`
`IN THE UNITED STATES DISTRICT COURT
`FOR THE EASTERN DISCTRICT OF NEW YORK
`
`X
`
`FRIENDS NYC, EMMA KADAR-PENNERand
`MARY MEYER,
`
`Plaintiffs,
`
`-against-
`
`PAYPAL HOLDINGS INC.,
`
`Defendant.
`
`CIVIL COMPLAINT
`
`CaseNo.: Z/ C!lV S730
`Jury Trial Demanded
`
`Plaintiffs, FRIENDS NYC, EMMA KADAR-PENNER and MARY
`
`MEYER,bytheir attorneys, GOUCHEV LAW,asandfor their Verified
`
`Complaint respectfully allege as follows:
`
`PARTIES AND VENUE
`
`1. Plaintiff, FRIENDS NYC,is a domestic organization, with a principal place
`
`of business located at 56 Bogart Street, Brooklyn, NY 11206. Plaintiffs,
`
`EMMA KADAR-PENNERand MARY MEYER,are the owners of
`
`FRIENDS NYC. Hereinafter, FRIENDS NYC, EMMA KADAR-PENNER
`
`and MARY MEYER,arecollectively referred to as “Plaintiffs.”
`
`
`
`Case 1:21-cv-05920 Document1 Filed 10/25/21 Page 2 of 10 PagelD #: 2
`
`2. Defendant, PAYPAL HOLDINGSINC. (PAYPAL),is a foreign business,
`
`doing business in San Jose, California, hereinafter “Defendant.”
`
`3. Venueis proper and based on Plaintiffs principal place of business, whichis
`
`located in Brooklyn, NY, within the Eastern District of New York.
`
`JURISDICTION
`
`4. This Court has jurisdiction over this matter based on a federal question
`
`pursuant to 28 U.S.C. 1331, et seq.
`
`5. Specifically, the 2018 Hemp Farm Act(the “Act”) provides:
`
`"InJo State ... shall prohibit the transportation or shipment of hemp or
`hemp products produced in accordance with subtitle G of the
`Agricultural Marketing Act of 1946 ... through the State."
`Pub. L. 115-334, § 10114 (codified at 7 U.S.C. § 1639 note).
`
`6. Additionally, the Act removed hemp,defined as cannabis (Cannabis sativa
`
`L.) and derivatives of cannabis with extremely low concentrations of the
`
`psychoactive compounddelta-9-tetrahydrocannabinol (THC) (no more than
`
`0.3 percent THC on a dry weight basis), from the definition of marijuana in
`
`the Controlled Substances Act (CSA).
`
`7. Plaintiffs request that this court hear whether the Defendant violated the Act
`
`based on an alleged violation of its Acceptable Use Policy based on deeming
`
`Plaintiffs to have been engagedin the sale of narcotics for products that
`
`contained less than 0.3 percent THC.
`
`
`
`Case 1:21-cv-05920 Document1 Filed 10/25/21 Page 3 of 10 PagelD #: 3
`
`FACTS COMMON TO ALL CAUSES OF ACTION
`
`8. Plaintiffs opened an account with Defendant on or about December 2012.
`
`9. The following email addressesare linked to Plaintiffs account and bank
`
`accounts with Defendant:
`
`Emma Kadar Penner emmakpenner@gmail.com,personal
`Mary Meyer Clothing mary@marymeyerclothing.com, business
`Mary Meyerhello@friendsnyc.com, business
`Mary Meyerfriendsnycpayments@gmail.com, business
`Mary Meyer marymeyershops@gmail.com, personal
`
`10.Plaintiffs sold various goods using Defendant’s platform without incident for
`
`8 years.
`
`11.Plaintiff’s goods included home,gift and clothing as merchandise.
`
`12.During 2018, Plaintiffs expanded their product line into certain CBD oil
`
`products containing less than 3% THC, while most products contained 0%
`
`(CBD Products).
`
`13.Plaintiffs used Defendantas a third party vendorto collect paymentfor the
`
`sale of these CBD Products.
`
`14.0n December2, 2020, Plaintiffs received a notice from Defendantthat both
`
`their business and personal accounts werelocked, that Plaintiffs were
`
`permanently barred from transacting any businesssales with Defendant and
`
`
`
`Case 1:21-cv-05920 Document1 Filed 10/25/21 Page 4 of 10 PagelD #: 4
`
`furthermore, that a hold was placed on approximately $ 9,000.00 in total
`
`representing variousof Plaintiffs funds (“Plaintiff's Funds”). Exhibit “A”
`
`15.Pursuant to the Defendant’s User Agreement(“User Agreement’),
`
`Defendant informed Plaintiffs that it would be holding the Plaintiffs Funds
`
`for up to 180 days pending an investigation.
`
`16.Plaintiffs made numerousattempts to resolve this matter with the Defendant
`
`but were given no information as to the cause for a 6 month period.
`
`17.Defendant respondedstating that it would only release information about
`
`Plaintiffs PayPal accountsif they received a legal subpoena. Exhibit B.
`
`18.Plaintiffs attempted to resolve this with Defendant over the course of the 180
`
`days, with no avail.
`
`19.Defendant never contacted Plaintiffs regarding the investigation, as such
`
`Plaintiffs were never afforded an opportunity to evaluate the cause of the
`
`suspension orprovide any facts to dispute the same.
`
`20.On May 20, 2021, Plaintiffs received notice from Defendant that $3, 958.01
`
`was withdrawn from their account as “damages caused by Acceptable Use
`
`Policy violation.” This same notice provides a link to dispute this
`
`withdrawal and whenfollowed,sets forth that there is no recourse available
`
`for the claim. See Exhibit C.
`
`
`
`Case 1:21-cv-05920 Document1 Filed 10/25/21 Page 5 of 10 PagelD #: 5
`
`21.. The only information Plaintiffs were able to ascertain during this 6
`
`month period from Defendant was a vagueallegationthat Plaintiffs violated
`
`Defendant’s “Acceptable Use Policy.”
`
`22. During this time, Defendant withheld and converted these funds of
`
`Plaintiffs, without notice and later revealed that it was based on a violation
`
`of Defendant’s Acceptable Use Policy which is repugnant and violates the
`
`Act.
`
`23. A review of Defendant’s Acceptable Use Policy sets forth four
`
`categories relating to Prohibited activities.
`
`24. Plaintiffs reviewed the same due to Defendant's failure to set forth any
`
`cause based onthelist and were unable to determine the causesinceall
`
`activities listed were outside the scope of their business model and products.
`
`25. On June 11, 2021, Defendant sent a message setting forth a reason for
`
`cutting off the businessrelationship citing sale of narcotics resulting in loss
`
`of funds and/or damages. In relevant part the email provided:
`
`“After a review of your accountactivity, we've determinedthat you're in
`violation of PayPal's Acceptable Use Policy. Specifically, the sale of
`narcotics, steroids, drug paraphernalia, certain controlled substances, or
`other products that present a risk to consumersafety. As a result, your
`account has been permanently limited and you won't be able to conduct any
`further business using PayPal. This is permitted under the PayPal User
`Agreementsections Restricted Activities and Actions We May Take.”
`
`Exhibit D
`
`
`
`Case 1:21-cv-05920 Document1 Filed 10/25/21 Page 6 of 10 PagelD #: 6
`
`FIRST CAUSE OF ACTION
`
`/
`
`26.
`
`Plaintiffs restate and reiterate each and every allegation set forth in
`
`paragraphs 1-25 aboveasif stated fully herein.
`
`27.
`
`Plaintiffs and Defendant entered into a contract for services in or about
`
`December, 2012.
`
`28.
`
`Pursuant to the contract, Plaintiffs utilized Defendant’s services as a third
`
`party platform for the receipt of payments for products it sold.
`
`29.
`
`Plaintiffs accepted the terms of the contract, including Defendant’s
`
`Acceptable Use Policy.
`
`30. Defendant breached the contract on December2, 2020, and multiple times
`
`thereafter by barring them andrestricting them from doing business without
`
`providing a basis or notice of any kind, and placed a hold on approximately $
`
`9,000.00 in total.
`
`31. Defendant breached the contract on May 20, 2021, when Plaintiffs received
`
`notice from Defendant that $3, 958.01 was withdrawn from their accountas
`
`“damages caused by Acceptable UsePolicy violation” without providing a basis
`
`or notice of any kind.
`
`
`
`Case 1:21-cv-05920 Document1 Filed 10/25/21 Page 7 of 10 PagelD #: 7
`
`32. Defendant breached the contract on June 11, 2021, when Defendantsent a
`
`messagesetting forth a reason for cutting off the businessrelationship citing sale of
`
`narcotics resulting in loss of Plaintiffs funds and/or damages.
`
`33.
`
`That by reason ofsaid breaches of contract, Plaintiffs have been damaged
`
`and continue to sustain damages.
`
`SECOND CAUSE OF ACTION
`
`34.
`
`Plaintiff restates and reiterates each and every allegation set forth in
`
`paragraphs 1-33 aboveasif stated fully herein.
`
`35.
`
`Plaintiffs provided the Defendant with access to their bank accounts linked
`
`to their email addresses set forth above herein.
`
`36.
`
`On December2, 2020, and multiple times thereafter, Defendant intentionally
`
`interfered to the exclusion ofPlaintiffs rights the funds that were held in the
`
`Plaintiffs bank accounts that were linked as set forth above in para.9.
`
`37. On December2, 2020, and multiple times thereafter, Defendantintentionally
`
`interfered with the possession andright to possessionof Plaintiffs rights to the
`
`fundsheld in the Plaintiffs bank accounts that were linked as set forth above in
`
`para.9.
`
`38.
`
`That by reason of said conduct caused by Defendant, Plaintiffs have been
`
`damaged and continue to sustain damages.
`
`
`
`Case 1:21-cv-05920 Document1 Filed 10/25/21 Page 8 of 10 PagelD #: 8
`
`39.
`
`Therefore, Plaintiff demands judgmentin her favoras set forth below.
`
`THIRD CAUSE OF ACTION
`
`40.
`
`Plaintiff restates and reiterates each and every allegationset forth in
`
`paragraphs1-39 aboveasif stated fully herein.
`
`41.
`
`On December2, 2020, Plaintiffs received a notice from Defendantthat both
`
`their business and personal accountslinked at set forth above in para. 9 were
`
`locked,that Plaintiffs were permanently barred from transacting any businesssales
`
`with Defendant and furthermore, and that a hold was placed on approximately $
`
`9,000.00 in total representing variousof Plaintiffs funds (“Plaintiffs Funds”).
`
`42. On May 20, 2021, Plaintiffs received another notice from Defendantthat $3,
`
`958.01 was withdrawn from their accountas “damages caused by Acceptable Use
`
`Policy violation.” This same notice providesa link to dispute this withdrawal and
`
`when followed,sets forth that there is no recourse available for the claim. See
`
`Exhibit C.
`
`43. On June 11, 2021, Defendant senta third a message setting forth a reason for
`
`cutting off the business relationship citing sale of narcotics resulting in loss of
`
`funds and/or damages. In relevant part the email provided:
`
`
`
`Case 1:21-cv-05920 Document1 Filed 10/25/21 Page 9 of 10 PagelD #: 9
`
`“After a review of your accountactivity, we've determined that you're in
`violation of PayPal's Acceptable Use Policy. Specifically, the sale of
`narcotics, steroids, drug paraphernalia, certain controlled substances, or
`other products that present a risk to consumersafety. As a result, your
`account has been permanently limited and you won't be able to conduct any
`further business using PayPal. This is permitted under the PayPal User
`Agreementsections Restricted Activities and Actions We MayTake.”
`
`Exhibit D
`
`44.
`
`Defendant withheld and converted these fundsof Plaintiffs, without notice
`
`and based on a violation of Defendant’s Acceptable Use Policy which is repugnant
`
`andviolates the Act.
`
`45. Defendant breached its contract with Plaintiffs based on a violation of
`
`Defendant’s Acceptable Use Policy which is repugnantand violates the Act.
`
`46. As aresult of Defendant’s conduct, Plaintiffs suffered a deprivation of property
`
`without due process andrelated to a finding repugnant to US law,and suffered
`
`damages,including but not limited to economic and consequential damages.
`
`WHEREFORE,Plaintiffs demand judgment against Defendantas follows:
`
`a. Nine percentinterest from December2, 2020, regarding the holdthat
`Defendant placed on Plaintiffs funds for approximately $ 9,000.00, and
`b. Damagesin the amount of $3, 958.01 plus nine percentinterest from May
`20, 2021, and
`c. Punitive damages, attorney’s fees, costs and disbursementsfor the entire
`action no less than $100,000.00, and
`d. Granting such other and furtherrelief as the Court may deem just and
`proper.
`
`
`
`Case 1:21-cv-05920 Document1 Filed 10/25/21 Page 10 of 10 PagelD #: 10
`
`Dated:
`
`New York, New York
`October 25, 2021
`
`GOUCHEV LAW
`
`Wt, X0-¢¢4
`
`Dorothy H. Riggio, Esq.
`45 Rockefeller Plaza, 20th Floor
`New York NY 10111
`Tel. (212) 537-9209
`
`