Wrg Servs. v. Eilers, 2008-L-057 (11-7-2008)

2008 Ohio 5854
CourtOhio Court of Appeals
DecidedNovember 7, 2008
DocketNo. 2008-L-057.
StatusPublished

This text of 2008 Ohio 5854 (Wrg Servs. v. Eilers, 2008-L-057 (11-7-2008)) is published on Counsel Stack Legal Research, covering Ohio Court of Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Wrg Servs. v. Eilers, 2008-L-057 (11-7-2008), 2008 Ohio 5854 (Ohio Ct. App. 2008).

Opinions

OPINION
{¶ 1} Dale Charles Pete Eilers, dba Eilers Trade, and LGC Bay County, LLC, c/o Registered Agent Dale C. Eilers (hereafter collectively "Mr. Eilers"), appeal from a judgment of the Lake County Court of Common Pleas denying Mr. Eilers' Motion for Judgment Notwithstanding the Verdict and/or Motion for New Trial, after a jury awarded damages to WRG Services Inc. ("WRG") in a contract dispute. For the following reasons, we affirm. *Page 2

{¶ 2} Procedural History

{¶ 3} On November 22, 2006, WRG filed a complaint against Mr. Eilers in the Lake County Court of Common Pleas alleging he breached several written agreements with WRG to use its ATM transaction processing services. Mr. Eilers filed an answer and a counterclaim. He also filed a motion to transfer venue, arguing one of the contracts specified jurisdiction and venue in Cuyahoga County, Ohio. The trial court denied the motion and the matter proceeded to a jury trial on January 8, 2008. The jury returned a verdict awarding WGR damages in the amount $17,238.05 and in favor of WRG regarding Mr. Eilers' counterclaim.

{¶ 4} Mr. Eilers filed a Motion for Judgment Notwithstanding the Verdict and/or Motion for New Trial. The trial court denied that motion, and Mr. Eilers filed the instant appeal from that judgment and from the court's judgment denying his request to transfer venue. The record reflects the following facts pertinent to this appeal.

{¶ 5} WRG's ATM Transaction Processing Services

{¶ 6} WRG, a Willoughby, Ohio company, is in the automated teller machine ("ATM") business. WRG has two separate lines of business: (1) it makes and sells ATMs, and (2) it offers services to process ATM transactions. In its latter capacity, WRG is referred to an "independent sales organization," or ISO.

{¶ 7} WRG has three hundred independent "distributors" throughout the country. These distributors either: (1) sell ATMs for WRG, (2) obtain transaction processing services contracts for WRG, or (3) own their own ATMs and contract with WRG to use its transaction processing services. Mr. Eilers, a sole proprietor located in *Page 3 Panama City, Florida, was one of its distributors, and this case involves the contracts he signed to use WRG's transaction processing services for the three ATMs he owned.

{¶ 8} An ISO such as WRG establishes its ATMs (i.e., the ATMs it processes) at a merchant's location, such as a gas station or a convenient store, in several different ways. WRG may sell an ATM outright to a merchant; or, WRG's distributors may solicit transaction processing services on its behalf for an ATM in a merchant's location. In Mr. Eilers' case, he had his own ATMs which he placed in several locations and then contracted with WRG for its transaction processing services.

{¶ 9} WRG is not a bank. In order to process the ATM transactions, it utilizes the service of a bank to "sponsor" its ATMs within the "banking networks" such as Visa or MasterCard. In addition to utilizing the service of a sponsor bank and the banking networks, WRG also utilizes the services of a transaction processor, which receives and decodes transmissions from the ATMs and routes each transaction to a proper destination, such as the bank that issued the ATM card. The transmission would include information regarding the personal identification number (PIN) and the account balance in the card. If the PIN matches the card and funds are available, an approval is sent back to the transaction processor, which in turn routes the transaction back to the ATM, which would then dispense cash.

{¶ 10} WRG pays its sponsor bank on a per-transaction basis. It is also responsible to the sponsor bank for all the ATMs for which WRG provides transaction processing services. In addition, WRG pays an annual sponsorship fee to each banking network such as VISA or Mastercard. WRG also pays the transaction processor for its transmission service. *Page 4

{¶ 11} WRG's revenues consist of two components: the "surcharge" revenue and the "network" revenue. The "surcharge" is a fee that a user pays to use an ATM. The "surcharge" is how a distributor such as Mr. Eilers makes money from an ATM. It comes out of a user's bank or credit card account. WRG collects these surcharge fees on behalf of the distributor and passes them on to the distributor, paid on a monthly basis. The distributor is free to keep all of the surcharge revenue or to share a portion of it with the merchant where the ATM is located. Because the surcharge is the profit that belongs to the distributor, the distributor determines how much surcharge an ATM at a particular location would charge. The fee ranges from $0.00 to $9.99, the industry standard being between $1.50 and $2.00.

{¶ 12} The second revenue component for WRG is the "interchange" it collects from an ATM network such as Visa or MasterCard, American Express, or dozens of other national and regional networks. This is its network revenue and this is how WRG makes money from its ATM transaction processing business. An ATM network such as Visa or MasterCard pays interchange to WRG in exchange for WRG's ATMs accepting the card it issues. The interchange rates paid by the ATM networks differ. The average interchange a network pays to an ISO for each ATM transaction is $0.43. The collection of the interchange, i.e., the network revenue, is how WRG profits from its ATM transaction processing services.

{¶ 13} The Merchant Processing Agreements at Issue

{¶ 14} Mr. Eilers owned three ATMs which utilized WRG's ATM transaction processing services, all located in Florida. The instant lawsuit concerns these three ATMs. To use WRG's transaction processing services for these ATMs, Mr. Eilers *Page 5 entered into three contracts, called "Merchant Processing Agreement," with WRG: (1) a contract placing an ATM at Bingo Palace dated January 1, 2001 (`the Bingo Palace contract"); (2) a contract placing an ATM at Calloway Bingo dated October 1, 2002 ("the Calloway Bingo contract"); and (3) the contract placing an ATM at Smok's Tobacco Outlet dated March 29, 2003 ("the Smok's contract"). These contracts were for a duration of five years, which is the industry standard for this type of contract, and renewable for another five years at the end of the term.

{¶ 15} Each of these contracts contains an identical clause regarding surcharge revenue and network revenue. For each of these ATMs, Mr. Eilers had decided to charge a user a surcharge of $2.49. The clause provided:

{¶ 16} "A customer surcharge of $2.49 shall be assessed at the location referenced on qualified ATM transactions (approved cash withdrawals). This surcharge shall be collected by [WRG] along with any other network revenues. [WRG] shall rebate to the merchant surchargerevenue less expenses referenced above in the merchant agreement or site agreement (location contract) by the 20th of each succeeding month. All other network revenues shall remain the sole property of [WRG]." (Emphasis added.)

{¶ 17} In 2004, Mr. Eilers received a total of $37,960.87 from WRG in surcharge income for his three ATMs, based on $2.49 per transaction; in 2005, he received $30,214.32.

{¶ 18}

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Lanzone v. Zart, 2007-L-073 (3-28-2008)
2008 Ohio 1496 (Ohio Court of Appeals, 2008)
Effingham v. Xp3 Corp., 2006-P-0083 (12-28-2007)
2007 Ohio 7135 (Ohio Court of Appeals, 2007)
Jaric, Inc. v. Chakroff
579 N.E.2d 493 (Ohio Court of Appeals, 1989)
Pena v. Northeast Ohio Emergency Affiliates, Inc.
670 N.E.2d 268 (Ohio Court of Appeals, 1995)
Kosier v. Derosa
862 N.E.2d 159 (Ohio Court of Appeals, 2006)
Premier Associates, Ltd. v. Loper
778 N.E.2d 630 (Ohio Court of Appeals, 2002)
Rohde v. Farmer
262 N.E.2d 685 (Ohio Supreme Court, 1970)
Posin v. A. B. C. Motor Court Hotel, Inc.
344 N.E.2d 334 (Ohio Supreme Court, 1976)
Blakemore v. Blakemore
450 N.E.2d 1140 (Ohio Supreme Court, 1983)

Cite This Page — Counsel Stack

Bluebook (online)
2008 Ohio 5854, Counsel Stack Legal Research, https://law.counselstack.com/opinion/wrg-servs-v-eilers-2008-l-057-11-7-2008-ohioctapp-2008.