The Second Circuit Court of Appeals has reinstated a class action accusing First Data of imposing an unfair and unlawful penalty on small business merchants that break the credit card terminal leases. The lawsuit against First Data challenges the enforceability of an optional liquidated damages clause that purports to give First Data the option to accelerate the lease agreements and demand immediate payment of all lease payments and the cost of the equipment (as determined by First Data).
In November 2014, the district court dismissed the individual and class claims, determining that the lead plaintiff lacked standing to sue. The district court’s decision was based on First Data’s assertion made during the pendency of the case that it was no longer attempting to enforce the clause against the class representative.
In a decision issued on November 3, 2015, the Second Circuit reversed, holding that the district court erred by not determining standing at the commencement of the lawsuit. The Second Circuit further held that the certified class claims may continue as long as named representative has standing, even if his individual claims turn out to be moot.
Ali Abtahi serves as class counsel in the litigation against First Data.