MERCHANT SERVICES: Class in Card Processing Fee Suit Certified
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| Billing Practices | Debt Collection | Unfair Competition and Fraud |
Class Action Reporter
Feb 18, 2014
Megan Gallegos at Courthouse News Service reports Rainbow Business Solutions has been appointed the lead plaintiff in a 2010 suit against Merchant Services Inc, National Payment Processing and several other companies and individuals in Oakland, Calif. The complaint alleges that Merchant Services, a card-payment processing company, conspired with card equipment leasing services to sell fraudulent equipment leases and credit card processing services laden with exorbitant fees and hidden costs. Rather than paying for the leased equipment, Rainbow says the high costs support commissions and profits. It also claims that the leasing companies collected purported taxes that were not actually due, and that they never sent those funds on to taxing authorities.
Adding insult to injury, the leasing companies collecting the taxes allegedly charged the merchants unauthorized administrative fees.
Though Merchant Services and its partners have recently settled the claims against them, claims against the leasing companies are ongoing. Merchant Services and its settling co-defendants had to pay $923,000 in attorneys' fees and a $7,500 incentive to each of the named plaintiffs.
The lead plaintiffs meanwhile moved for class certification, and U.S. District Judge Claudia Wilken previously agreed to organize two groups of plaintiffs.
A California subclass of the proposed SKS Post-Lease Expiration Class is defined as "all persons and businesses whose lease numbers appeared on Schedule 1." They can pursue a claim under California unfair competition law (UCL). SKS Associates is a named defendant.
The property tax equipment cost basis class, defined as "all persons and businesses who from March 26, 2006, to the present paid any leasing defendants property taxes based on a cost greater than the 'equipment cost'" to pursue a breach of contract claim and its California subclass to pursue a claim for breach of the duty of good faith and fair dealing and a UCL claim."
Wilken nevertheless refused to certify three other subclasses, one of which would have included merchants that allegedly paid more than the standard rate of Northern Leasing, another equipment service.
The others involved those that allegedly paid property tax on the card equipment cost, and those that had their credit reports inspected in an attempt to collect amounts due on a lease.
Wilken pooh-poohed those subclasses because "individual issues of reliance will predominate with respect to individual class members' reliance on the alleged fraud."
The Plaintiffs are represented by:
Adam Gutride, Esq. Kristen Gelinas Simplicio, Esq. Seth Adam Safier, Esq. Todd Michael Kennedy, Esq. GUTRIDE SAFIER LLP 835 Douglass Street San Francisco, CA 94114 Telephone: (415) 271-6469 Facsimile: (415) 449-6469 E-mail: adam@gutridesafier.com Kristen@gutridesafier.com seth@gutridesafier.com todd@gutridesafier.com
The Defendants are represented by: Cary Donahue Sullivan, Esq. Thomas Reed Malcolm, Esq Travis Biffar, Esq. JONES DAY 3161 Michelson Drive, Suite 800 Irvine, CA 92612 Telephone: (949) 553-7513 Facsimile: (949) 553-7539 E-mail: carysullivan@jonesday.com tbiffar@jonesday.com
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Brian D. Hershman, Esq. JONES DAY 555 South Flower Street, 15th Floor Los Angeles, CA 90071 Telephone: (213) 243-2445 Facsimile: (213) 243-2539 E-mail: bhershman@jonesday.com
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Kevin Hugh Logan, Esq. JONES DAY 51 Louisiana Avenue NW Washington, DC 20001 Telephone: (202) 879-3967 Facsimile: (202) 626-1700 E-mail: klogan@jonesday.com
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James Cai, Esq. SCHEIN & CAI, LLP 111 West St. John Street, Suite 1250 San Jose, CA 95113 Telephone: (408) 436-0789 Facsimile: (408) 436-0758 E-mail: jcai@sacattorneys.com
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Seth Wesley Wiener, Esq. LAW OFFICES OF SETH W. WIENER 609 Karina Court San Ramon, CA 94582 Telephone: (925) 487-5607 E-mail: sethwiener@yahoo.com
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Rod Divelbiss, Esq. John Vincent Erickson, Esq. JRA LAW PARTNES LLP 235 Pine Street, Suite 1300 San Francisco, CA 94104 Telephone: (415) 788-4646 Facsimile: (415) 788-6929 E-mail: rdivelbiss@collette.com jerickson@collette.com
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Abraham Y. Skoff, Esq. Jennifer Nigro, Esq. Robert Lillienstein, Esq. Scott E. Silberfein, Esq. MOSES & SINGER LLP 405 Lexington Avenue New York, NY 10174 Telephone: (212) 554-7800 E-mail: askoff@mosessinger.com jnigro@mosessinger.com rlillienstein@mosessinger.com ssilberfein@mosessinger.com
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John Merrill Heaphy, III, Esq. Jeffrey James Halldin, Esq. HARRISON AND HELD, LLP 333 W. Wacker, Ste 1700 Chicago, IL 60606 Telephone: (312) 753-6160 E-mail: jheaphy@harrisonheld.com jhalldin@harrisonheld.com
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Joan Eve Trimble, Esq. Lee Alan Sherman, Esq. CALLAHAN, THOMPSON, SHERMAN & CAUDILL LLP 2601 Main Street, Suite 800 Irvine, CA 92614 Telephone: (949) 261-2872 Facsimile: (949) 261-6060 E-mail: jtrimble@ctsclaw.com lsherman@ctsclaw.com
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K. Todd Phillips, Esq. Seema Tendolkar, Esq. WICK PHILLIPS GOULD & MARTIN, LLP 2100 Ross Avenue, Suite 950 Dallas, TX 75201 Telephone: (214) 692-6200 Facsimile: (214) 692-6255 E-mail: tphillips@wickphillips.com seema.tendolkar@wickphillips.com
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Michael Thomas Tinan Carlson, Esq. GEARY SHEA O'DONNELL & GRATTAN, PC 37 Old Courthouse Square, 4th Floor P.O. Box 429 Santa Rosa, CA 95402-0429 Telephone: (707) 545-1660 Facsimile: (707) 545-1876 E-mail: mcarlson@gsoglaw.com
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James R. McGuire, Esq. MORRISON & FOERSTER LLP 425 Market Street San Francisco, CA 94105-2482 Telephone: (415) 268-7000 Facsimile: (415) 268-7522 E-mail: jmcguire@mofo.com
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Stephen M. Colangelo, Esq. MORRISON & FOERSTER LLP 2000 Pennsylvania Avenue, N.W., Suite 6000 Washington, DC 20006 Telephone: (202) 887-1500 E-mail: SColangelo@mofo.com
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Hayes F. Michel, Esq. KRAKOWSKY MICHEL LLP 1925 Century Park East, Suite 2050 Los Angeles, CA 90067 Telephone: (310) 277-7342 Facsimile: (310) 277-0298 E-mail: hmichel@krakowskymichel.com
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Robert N. Webner, Esq. VORYS SATER SEYMOUR & PEASE LLP 52 East Gay Street Columbus, Oh 43215 Telephone: (614) 464-8243 Facsimile: (614) 719-5083 E-mail: rnwebner@vorys.com
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Matthew Keenan Wegner, Esq. Matthew Allen Berliner, Esq. BROWN WEGNER & BERLINER, LLP 2603 Main Street, Suite 1050 Irvine, CA 92614 Telephone: (949) 705-0080 Facsimile: (949) 749-4099 E-mail: mwegner@bwb-lawyers.com mberliner@bwb-lawyers.com
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Janet Suejean Park, Esq. MATRIX SERVICE COMPANY 500 W Collins Avenue Orange, CA 92867 Telephone: (714) 289-6638 E-mail: jpark@matrixservicecompany.com
The case is Rainbow Business Solutions, et al. v. Merchant Services, Inc., et al., Case No. 4:10-cv-01993-CW, in the U.S. District Court for the Northern District of California (Oakland).