Maybe 502 Bad Gateway is caused because there are too many output addresses.
I've seen this issue with the mass small payments before.
Maybe he should try to send in smaller chunks to all the users that have 0.01 BTC or more. If he is smart he will be able to avoid the required 0.0001 fee.
Then do the same with the smaller amounts ... and for the future double the "miner fee".
Their API worked fine with 138 outputs in the past. Tested with 108 outputs, same issue. Tested with 2 outputs and worked, but 2 outputs are not enough obviously. Anyways, sending the transaction and then responding with an error page is unacceptable so we are working on a solution to replace it. If the test goes well it can be deployed within a few hours.