Earlier this year, Hank Fellows and Michael Gretchen obtained a dismissal of the putative federal class action styled as Cobra Tactical, Inc. et al. v. Payment Alliance International et al.,2018 WL 1473828, ___ F.Supp.3d ____ (U.S. District Court for the Northern District of Georgia 2018).  The plaintiffs alleged that the firm’s client, Payment Alliance International (“PAI”), and the other defendants charged them unauthorized and excessive fees for merchant payment processing services.  Merchant payment processing services allow merchants to accept payment for goods and services via credit and debit cards. Defendant Global Payments Direct, Inc. is a payment processor, while defendant PAI and defendant Clearant, LLC, are merchant acquirers.

U.S. District Judge Mark Cohen granted the motions to dismiss of all the defendants.  The Court determined that the parties had entered into “Card Service Agreements (“CSAs”) which were accepted through performance by the parties, although they were not signed by the defendants.  The Court noted that “[w]here a valid contract exists, unjust enrichment claims are barred as a matter of law,” quoting Donchi, Inc. v. Robdol, LLC, 283 Ga. App. 161, 167 (2007).  The Court therefore dismissed the plaintiffs’ unjust enrichment claim in Count I of the class action complaint.

The Court also dismissed the plaintiffs’ claims in Count II for (1) breach of contract and (2) breach of the covenant of good faith and fair dealing because of the “Limitation of Liability” clause found in the Terms and Conditions in the CSAs.  The pertinent portion required notice in writing “within 60 days of such failure to perform or, in the event of a billing error, within 90 days of the date of the invoice or applicable statement.  Merchant expressly waives any such claim that is not brought within the time periods stated herein.”

The plaintiffs did not purport to have complied with the notice provision, but contended that the clause was not enforceable because it was exculpatory, unconscionable, and vague.  The Court rejected the plaintiffs’ contentions, determining that the clause was substantively and procedurally valid and not vague.  The Court also rejected the plaintiffs’ plea for a justification in the delay in notification, determining that the plaintiffs failed to allege or explain why the purported overbilling could not have been discovered in the initial time period.

Although the Court noted that “whether a delay is justified generally is an issue of fact to be resolved by a jury,” citing Eels v. State Farm Mut. Auto. Ins. Co., 324 Ga. App. 901, 904 (2013), it stated that to survive a motion to dismiss, the stated justification for delay must be “plausible” under Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007) standard.  The Court held that the plaintiffs’ explanation did not justify the delay, and it therefore dismissed Count II of the class action complaint.