MNG 2005, Inc. v. Paymentech, LLC

MNG 2005, INC., Plaintiff, v. PAYMENTECH, LLC, et al., Defendants.

Case No. 4:18-cv-01155-JAR

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF MISSOURI EASTERN DIVISION

November 9, 2020

MEMORANDUM AND ORDER

This matter is before the Court on two motions to dismiss: one filed by Defendants Paymentech, LLC ("Paymentech"), JPMorgan Chase Bank, N.A. ("Chase"), and Visa USA, Inc. ("Visa") (Doc. 89); and another filed by Defendant G2 Web Services, LLC. ("G2"). (Doc. 118). Both motions are fully briefed and ready for disposition. This court will address the two motions in one Memorandum and Order as they generally concern similar issues.

I. FACTUAL AND PROCEDURAL BACKGROUND

In its prior Memorandum and Order (Doc. 67), this Court summarized the alleged facts:

Plaintiff is a Missouri corporation operating an online cooking-oil business. In April, 2018, Plaintiff entered into a contract with Chase and Paymentech—a wholly-owned subsidiary of Chase—for credit card processing services (the "Merchant Agreement"). (Doc. 57-1).

Under the TERMS AND CONDITIONS of the Merchant Agreement, Plaintiff agreed to comply with "all applicable Payment Brand Rules in effect from time to time." (Doc. 59-1 at § 1.3(a)). In addition, Plaintiff promised it would not "submit[] any Transaction that [it] knows or should have known to be either fraudulent, illegal, [or] damaging to the Payment Brand(s)." (Id. at § 1.4(n)). Likewise, Plaintiff authorized Chase and Paymentech to "temporarily suspend or delay payment to [Plaintiff] of amounts due under this Agreement," until Plaintiff satisfies its obligations under the Merchant and "executes all documents reasonably requested by Chase [and] Paymentech." (Id. at § 4.6(q)(i)-(ii)). Finally, Plaintiff agreed that Chase and Paymentech "may terminate [the Merchant Agreement] immediately if . . . [Plaintiff] engages in conduct that creates or could tend to create harm or loss to the goodwill of any Payment Brand." (Id. at § 10.3(i)(i)). Visa is a "Payment Brand." (Id. at § 18).

Less than one month after entering into the Merchant Agreement, Chase stopped processing Plaintiff's credit card transactions. Prior to that, Chase withheld more than $66,000 in payments related to purchases by Plaintiff's customers using Visa cards. Chase informed Plaintiff that it had stopped processing transactions and would withhold the payments pursuant to Sections 4.6 and 10.3 of the Merchant Agreement, concluding that the transactions "tend to create harm or loss to the good will of the payment brand." (Id. at ¶ 13). Chase represents that it took action after it was informed by Visa of potentially harmful transactions. (Doc. 57 at 3.)

Plaintiff filed suit in Missouri state court and obtained a temporary restraining order against Defendants, prohibiting them from withholding payments and from "making false and defamatory statements about Plaintiff that Plaintiff is engaged in criminal behavior." (Doc. 1-1 at 23). Defendants removed the case to this Court on the basis of diversity jurisdiction and the temporary restraining order was dissolved by consent of the parties. (Docs. 1, 22).

Thereafter, Plaintiff was granted leave to file an Amended Complaint, in which it advanced five claims for relief:

Count I - Breach of Contract by Paymentech and Chase;

Count II - Libel and Slander by Paymentech;

Count III - Conversion by Paymentech;

Count IV - Breach of Contract by Visa; and

Count VI¹ - Tortious Interference with Contract by Paymentech, Chase, and Visa. (Doc. 67 at 1-3).

Defendants moved to dismiss the complaint and the Court granted the motion in part, dismissing Counts II, IV, and VI. (Id. at 10). Thereafter, the Court granted Paymentech's motion for reconsideration and dismissed Count III as well, finding that there is no claim for conversion when the property allegedly converted is money. (Doc. 82). In the same order, the Court granted Plaintiff leave to amend its complaint.

Plaintiff then filed its Third Amended Complaint advancing the following claims:

Count I - Unfair Business Practices by Paymentech, Chase, and Visa;

Count II - Breach of Contract by Paymentech and Chase;Count III - Unjust Enrichment by Paymentech and Visa. (Doc. 86).

Plaintiff simultaneously moved to join Visa as a necessary party, arguing that although it has no direct contractual relationship with Plaintiff, Visa's presence in the case is necessary to fully address Plaintiff's alleged injuries. (Doc. 85). Plaintiff subsequently sought leave to add another new defendant, G2, arguing that Visa contracts with G2 to monitor and identify companies accepting Visa payments for conduct that violates the Merchant Agreement and assists in maintaining Visa's "Terminated Merchant" list. (Doc. 103). In its motion for leave to join G2, Plaintiff sought to add new claims of libel and slander against both Visa and Chase. (Id.). Plaintiff proposed a Fourth Amended Complaint that asserts the following claims:

Count I - Unfair Business Practices by Paymentech, Chase, Visa, and G2;

Count II - Breach of Contract by Paymentech and Chase;

Count III - Unjust Enrichment by Paymentech and Visa.

Count IV - Libel and Slander by Visa and Chase.² (Doc. 104).

This Court granted Plaintiff's motions to join Visa and G2 and docketed Plaintiff's Fourth Amended Complaint. (Doc. 108). The Fourth Amended Complaint (Doc. 104) is operative for purposes of the instant motions to dismiss.

Defendants Paymentech, Chase, and Visa seek dismissal of Counts I, III, and IV (Docs. 89, 112), as this Court has previously denied dismissal as to Count II. (Doc. 67). G2 seeks dismissal of Count I. (Doc. 118).

II. LEGAL STANDARD

To survive a motion to dismiss under Rule 12(b)(6), "a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)).A claim is facially plausible "when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. (citing Twombly, 550 U.S. at 556). "While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff's obligation to provide the 'grounds' of his 'entitle[ment] to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Twombly, 550 U.S. at 555 (alteration in original) (citations omitted). "When ruling on a motion to dismiss [under Rule 12(b)(6)], the district court must accept the allegations contained in the complaint as true and all reasonable inferences from the complaint must be drawn in favor of the nonmoving party." Young v. City of St. Charles, 244 F.3d 623, 627 (8th Cir. 2001).

III. DISCUSSION

A. G2's Motion for Dismissal Pursuant to Fed. R. Civ. P. 12(b)(2)

G2 argues that this Court lacks personal jurisdiction over it because Missouri's long-arm statute is not satisfied and G2 does not have sufficient contacts with Missouri to satisfy due process. (Doc. 119 at 3-8). "To survive a motion to dismiss for lack of personal jurisdiction, a plaintiff must make a prima facie showing that personal jurisdiction exists, which is accomplished by pleading sufficient facts 'to support a reasonable inference that the defendant can be subjected to jurisdiction within the state.'" K-V Pharm. Co. v. J. Uriach & CIA, S.A., 648 F.3d 588, 591-92 (8th Cir. 2011) (quoting Dever v. Hentzen Coatings, Inc., 380 F.3d 1070, 1072 (8th Cir. 2004)). The evidence must be viewed in the light most favorable to Plaintiff, and all factual conflicts will be resolved in Plaintiff's favor when deciding if personal jurisdiction exists. Id. at 592 (citing Digi-Tel Holdings, Inc. v. Proteq Telecomm. (PTE) Ltd., 89 F.3d 519, 522 (8th Cir. 1996)). "To defeat a motion to dismiss for lack of personal jurisdiction, the nonmoving party need only make a primafacie showing of jurisdiction." Epps v. Stewart Info. Servs. Corp., 327 F.3d 642, 647 (8th Cir. 2003) (citing Falkirk Min. Co. v. Japan Steel Works, Ltd., 906 F.2d 369, 373 (8th Cir. 1990)).³

Missouri's long-arm statute permits this Court to exercise jurisdiction over G2 if the present cause of action arises from (1) the transaction of any business in Missouri; (2) the making of any contract in Missouri; or (3) the commission of a tortious act in Missouri. Mo. Rev. Stat. § 506.500(1)-(3).⁴ The Missouri Supreme Court has declared that the Missouri legislature's "ultimate objective [when enacting the long-arm statute] was to extend the jurisdiction of the courts of this state over non-resident defendants to the extent permissible under the Due Process Clause of the Fourteenth Amendment." State v. Pinnell, 454 S.W.2d 889, 892 (Mo. banc 1970). Therefore, the "critical factor in our analysis is whether the exercise of personal jurisdiction in this case comports with due process." Clune v. Alimak AB, 233 F.3d 538, 541 (8th Cir. 2000).

The Due Process Clause of the Fourteenth Amendment requires that G2 have "minimum contacts" with the forum such that the exercise of jurisdiction over it does not offend "traditional notions of fair play and substantial justice." Int'l Shoe v. Washington, 326 U.S. 310, 319 (1945). G2's contacts must be sufficiently purposeful that it "should reasonably anticipate being haled into court" in this forum. World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980). "In judging minimum contacts a court properly focuses on the relationship among the defendant, the forum, and the litigation." Calder v. Jones, 465 U.S. 783, 788 (1984).

In the Eighth Circuit, five factors must be considered: (1) the nature and quality of the contacts with the forum state; (2) the quantity of contacts with the forum state; (3) the relation of the cause of action to the contacts; (4) the interest of the forum state in providing a forum for its residents; and (5) the convenience of the...