Judge Comes Down Against Heartland, Rules That Its Own Filings Undermine Its Position

Written by Evan Schuman
January 5th, 2010

A federal judge in late December 2009 slammed processor Heartland, dismissing its attempts to halt a marketing program by one-time partner VeriFone as being contradicted by Heartland’s own court filings. But VeriFone is asking the court to keep secret the number of customers who have made the move from Heartland to VeriFone.

The denial of a preliminary injunction ruling wasn’t entirely a surprise, as reports of Heartland’s apparently contradictory statements had already surfaced. But when U.S. District Court Judge Mary Cooper issued a ruling in the case on December 23 that dismissed so many of Heartland’s claims against VeriFone, that was a bit startling.

The background of this case is bizarre enough that a full recap is too much like science fiction to be believable. The short version, though, is that VeriFone accused Heartland of violating a patent, which caused VeriFone to say it was cutting off Heartland’s support. VeriFone then started telling Heartland customers that VeriFone would be more than happy to support those customers directly—for free—in an attempt to get a lot of Heartland’s retailers to move to VeriFone. This federal lawsuit is, for the most part, about Heartland wanting VeriFone to be ordered to stop stealing its customers.

Judge Cooper’s ruling gave a lot of weight to a separate lawsuit between the two players involving the patent, one that was filed in Mercer County, N.J. In that lawsuit, Heartland argues that it relies on VeriFone for support. But in the Cooper case, it argues that it does not rely on VeriFone for support. And that’s where the judge found most of the contradictions she cited.

“The Mercer County action is replete with assertions of Heartland’s dependence on VeriFone support in providing support to its customers. Heartland’s claims that it will have no problem whatsoever supporting VeriFone devices, despite VeriFone’s discontinuation of support, contradicts its own claims in this case and in the Mercer County action,” she wrote. “These statements suggest that Heartland will have difficulty maintaining pre-dispute levels of service to Heartland customers using VeriFone POS terminals as customers’ terminals develop problems in the future. Heartland’s pleadings in the Mercer County action, inconsistent with its position in this case, constitute non-conclusive evidence for the Court to consider in this case.”

When VeriFone initially argued that Heartland had contradicted itself with its filings in the Mercer County case, Heartland said the lines were taken out of context, that VeriFone was taking comments about gas stations and trying to apply them to other types of retailers.


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