United States District Court, N.D. Texas, Dallas Division
MEMORANDUM OPINION AND ORDER
A. FITZWATER SENIOR JUDGE.
action in which the court entered a final judgment dismissing
with prejudice the actions of plaintiffs Matthew Maynard
(“Maynard”) and Maynard Investment Group, LLC
d/b/a Discount Sport Nutrition (“DSN”),
plaintiffs move under Fed.R.Civ.P. 59(e) to set aside the
dismissal and judgment. For the reasons that follow, the
court grants the motion in part and denies it in part,
subject to plaintiffs' paying defendants their reasonable
attorney's fees and costs incurred in responding to the
December 2017 Maynard filed suit in state court against
defendants PayPal, Inc. and PayPal Holdings, Inc. The action
stems from activities surrounding Maynard and DSN's use
of defendants' merchant services (a “PayPal
account”) to accept online payments for a variety of
vitamins and sport nutrition supplements. Maynard alleges
that defendants knowingly allowed a fraudulent chargeback
scheme in which buyers of DSN's products would file false
disputes with defendants' dispute resolution system and
seek a full refund on DSN's products months after they
had received their orders. According to Maynard, defendants
improperly issued full refunds to all of the buyers despite
the fact that Maynard provided defendants with thousands of
pages of documentary evidence that proved the disputes were
without merit, and without regard for the provisions in the
PayPal User Agreement (“user
defendants were served in January 2018 and removed the case
to this court in February 2018. In April 2018 defendants
filed a motion to dismiss Maynard's state court petition.
Maynard did not respond to the motion, despite requesting and
receiving a time extension. In July 2018 the court granted
defendants' motion to dismiss but also granted Maynard
leave to replead, stating, inter alia:
Maynard filed this case in state court, under the pleading
standards that govern in that forum. He should be given an
opportunity to replead under the federal pleading standards.
See, e.g., Hoffman v. L & M Arts, 774 F.Supp.2d
826, 849 (N.D. Tex. 2011) (Fitzwater, C.J.) (granting similar
relief in removed case). Accordingly, the court grants
Maynard 28 days from the date this order is filed to file an
amended complaint. If he fails to replead, this action will
be dismissed based on defendants' April 19, 2019 motion.
If he repleads, defendants may move anew to dismiss, if they
have a basis to do so.
2018 Order at 1-2. Maynard filed a first amended complaint in
August 2018. Shortly thereafter, defendants moved anew to
dismiss Maynard's first amended complaint. In response,
Maynard moved for leave to file a second amended complaint in
order to add DSN as a plaintiff. In November 2018 the court
denied defendants' motion to dismiss without prejudice
and granted Maynard leave to file a second amended complaint.
See Maynard v. PayPal, Inc., 2018 WL 5776268, at *1,
6 (N.D. Tex. Nov. 2, 2018) (Fitzwater, J.).
second amended complaint-now on behalf of Maynard and
DSN-was filed, and defendants moved again to
dismiss. Plaintiffs requested, and the court granted, two
extensions of time to file a response to defendants'
motion such that the final deadline to respond was February
1, 2019. Despite being granted two extensions of time,
plaintiffs failed to respond to defendants' motion to
dismiss. The court granted defendants' motion and entered
judgment in favor of defendants on February 13, 2019, holding
that the second amended complaint failed to state a claim on
which relief can be granted.
March 13, 2019-28 days after the entry of judgment-plaintiffs
filed a motion to alter or amend the judgment pursuant to
Rule 59(e). The motion has been briefed and is now ripe for
district court has considerable discretion in deciding
whether to reopen a case under Rule 59(e).” Edward
H. Bohlin Co. v. Banning Co., 6 F.3d 350, 355 (5th Cir.
1993) (footnote omitted). In deciding plaintiffs' motion,
the court considers such factors as whether their failure to
comply with the court's order was the result of excusable
neglect, whether setting aside the judgment would prejudice
the adversary, and whether plaintiffs have a meritorious
claim. See CJC Holdings, Inc. v. Wright & Lato,
Inc., 979 F.2d 60, 64 (5th Cir. 1992). “These
factors are not ‘talismanic,' and [the court] will
consider others.” Id. (quoting In re
Dierschke, 975 F.2d 181, 184 (5th Cir. 1992)). The
ultimate inquiry remains whether the movants show good cause.
See Id. “The district court need not consider
all of these factors.” Id.
court addresses first whether plaintiffs have established
motion makes no attempt to explain how or why they failed to
respond to defendants' motion to dismiss plaintiffs'
second amended complaint. The court is thus unable to discern
whether plaintiffs' failure to respond was the result of
excusable neglect, and this factor does not favor
reconsideration of the court's dismissal order.
court considers next whether setting aside the judgment of
dismissal would prejudice defendants.
who secures dismissal of a case will of course “suffer
some form of prejudice anytime [the party] obtains such
relief and the opposing party is successful in having it set
aside. The court must therefore assess whether the prejudice
is unfair.” Artemis Seafood, Inc. v.
Butcher's Choice, Inc., 1999 WL 1032798, at *3 (N.D.
Tex. Nov. 10, 1999) (Fitzwater, J.). If the court sets aside
the judgment of this case, defendants will be required to
defend a lawsuit that they would otherwise not have been
obligated to defend. This is not unfairly prejudicial to
defendants, except to the extent they have been required to
respond to plaintiffs' present motion. As in Artemis
Seafood, the court holds that if defendants are
compensated for such fees and costs, the prejudice to
defendants of granting the motion is not unfair. See
Duffin v. Ocwen Loan Servicing, LLC, 2019 WL 2341047, at
*2 (N.D. Tex. June 3, 2019) (Fitzwater, J.).
the court addresses whether plaintiffs have a meritorious
maintain that the facts and allegations set forth in their
second amended complaint “were sufficient to state the
causes of action discussed below and to survive
[dismissal].” Ps. Br. 2. Defendants respond, inter
alia, that plaintiffs abandoned their claims by failing
to respond to the motion to dismiss and that the court
properly dismissed plaintiffs' claims because they failed
to satisfy the federal pleading standard.
may abandon its claim when it fails to pursue the claim
beyond the complaint. See, e.g., Black v. N. Panola Sch.
Dist., 461 F.3d 584, 588 n.1 (5th Cir. 2006); Vela
v. City of Houston, 276 F.3d 659, 678-79 (5th Cir.
2001); Hargrave v. Fibreboard Corp., 710 F.2d 1154,
1163-64 (5th Cir. 1983). In this case, the court does not
agree with defendants' argument that plaintiffs'
failure to respond to the motion to dismiss equates to total
abandonment of all of their claims. Some of the
claims, however, do appear to have been abandoned by
plaintiffs as a result of the papers filed in support of the
their briefing, plaintiffs do not challenge the court's
dismissal of the following claims: negligent undertaking;
negligent hiring, training, and supervision; vicarious
liability; conversion; aiding and abetting/assisting and
participating; and promissory estoppel.Indeed, plaintiffs
implicitly acknowledge that not all of the causes of action
they pleaded should have survived dismissal. See Ps.
Br. 2 (stating “[t]he facts and allegations in
Plaintiffs' Complaint were sufficient to state the causes
of action discussed below” and proceeding to
discuss select causes of action). Thus the court, in its
discretion, declines to revisit its dismissal of those
determine whether it was error to grant defendants'
motion to dismiss, the court, in its discretion, will engage
in a more thorough analysis of each cause of action on which
the parties disagree.
threshold matter, the parties disagree as to which
state's law should apply to plaintiffs' claims.
Defendants maintain that, per the user agreement's choice
of law clause, Delaware law applies. In their instant motion,
plaintiffs suggest that the court should look to Texas law
because the choice of law provision is not enforceable.
properly analyze each disputed cause of action, the court
will first determine whether Texas or Delaware law applies to
plaintiffs' claims. See Energy Coal S.P.A. v. CITGO
Petroleum Corp., 836 F.3d 457, 459 (5th Cir. 2016)
(“Choice-of-law decisions can be resolved at the motion
to dismiss stage when factual development is not necessary to
resolve the inquiry.”). “A diversity court
generally applies the choice-of-law rules of the state in
which it sits.” InterFirst Bank Clifton v.
Fernandez, 853 F.2d 292, 294 (5th Cir. 1988) (citing
Stuart v. Spademan, 772 F.2d 1185, 1195 (5th Cir.
1985)). Because this court sits in Texas, it applies Texas
choice of law rules. “Under the Texas rules, in those
contract cases in which the parties have agreed to an
enforceable choice of law clause, the law of the chosen state
must be applied.” Resolution Tr. Corp. v. Northpark
Joint Venture, 958 F.2d 1313, 1318 (5th Cir. 1992)
(citing DeSantis v. Wackenhut Corp., 793 S.W.2d 670,
678 (Tex. 1990)).
the user agreement provides:
You agree that, except to the extent inconsistent with or
preempted by federal law and except as otherwise stated in
this user agreement, the laws of the State of Delaware,
without regard to principles of conflict of laws, will govern
this user agreement and any claim ...