Wawa, Inc. v. MasterCard International, Inc.

Background

Wawa sued Mastercard after a data-security incident involving unauthorized access to Wawa’s cardholder data environment. Mastercard determined that more than five million customer accounts created liability under its standards and initially assessed BANA $17,885,353.56. Mastercard later reduced the assessment to $10,731,212.14. Under an agreement with BANA, Wawa disputed the assessment and received the right to contest it.

Wawa asserted seven causes of action: breach of contract; breach of the implied promise of good faith and fair dealing; money had and received, restitution, and unjust enrichment; deceptive practices under New York General Business Law § 349; and unfair or deceptive practices under North Carolina General Statute § 75-1.1. Some claims were asserted as BANA’s assignee or subrogee, and some were asserted directly by Wawa.

Rule 12(b)(6) Standard

Mastercard moved to dismiss under Federal Rule of Civil Procedure 12(b)(6), which tests whether a complaint alleges enough facts to state a legally plausible claim. The court generally accepts well-pleaded factual allegations as true at this stage, but it does not accept unsupported legal conclusions as facts.

Contract Claims

Wawa argued that the assessment was an unenforceable penalty because it did not reflect Mastercard’s or its issuers’ actual damages. The court held that, under the legal principles Wawa invoked, an assessment could be treated as a penalty only if BANA had breached its agreement with Mastercard. Because Wawa did not allege that Mastercard imposed the assessment because of a breach by BANA, the court dismissed that penalty theory without prejudice.

Wawa also alleged that the assessment violated Mastercard’s standards for several reasons. Mastercard’s motion ultimately challenged only the theory based on Section 10.2.5.4 of the Security Rules; the court treated Wawa’s other four standards-based theories as unopposed. The court held that the partial motion was procedurally proper because each factual basis could constitute a separate contract claim.

Section 10.2.5.4 provided that the assessment would not be imposed if specified conditions were met, including that at least 95 percent of Wawa’s transactions were acquired through hybrid point-of-sale terminals. Wawa asked the court to exclude transactions at automated fuel dispensers because of the asserted difficulty of installing chip-capable terminals there. The court held that the contract’s text was clear and required all transactions to be counted. Because Wawa acknowledged that including the fuel-dispenser transactions would leave it below the 95-percent threshold, the court dismissed this contract theory without prejudice.

Other Claims

The court dismissed Wawa’s implied-covenant claim without prejudice because Wawa offered only a conclusory assertion that Mastercard acted unfairly and in bad faith when calculating and collecting the assessment. The court also noted that BANA continued to receive transaction fees under its agreement with Mastercard.

The court dismissed both unjust-enrichment and money-had-and-received claims without prejudice. It reasoned that those claims duplicated Wawa’s contract theories concerning the assessment, and a valid contract governing the subject matter generally prevents recovery under these quasi-contract theories.

The court dismissed both New York General Business Law § 349 claims without prejudice. Wawa did not adequately show that the assessment dispute had the required broad impact on the public. The court also stated that the dispute arose between sophisticated business entities rather than the individual consumers the statute was intended to protect.

Finally, the court dismissed Wawa’s North Carolina General Statute § 75-1.1 claim with prejudice. The court held that North Carolina law does not allow such claims to be assigned and rejected Wawa’s argument that subrogation avoided that bar.

Disposition

The court granted Mastercard’s motion to partially dismiss the complaint. Claims for breach of the implied covenant, money had and received/restitution/unjust enrichment, and New York General Business Law § 349 violations were dismissed without prejudice. The contract claim was dismissed without prejudice to the extent it relied on the alleged unlawful-penalty theory or Section 10.2.5.4. The North Carolina General Statute § 75-1.1 claim was dismissed with prejudice.

Wawa was granted leave to file an amended complaint as to claims not dismissed with prejudice by October 23, 2023. The court stated that claims dismissed without prejudice would be deemed dismissed with prejudice if Wawa did not timely amend and could not show good cause for the delay.