartland argues that in Campbell-Ewald Co. v. Gomez, ––– U.S. ––––, 136 S. Ct. 663, 193 L.Ed.2d 571 (2016), the Supreme Court countenanced Heartland's actions because, though holding that an unaccepted offer of judgment did not moot a complaint, it left open the possibility that a claim might be mooted "if a defendant deposits the full amount of the plaintiff's individual claim in an account payable to the plaintiff, and the court then enters judgment for the plaintiff in that amount." Id. at 672. But that's not what happened here. In this case, by contrast, no Rule 68 judgment was entered or sought in advance of the deposit or thereafter, Heartland accessed Story's credit card account without his authority or knowledge (or that of his counsel), and he quickly rejected the money, before the motion for judgment on the pleadings was ripe for consideration. The Court finds these facts do not fit through the window left open in Campbell-Ewald. The motion for judgment on the pleadings will be denied.
At the same time Heartland deposited money into Story's credit card account, it also changed the terms of its service agreement governing the MySchoolBucks program. Before, the terms provided that disputes would be subject to the jurisdiction of the courts of the state of New Jersey.2 Doc. 4, Ex. 1 at 2. Now, when parents log into the MySchoolBucks website, they see the following pop-up message:
Doc. 34 at 5. When users click on "Show Terms of Service" they see the following statement:
PLEASE READ SECTIONS 14 ("DISPUTE RESOLUTION") AND 15 ("CLASS ACTION WAIVER") CAREFULLY AS THEY RELATE TO ARBITRATION AND CLASS ACTIONS
Section 14 states, in relevant part:
And Section 15 states, in relevant part:
Doc. 34, Ex. 1. A.
None of the named plaintiffs have agreed to these new terms and none of them are currently using their MySchoolBucks accounts. Story stated at the hearing that he would like to continue using the service because it is inconvenient to pay with cash, which is the only alternative at his children's school, but he is unwilling to agree to the new terms.
Additionally, Heartland changed the description about the fee at the same time it added the arbitration clause and class action bar. Before, the Terms of Service stated:
Your school district may require a program fee or membership fee for your use of the service. If you are required to pay a program fee, you will be notified on a screen prior to completing the payment transaction and any such program fee will be required for each payment you make using the Service.
Elsewhere, the website stated:
Signing up for MySchoolBucks is free. Depending on your school/district and order/item you are purchasing, you may be required to pay a program or membership fee.
See Doc. 12, Ex. 1.
Now, the website states:
Story moved for a protective order to prohibit Heartland from "misleading or coercing putative class members into waiving their rights in this litigation," seeking to "void any purported waivers" already procured and requiring Heartland to issue a curative notice to prospective class members (Doc. 13). Heartland filed a response (Doc. 34), and the Court heard argument on the motion, following which Story filed a reply and additional exhibits (Docs. 58 & 59), and Heartland filed a sur-reply (Doc. 63).
Under "the general policies embodied in Rule 23, which governs class actions in federal court," the Court "has both the duty and the broad authority to exercise control over a class action and to enter appropriate orders governing the conduct of counsel and parties." Gulf Oil Co. v. Bernard, 452 U.S. 89, 99-100, 101 S.Ct. 2193, 68 L.Ed.2d 693 (1981). However, "an order limiting communications between parties and potential class members should be based on a clear record and specific findings that reflect a weighing of the need for a limitation and the potential interference with the rights of the parties." Id. at 101, 101 S.Ct. 2193. "[T]he mere possibility of abuses does not justify routine adoption of a communications ban that interferes with the formation of a class or the prosecution of a class action ...." Id. at 104, 101 S.Ct. 2193. In this case, no motion for class certification has yet been filed.4 Thus, the Court is particularly mindful that any restriction now on Heartland's communications with its customers could later prove to have been unwarranted. See id. ( ).
"Types of communications that have been recognized to violate Rule 23 include misleading communications to class members regarding the litigation, communications that misrepresent the status or effect of the pending action, communications that coerce prospective class members into excluding themselves from the litigation, and communications that under[mine] cooperation with or confidence in class counsel." Taaffe v. Robinhood Mkts., Inc., No. 8:20-cv-513-T-36SPF, 2020 WL 1531127, at *3 (M.D. Fla. Mar. 31, 2020) (quotation and citation omitted).Plaintiffs bear the burden of demonstrating that the communication at issue "threatens the proper functioning of the litigation." Id. (quotation and citations omitted).
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