DHANI et al v. VISA, INC. et al
ORDER granting Defendants' 28 Motion to Dismiss; cause is DISMISSED for improper venue pursuant to Fed.R.Civ.P. 12 (b)(3). (See Order). Signed by Judge Robert L. Miller, Jr on 10/13/2020. (MAC) Modified on 10/13/2020 (NLR).
Case 1:19-cv-04987-RLM-DLP Document 67 Filed 10/13/20 Page 1 of 6 PageID #: 581
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF INDIANA
HARVINDER DHANI and
VISA, INC. and STRIPE, INC.
) CAUSE NO. 1:19-cv-4987 RLM-DLP
OPINION AND ORDER
Harvinder Dhani and Manuel Garcia work for Pharmaneek, Inc., an online
pharmacy. Pharmaneek used Stripe, Inc.’s payment processing services before
Stripe terminated Pharmaneek’s accounts and placed it on the MATCH list, a list
that companies in the credit card industry use to identify high-risk merchants.
Pharmaneek brought claims in this court against Stripe and Visa, Inc. in 2018
for placing it on the MATCH list and the events that followed. Pharmaneek
voluntarily dismissed its claims in favor of arbitration, which is ongoing. After
arbitration began, Mr. Dhani and Mr. Garcia filed this suit alleging two counts
of defamation. Stripe and Visa move to dismiss Mr. Dhani and Mr. Garcia’s
claims, or in the alternative, to stay this action pending the outcome of
arbitration. For the reasons stated below, the court grants Stripe and Visa’s
motion to dismiss.
Mr. Dhani and Mr. Garcia are “principals and/or owners” of multiple
healthcare companies, including Access Therapies, Inc. and Pharmaneek, Inc.,
Case 1:19-cv-04987-RLM-DLP Document 67 Filed 10/13/20 Page 2 of 6 PageID #: 582
www.uneekdose.com, and www.bluepillusa.com and done business under
several names. Pharmaneek and its related entities applied for three accounts
with Stripe, a company that processes credit card payments. First, Pharmaneek
applied for an account for its business Uneekdose with the URL uneekdose.com
in December 2017. Mr. Dhani was listed as the account representative on the
application, and he provided the email email@example.com. In March
2018, Stripe received an account application from BluePillUSA and its website
bluepillusa.com. Prithvi Dhani was listed as the company representative on the
application, and the provided email was firstname.lastname@example.org. The company street
address and phone number matched the address on Pharmaneek’s application
for Uneekdose, as did the first part of the email address, so Stripe associated the
account with the one created for Uneekdose. Later that month, Mr. Garcia
applied for a Stripe account as the company representative for BLPUSA with the
URL accesstherapies.com. He provided the email address email@example.com.
Stripe also associated this account with the Uneekdose account, this time
because Mr. Garcia’s email address URL matched the one Pharmaneek used
when it submitted the Uneekdose application.
Stripe notified Pharmaneek in March 2018 that it was terminating
Pharmaneek’s account because it was a prohibited business under Stripe’s
services agreement. Stripe told Pharmaneek that Visa had determined
Pharmaneek violated its regulations by selling a controlled substance without a
prescription. Stripe also notified Pharmaneek that it had been placed on the
Case 1:19-cv-04987-RLM-DLP Document 67 Filed 10/13/20 Page 3 of 6 PageID #: 583
MATCH list, a credit card industry “blacklist” used to identify high-risk
Mr. Dhani and Mr. Garcia allege that when a company is placed on the
MATCH list, the company’s name and the name of its principals and officers are
included in the listing. They allege that when a merchant applies for an account
with a new merchant payment processor, the processor screens the applicant for
a MATCH list entry. Mr. Dhani and Mr. Garcia contend that merchants on the
list have a difficult time establishing new accounts with payment processors and
maintaining their existing accounts. Further, any other business entity
associated with principals and officers who appear on a MATCH list entry “will
have enormous difficulties in opening or retaining merchant accounts.” They
allege that when merchant processors contacted Visa to ask why Pharmaneek
was on the MATCH list, Visa told those processors that Pharmaneek illegally sold
controlled substances without a prescription, and Mr. Dhani and Mr. Garcia
were associated with those activities. Mr. Dhani and Mr. Garcia dispute Visa’s
allegation that Pharmaneek ever sold a controlled substance without a
prescription, and the allege in their complaint that Visa’s alleged statements to
payment processors implicating Mr. Dhani and Mr. Garcia in that illegal activity
Visa and Stripe argue that Mr. Dhani and Mr. Garcia’s claims are subject
to binding arbitration under the Stripe Services Agreement, so the claims should
be dismissed for improper venue pursuant to Fed. R. Civ. P. 12(b)(3). “[A] Rule
12(b)(3) motion to dismiss for improper venue, rather than a motion to stay or to
Case 1:19-cv-04987-RLM-DLP Document 67 Filed 10/13/20 Page 4 of 6 PageID #: 584
compel arbitration, is the proper procedure to use when the arbitration clause
requires arbitration outside the confines of the district court’s district.”
Faulkenberg v. CB Tax Franchise Sys., LP, 637 F.3d 801, 808 (7th Cir. 2011)
(citing Cont’l Ins. Co. v. M/V Orsula, 354 F.3d 603, 606–607 (7th Cir. 2003)).
The court may compel the parties to arbitrate if three elements are shown: “(1)
an enforceable written agreement to arbitrate; (2) a dispute is the scope of the
arbitration agreement, and (3) a refusal to arbitrate.” Scheurer v. Fromm Family
Foods LLC, 863 F.3d 748, 752 (7th Cir. 2017) (citing 9 U.S.C. §4; Zurich
American Ins. Co. v. Watts Industries, Inc., 417 F.3d 682, 687 (7th Cir. 2005)).
The parties only dispute the first element.
Federal policy favors arbitration agreements. A.D. v. Credit One Bank,
N.A., 885 F.3d 1054, 1059 (7th Cir. 2018) (internal citations and quotations
omitted). Under the Federal Arbitration Act, courts must “place written
arbitration agreements on the same footing as other contracts.” 9 U.S.C. § 2;
Scheurer v. Fromm 863 F.3d at 752. Accordingly, “an arbitration agreement
generally cannot bind a non-signatory.” A.D. v. Credit One Bank, 885 F.3d at
1059 (citing Zurich American Ins. v. Watts, 417 F.3d at 687). But this
requirement “does not ‘alter background principles of state contract law
regarding the scope of agreements (including the question of who is bound by
them).’” GE Energy Power Conversion France SAS, Corp. v. Outokumpu
Stainless USA, LLC, 140 S. Ct. 1637, 1643 (2020) (quoting Arthur Andersen LLP
v. Carlisle, 556 U.S. 624, 630 (2009)). The court will enforce an arbitration
agreement against a non-signatory under limited exceptions, depending on
Case 1:19-cv-04987-RLM-DLP Document 67 Filed 10/13/20 Page 5 of 6 PageID #: 585
applicable state law principles: “(1) assumption, (2) agency, (3) estoppel, (4) veil
piercing, and (5) incorporation by reference.” Id. at 1059-1060.
Stripe and Visa argue that Mr. Dhani and Mr. Garcia are bound to the
services agreement because they are agents of the companies that signed the
agreement. The agreement says Stripe may report information about misuse of
If you misuse the Payment Processing Services for payment card
Transactions or engage in activity the Networks identify as damaging
to their brand, or if we are required to do so by the Network Rules,
we may submit information about you, Representatives, your
beneficial owners and principals, and other individuals associated
with your Stripe Account, to the MATCH terminated merchant
listing maintained by Mastercard and accessed and updated by Visa
and American Express, or to the Consortium Merchant Negative File
maintained by Discover. Addition to one of these lists may result in
your inability to accept payments from payment cards. You
understand and consent to our sharing this information and to the
listing itself, and you will fully reimburse us for any losses we incur
from third-party claims, and you waive your rights to bring any
direct claims against us that result from such reporting.
[Doc. No. 31, p. 22]. The services agreement also says that any dispute, claim,
or controversy arising out of or related to any provision of the agreement will be
determined by arbitration in San Francisco. Mr. Dhani and Mr. Garcia argue
that they weren’t parties to the Stripe services agreement because they only
signed the agreement as registering agents, so they can’t be bound by the
arbitration provision. But Mr. Dhani and Mr. Garcia aren’t just agents of
Pharmaneek. They acknowledge in their complaint that they are principals
and/or owners of Pharmaneek. They also say that Pharmaneek operated under
the business names UNEEKDOSE and BLUEPILLUSA, both of which signed to
Stripe’s services agreement. Stripe may send information about the principals
Case 1:19-cv-04987-RLM-DLP Document 67 Filed 10/13/20 Page 6 of 6 PageID #: 586
and owners of a registering user to the MATCH list under the terms of that
agreement. Further, Mr. Dhani and Mr. Garcia’s claims are directly related to
Stripe’s actions placing Pharmaneek on the MATCH list, conduct that is already
subject to ongoing arbitration. Under ordinary principles of contract and agency,
Mr. Dhani and Mr. Garcia are bound by the terms of the services agreement to
arbitrate their claims. Belom v. Nat’l Futures Ass’n, 284 F.3d 795, 799 (7th Cir.
Accordingly, the court GRANTS Stripe and Visa’s motion to dismiss for
improper venue pursuant to Fed. R. Civ. P. 12(b)(3) [Doc. No. 28].
October 13, 2020
/s/ Robert L. Miller, Jr.
Judge, United States District Court
distribution: All electronically registered
counsel of record.
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?