Magistrate Judge Recommends Certification of Declaratory and Injunctive Relief Claims in First Data Lawsuit

On May 3 2012, United States Magistrate Judge E. Thomas Boyle, recommended the certification of declaratory and injunctive relief claims brought on behalf of merchants who leased credit card point of sales terminals from First Data. Magistrate Judge Boyle recommended that Ali Abtahi be appointed as class counsel.

The lawsuit seeks declaration and injunctive relief regarding the enforceability of an “optional liquidated damages” clause. The liquidated damages clause purports to entitle First Data to (i) recover the leased terminal, (ii) accelerate immediately collect all monthly lease charges; and (iii) charge the fair market value of the terminal (as determined by First Data). According to the lawsuit, the clause imposes an unfair and unlawful penalty on merchants who seek to cancel their equipment lease with First Data.