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Weil Wins Second Circuit Appeal in Putative Class Action for First Data Corporation

On June 1, 2018, Weil won a major victory when the Second Circuit affirmed the dismissal of a putative class action lawsuit against the payment processing company First Data Corporation and several of its subsidiaries.

The plaintiff, Zam & Zam Super Market, LLC, alleged that First Data breached its merchant processing agreement when the company amended the agreement to charge for new data protection services. Although the agreement expressly permitted First Data to amend the agreement to charge new fees for new services on 30 days’ notice, the plaintiff claimed that it never received notice of the amendment and that, in any event, notice was inadequate. The complaint sought millions of dollars in damages and included claims for breach of contract, implied covenant of good faith and fair dealing, and unconscionability.

In moving to dismiss on behalf of First Data, Weil argued that First Data had properly amended the agreement and had provided adequate notice of the contractual amendment. Weil also argued that the plaintiff’s claims were barred because plaintiff had failed to comply with the agreement’s mandatory notice-of-claim provision. Finally, Weil argued that the plaintiff’s implied covenant claim was duplicative of its breach-of-contract claim and that plaintiff’s unconscionability claim could not be used as a basis for affirmative recovery under New York law and, even so, was improperly pleaded.

On October 31, 2017, Judge Feuerstein of the Eastern District of New York granted Weil’s motion to dismiss the complaint in its entirety, with prejudice. On appeal, the Second Circuit affirmed.

Jonathan Polkes, the Co-Head of Weil’s global Litigation Department, led the Weil team, which included partner Paul Dutka, and associates Ondrej Staviscak Diaz, Amy Suehnholz, Alexandria Swette, and Jennifer Lau.