BLST Northstar, LLC v. Santander Consumer USA, Inc.

Background

BLST Northstar, LLC and BLST Receivables & Servicing, LLC, collectively called Bluestem in the opinion, operated an online and mail-order retail business. Beginning in April 2013, Bluestem’s customers used Bluestem credit cards to buy goods, and Bluestem sold the resulting credit-card debts, called receivables, to Santander Consumer USA, Inc. The parties’ relationship was governed by a Program Agreement and a Standard Receivables Sales Agreement.

Santander later decided to leave the credit-card business. The parties discussed selling the receivables back to Bluestem, but that sale did not occur. In March 2021, Santander sold the receivables to BB Allium, LLC, an entity controlled by Castlelake. The following month, Santander notified Bluestem that it would not renew the Program Agreement, which was set to expire in April 2022. Bluestem then requested information from Santander, including information about the sale to Castlelake.

Bluestem asserted three claims: breach of contract, violation of the Defend Trade Secrets Act, and breach of the implied covenant of good faith and fair dealing. Santander moved for summary judgment, which is judgment entered without a trial when the evidence shows no genuine dispute over a material fact and the moving party is entitled to judgment as a matter of law.

Breach of Contract

Bluestem argued that it had a right of first refusal or a right to buy back the receivables before Santander could sell them to a third party. The court found that the agreements did not contain such a right. Instead, the Standard Receivables Sales Agreement expressly gave Santander ownership of the receivables and the right to transfer, sell, or assign them.

The agreements allowed Bluestem to present a bid after Santander delivered a termination or non-renewal notice. The Castlelake transaction occurred before Santander delivered the non-renewal notice. The court also found that the bid process did not require Santander to sell the receivables to Bluestem, even if Bluestem submitted a bid.

The court rejected Bluestem’s argument that other provisions restricted the sale. It concluded that the provision concerning encumbering or delaying Bluestem’s rights applied to certain loans and securitizations, not to the Castlelake sale. It also found that another provision expressly stated that the assignment language did not restrict Santander’s ability to transfer the receivables. Because Santander had not accepted a Bluestem bid, the court further concluded that Santander had no contractual duty to provide the information or cooperation associated with an accepted bid.

The court declined to use evidence outside the written agreements to alter their unambiguous terms. It held that Bluestem had not identified a genuine dispute over a material fact and granted summary judgment on the contract claim.

Defend Trade Secrets Act Claim

Bluestem alleged that Santander improperly disclosed Bluestem’s trade secrets, financial information, and other information to Castlelake and others involved in the transaction. The Defend Trade Secrets Act provides a private claim for an owner whose trade secret is misappropriated, meaning improperly acquired, used, or disclosed.

The court held that the agreements authorized the disclosures. The Standard Receivables Sales Agreement allowed Santander to provide a potential purchaser with Bluestem’s confidential information reasonably needed to evaluate the purchase, if the purchaser entered into a substantially similar confidentiality agreement. The court found that Castlelake was a potential purchaser and that there was no dispute that Santander and Castlelake entered into a confidentiality agreement.

The court also rejected Bluestem’s argument that the Program Agreement limited Santander to sharing only anonymized account-balance or “data tape” information. It found that the agreement permitted additional related borrower information when reasonably required for a potential purchaser’s evaluation, subject to restrictions including a confidentiality agreement. Because the agreements were unambiguous, the court did not consider extrinsic evidence offered to show a different meaning.

The court stated that even if Santander had provided unnecessary documents, Bluestem had not identified resulting damages, which are required for the claim to proceed. It granted summary judgment on the trade-secrets claim.

Implied Covenant of Good Faith and Fair Dealing

Bluestem alleged that Santander breached the implied covenant of good faith and fair dealing by depriving Bluestem of contractual rights. The court concluded that Bluestem had not shown that Santander did anything beyond exercising rights expressly granted by the agreements. It therefore granted summary judgment on this claim as well.

Disposition

Judge Paul A. Magnuson granted Santander’s Motion for Summary Judgment. The court denied Santander’s motions to exclude expert testimony as moot and ordered that the matter be dismissed with prejudice. The opinion directs that judgment be entered accordingly.