Background:

• PTC: Peoples Trust Company, a bank (acquirer) for Visa services.
• PSP: PSP Services Inc., manages retailer relations for Visa payments.

Issues:

• Chargebacks: Refunds or fraud involve risks down the payment chain; PTC and PSP indemnify those above them, like Visa.
• Reserves: PTC holds funds to cover potential retailer failures, including a 100% reserve for high-risk clients like Flair Airlines.
• Audit Rights: PTC's contract with PSP includes the right to audit PSP’s operations.

Events:

• PTC increased PSP’s reserve due to high chargebacks and concerns with Flair Airlines.
• PSP terminated the contract and initiated “De-Conversion” to wind down operations.
• PTC attempted an audit; PSP refused.

Court's Rulings:

1. PTC’s Audit Rights:

   • Strong prima facie case that PTC’s audit rights persist during De-Conversion.
   • Audit rights prevent irreparable harm and manage financial risks.
   • Balance of convenience favored PTC, ensuring transparency and minimizing disputes.

2. PSP’s Injunction Request:

   • No strong case that PTC wrongfully moved funds.
   • Settlement accounts were not deemed trust funds.
   • Financial harm claims could be resolved with damages if proven at trial.

Outcome:

• PTC’s Motion: Granted; PSP must allow the audit.
• PSP’s Motion: Dismissed; insufficient evidence of wrongful fund transfer.
• Costs: PSP to cover PTC’s legal expenses for the motions.

Monetary Award/Costs:

• PTC’s Costs: PTC was awarded costs for both the audit motion and the cross-motion.
  • Audit Motion Costs: Fixed at $100,000 on a substantial indemnity basis.
  • Cross-Motion Costs: Fixed at $45,000 on a partial indemnity basis.
• Total Costs Awarded to PTC: $145,000.