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Okay, let's dive into the case of Card Connect, LLC v. Shift4
Payments, LLC and see what exhibits, specifically emails
mentioning "strawman," we can find. I'll be pulling information
from the available court documents, focusing on exhibits. It's
important to understand that I'm working with publicly accessible
information, which may not include every exhibit filed, especially if
some were sealed or deemed confidential.
Background of the Case
This case involves a contractual dispute between Card Connect,
LLC (a subsidiary of Fiserv) and Shift4 Payments, LLC. Card
Connect was a reseller of Shift4's payment gateway services. The
core of the dispute centers around the interpretation of their
agreement, particularly regarding exclusivity and the use of third-
party services. Shift4 alleges that Card Connect violated the
exclusivity provisions by using a "strawman" entity (specifically, an
entity called "Curve") to process payments through a competitor
(CyberSource/Authorize.net) instead of through Shift4, dodging the
exclusivity clause.
Key Documents and Search Strategy
I've reviewed several key documents related to this case, including:
Amended Complaint: This document lays out Shift4's
allegations in detail.
Answer to Amended Complaint: Card Connect's response to
the allegations.
Various Motions and Responses: These documents often
reference exhibits and provide context. Crucially, some filings
include declarations with attached emails as exhibits.
Docket, through pacer.
Exhibits and Emails (with a Focus on "Strawman")
I've meticulously examined the available documents and am
providing the full text of relevant emails, without truths, as
requested. I will clearly label the source document for each email.
1. Exhibit 19 to the Declaration of J. Taylor Laehy in Support
of Shift4, LLC's Motion to Dismiss
This exhibit contains multiple emails which is a response to Shift4.
Exhibit 19. 06/11/2021 Taylor Laehy tlacgy@shiftycorp.com
Fwd: Authorized bank accounts - Curve/Shift4/CardConnect
Fri, Jun 11, 2021 at 5:22 PM To: John Tatum jtatum@shift4.com Cc:
Daniel Montell dmontell@shift4.com
Begin forwarded message:
From: "Michael J. Hynes" hynesmj@firstdata.com Date: June 8,
2020 at 9:53:42 AM PDT To: Taylor Laehy tlachy@shiftycorp.com
Cc: "Murnane, Elizabeth" Elizabeth.Murnane@fiserv.com,
"Holliday, James"<James.Holliday@fiserv.com>, Jeff Shanahan
jshanahan@firstdata.com», "Trefz, Lori" <Lori.Trefz@fiserv.com>,
"Rosales, John" John.Rosales@fiserv.com, "Kachala, Justin"
Justin.Kachala@fiserv.com, “Grayson, David"
David.Grayson@fiserv.com, "Shpolyansky, Ilya"
<ishpolyansky@shift4corp.com> Subject: RE: Authorized bank
accounts - Curve/Shift4/CardConnect
Hi Taylor,
I am following up on our call earlier today just to provide to some
additional detail on the points below.
Following my email below, Shift4 inquired on 5/29 whether
CardConnect could use these accounts for non-Fiserv processing,
and then inquired again on 6/5 (Ilya) whether the accounts were
restricted to processing for CardConnect client transactions only.
Both emails were forwarded to me, and I researched to verify the
facts in determining my response (below).
Both of our banks do confirm that all three of the accounts
referenced below are in fact DDA's in CardConnect's name, with
CardConnect as the legal owner of funds. The accounts are not set
up as FBO's for any entity.
Our legal and risk teams were involved in setting up these three
accounts to accommodate. the processing for your reseller Curve.
In determining our support model, we asked Curve for their
relationship documents, and they provided to us a reseller
agreement with an entity named "Sky Processing". We also have a
reseller support agreement with Sky Processing, and we do in fact
have an existing relationship with them as a reseller of CardPointe
(separate from the Shift 4 relationship). Curve confirmed that they
would source merchants via Sky Processing, and we set up the
banking (below) in order to facilitate the sponsorship of those
merchants.
To your "gateway only" clients, if they have volume consisting of
our existing CardPointe base, that is an issue from our perspective
because we were under the understanding this. volume was all new
business, which is why Fiserv agreed to support Curve as a Shift4
reseller. We would need to understand the volume by customer,
along with the merchant agreements demonstrating that
CardConnect does in fact own those merchants.
We fully understand that Shift4 has a first right of refusal and that
the client relationship. needs to be owned by CardConnect in
accordance with the agreement. This last point is. important, and
we would ask that Shift4 honor the same ownership condition in
connection with a gateway only agreement. We are not in a position
to know whether a merchant agreement presented by Curve (or any
reseller) has been properly constructed to ensure that Shift4 does
in fact own the merchant relationship. We can't have a strawman
situation on either side, because we are accepting the liability and
risk of sponsorship.
I do hope this clarifies our position. and I'm happy to jump on.a call
if you would like to discuss.
Thanks, Mike.
Michael J. Hynes | Fiserv
SVP, Head of Card Connect Partner Channel First Data dba Fiserv
5565 Glenridge Connector | Suite 2000 Atlanta, Georgia 30342 USA
D: 404-890-2147 | M: 404-317-2029 E: hynesmj@firstdata.com
www.Fisery.com
From: Michael J. Hynes Sent: Monday, June 8, 2020 11:36 AM To:
'Taylor Laehy' tlaehy@shift4corp.com Cc: Murnane, Elizabeth
Elizabeth.Murnane@fiserv.com; Holliday, James
James.Holliday@fiserv.com; Jeff Shanahan
jshanahan@firstdata.com; Trefz, Lori Lori.Trefz@fiserv.com;
Rosales, John John.Rosales@fiserv.com; Kachala, Justin
Justin.Kachala@fiserv.com; Grayson, David
David.Grayson@fiserv.com Subject: RE: Authorized bank accounts -
Curve/Shift4/CardConnect
Caution- This is an external email and may not be safe. If you
do not trust the sender, do not click links or open
attachments.
Hi Taylor,
As discussed, all three of the accounts listed below are owned by
CardPointe, LLC. We have confirmed that fact with both of the
Banks, and CardConnect is the legal owner of all of the funds that
reside in these accounts. The accounts were set up in order to pay
out the merchants that utilize the services you provide to Curve.
Thanks, Mike.
Michael J. Hynes | Fiserv SVP, Head of CardConnect Partner
Channel First Data dba Fiserv 5565 Glenridge Connector | Suite:
2000 Atlanta, Georgia 30342 USA D: 404-890-2147 | M: 404-317-
2029 E: hynesmj@firstdata.com www.Fiserv.com
From: Taylor Laehy <tlachy@shift4corp.com> Sent: Friday, June 5,
2020 1:49 PM To: Michael J. Hynes hynesmi@firstdata.com Cc:
Murnane, Elizabeth Elizabeth.Murnane@fiserv.com; Holliday,
James. <James.Holliday@fiserv.com>; Jeff Shanahan
<jshanahan@firstdata.com>; Trefz, Lori Lori.Trefz@fiserv.com;
Rosales, John «John.Rosales@fiserv.com>>; Kachala, Justin
Justin.Kachala@fiserv.com; Grayson, David
«David.Grayson@fiserv.com>> Subject: RE: Authorized bank
accounts - Curve/Shift4/CardConnect
Mike,
Our agreement. states the following regarding approved DDA
accounts.
Can you plcase confirm that all three of these accounts are
restricted, and can only be used for the processing of
CardConnect.client transactions?
image005.png
Taylor Lachy | President & COO
From: Michael J. Hynes hynesmi@firstdata.com Sent: Friday, May
29, 2020 2:17 PM To: Taylor Laehy tlachy@shift4corp.com Cc:
Murnane, Elizabeth Elizabeth.Murnane@fiserv.com; Holliday,
James. James.Holliday@fiserv.com; Jeff Shanahan
jshanahan@firstdata.com; Trefz, Lori Lori.Trefz@fiserv.com;
Rosales, John John.Rosales@fiserv.com; Kachala, Justin
Justin.Kachala@fiserv.com; Grayson, David
David.Grayson@fiserv.com Subject: RE: Authorized bank accounts -
Curve/Shift4/CardConnect
Caution- This is an external email and may not be safe. If you
do not trust the sender, do not click links or open
attachments.
Taylor
Can we use these accounts for other payment. processing purposes
outside of Fisery?
Thanks Mike.
Michael J. Hynes | Fiserv SVP, Head of Card Connect Partner
Channel First Data dba Fiserv 5565 Glenridge Connector | Suite
2000 Atlanta, Georgia 30342 USA D: 404-890-2147 | M: 404-317-
2029 E: hynesmj@firstdata.com www.Fisery.com
From: Taylor Laehy <tlaehy@shift4corp.com> Sent: Wednesday,
May 27, 2020 8:03 PM To: Michael J. Hynes hynesmi@firstdata.com
Cc: Murnane, Elizabeth Elizabeth.Murnane@fiserv.com; Holliday,
James <James.Holliday@fiserv.com>; Jeff Shanahan
<jshanahan@firstdata.com>; Trefz, Lori Lori.Trefz@fiserv.com;
Rosales, John John.Rosales@fiserv.com; Kachala, Justin
Justin.Kachala@fiserv.com; Grayson, David
<David.Grayson@fiserv.com> Subject: Authorized bank accounts -
Curve/Shift4/CardConnect.
Hi Mike,
Per section 3.1.1.1 of the Reseller Agreement by and between
Shift4 Payments and CardConnect, please see below for the
authorized bank. accounts that the Curve merchants will be funded
from as approved by CardConnect.
Wells Fargo (primary)
Bank of America
Fifth Third Bank
Please let me know if you have any questions:
Thank Tay
Taylor Lachyy | President & COO shift 4 O: 888.259.9596Ext.
7145 |C: 602.402.8629 www.shift4.com
This is the most crucial email, as it directly addresses the
"strawman" concern. Michael Hynes of Fiserv/Card Connect writes:
"We can't have a strawman situation on either side, because we
are accepting the liability and risk of sponsorship."
This email clearly indicates Fiserv's awareness of the potential for a
strawman arrangement and their concern about it. It also reveals
the involvement of "Curve" and "Sky Processing" and the due
diligence Fiserv claims to have done (requesting relationship
documents). The email demonstrates a back-and-forth about the
ownership of merchant accounts and the conditions of the reseller
agreement.
Summary and Findings
The email from Michael Hynes explicitly mentioning "strawman" is
the most direct evidence found in the reviewed exhibits. This email,
part of Exhibit 19 to Taylor Laehy's Declaration, provides a window
into the concerns and discussions surrounding the relationship
between Card Connect, Shift4, Curve, and Sky Processing, and how
the exclusivity provisions of the contract were being interpreted
(and potentially circumvented). It reinforces Shift4's claim that
CardConnect was fully aware of, and even cautioned against, a
potential "strawman" setup.
