Deutsch v. JPMorgan Chase & Co., 18-CV-11655 (VSB)

CourtUnited States District Courts. 2nd Circuit. United States District Courts. 2nd Circuit. Southern District of New York
Writing for the CourtVERNON S. BRODERICK, United States District Judge
Docket Number18-CV-11655 (VSB)
Decision Date30 September 2019


18-CV-11655 (VSB)


September 30, 2019



Peter Deutsch
Peter Deutsch Attorney
Hollywood, Florida
Counsel for Plaintiff

Alan Schoenfeld
Noah Adam Levine
Wilmer Cutler Pickering Hale & Dorr LLP
New York, New York
Counsel for Defendant JPMorgan Chase & Co.

VERNON S. BRODERICK, United States District Judge:

Plaintiff Michael Deutsch ("Plaintiff') brings this action against Defendant JPMorgran Chase & Co. ("Chase" or "Defendant") alleging claims related to several allegedly fraudulent credit card transactions. Before me is Defendant's motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6). For the reasons stated below, Defendant's motion to dismiss is GRANTED IN PART and DENIED IN PART. Specifically, Defendant's motion is DENIED as to Plaintiff's claims for violation of the Truth in Lending Act (Count II), breach of contract

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(Count III), and false advertising (Count VIII). Defendant's motion to dismiss is GRANTED as to all other claims.

I. Background1

Plaintiff has been a Chase customer for many years. (Compl. ¶¶ 7-9.)2 Toward the end of 2015, Plaintiff entered a Chase branch in Manhattan, where a Chase employee, Ryan Buckley, suggested that Plaintiff upgrade his current credit card to a Chase Sapphire Reserve credit card. (Id. ¶ 10.) In making the proposal, Buckley explained that the Sapphire Reserve card "had much stronger fraud protection than the standard Sapphire card," that "it was the best fraud protection Chase had ever developed or offered," and that if Plaintiff had the Sapphire Reserve card, "Chase would use every available means to contact him about any suspicious activity on his card and . . . would decline to apply any suspicious charges . . . unless and until it had contacted him and he had acknowledged that he had authorized the transaction." (Id. ¶¶ 11-12.) Buckley showed Plaintiff a brochure, which included an explanation of the additional fraud protection. (Id.) Plaintiff accepted the offer, authorized Buckley to upgrade his card, and Plaintiff agreed to pay the $450 fee. (Id. ¶ 13.) Based on Plaintiff's excellent credit history, Defendant extended him the maximum possible credit limit of $75,000. (Id. ¶ 18.) Sometime thereafter, Plaintiff visited Chase's public website, which stated, "We've got you covered. . . . 24/7 fraud monitoring. We use specialized tools to monitor for fraud and we'll text, e-mail or call you if there's anything unusual on your account[.]" (Id. ¶ 14.)

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Beginning in February 2018, Plaintiff entered into some sort of business relationship with Patrick Ayson, a ticket broker who operated a business named Patixsuites.3 (Id. ¶¶ 22-26.) Plaintiff and Ayson entered into written agreements, pursuant to which Plaintiff would provide funds for the purchase of tickets from Ticketmaster Entertainment, Inc. ("Ticketmaster") at face value, which Ayson would resell at a profit, keeping a portion of the proceeds as a commission. (Id. ¶¶ 23-25.) For each transaction, Plaintiff deposited funds directly into an account maintained by Ayson or his business, or Plaintiff wired funds to those accounts. (Id. ¶ 26.)

On February 24, 2018, Ayson and Plaintiff discussed "an opportunity to purchase tickets to a Golden State Warriors basketball team game that evening against the Oklahoma City Thunder," but Ayson explained to Plaintiff "that the potential buyers for the tickets were at the arena." (Id. ¶ 27.) Because of these circumstances, "Ayson explained, he would be able to purchase the tickets only if [Plaintiff] provided him with his credit card number." (Id.) Plaintiff "provided Ayson with his Sapphire Reserve card number, its expiration date and 'C[V]V' number from the back of the card." (Id. ¶ 28.) Plaintiff "did not ask Ayson about the precise mechanism of how he would use his credit-card information and Mr. Ayson did not explain it either." (Id.) However, Plaintiff assumed—based upon his past experiences with ticket brokers—that Patixsuites would charge his credit card for the cost of the tickets. (Id.) A short while later, Ayson called Plaintiff to inform him that the charge had been rejected, and Plaintiff then called Chase to confirm that the charge had been authorized. (Id. ¶ 29.) The Chase representative explained that Ticketmaster, not Chase, had declined the transaction "because the card had not been physically present at the point of sale." (Id.)

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The following day, Plaintiff called Chase to confirm that the tickets had not been charged to his account. (Id. ¶ 31.) The Chase representative said that the only charge from the previous day had been one by Patixsuites for $999.99, which Patixsuites had credited back the same day. (Id.)

Plaintiff did not authorize Ayson to make any additional charges on the Sapphire Reserve card, but, over the following weeks, Ayson used the card to make at least forty additional purchases. (Id. ¶¶ 34, 40.) Using Plaintiff's name and credit card information, Ayson provided his own email address to Ticketmaster and requested that the tickets be emailed directly to him. (Id. ¶¶ 37-38.) Between the time when Plaintiff upgraded to a Sapphire Reserve card and February 2018, Plaintiff's monthly balance averaged between $6,000 and $7,000 per month, rising above $10,000 only once and never exceeding $15,000. (Id. ¶¶ 19-20.) From March 7, 2018 to March 23, 2018, Ayson made fraudulent charges totaling $118,205.88, raising Plaintiff's balance to over $124,000. (Id. ¶¶ 40-41, 43.) For example, in a six-day period between March 7, 2018 and March 13, 2018, Ayson made fourteen fraudulent charges of between $1,300 and $2,400, totaling $24,508. (Id. ¶ 45.) On March 20, 2018, Ayson made nine fraudulent charges totaling $30,822.68. (Id. ¶ 48.)

Chase did not notify Plaintiff of the fraudulent charges. (Id. ¶¶ 42, 45, 47.) Plaintiff learned of the fraudulent charges on March 27, 2018, after Chase declined one of Plaintiff's own, valid charges. (Id. ¶¶ 42, 74-75.) Plaintiff reported the fraudulent charges as soon as he learned of them, and his card was cancelled and reissued on the same day. (Id. ¶ 76.)

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II. Procedural History

Plaintiff filed this action on December 13, 2018. (Doc. 1.) On February 1, 2019, Chase filed a motion to dismiss, (Doc. 17), supported by a memorandum of law, (Doc. 18), and a declaration, (Doc. 19). On March 15, 2019, Plaintiff and Live Nation Entertainment, Inc. and Ticketmaster Entertainment, Inc., which were also named as defendants in Plaintiff's Complaint, filed a notice of voluntary dismissal pursuant to Federal Rule of Civil Procedure 41(a)(1)(A)(i), (Doc. 41), which was so ordered by Judge Ronnie Abrams on March 19, 2019, (Doc. 42). On March 26, 2019, Plaintiff filed a memorandum in opposition to Chase's motion to dismiss. (Doc. 43.) Judge Abrams rejected Plaintiff's memorandum because it exceeded the applicable page limit, (see Doc. 45), and Plaintiff filed an amended memorandum on April 1, 2019, (Doc. 46). On April 4, 2019, this case was reassigned to my docket. Chase filed its reply memorandum on April 19, 2019.

Although he did not obtain leave to do so, Plaintiff filed a sur-reply memorandum on April 29, 2019. (See Doc. 48).4 Chase submitted a letter in response to the sur-reply on May 3, 2019. (Doc. 49.) On May 10, 2019, because Plaintiff failed to articulate the standard for when a sur-reply should be accepted, or to make any attempt to demonstrate that he met that standard, I denied Plaintiff's request for leave to submit a sur-reply. (Doc. 50.) Accordingly, I do not consider Plaintiff's sur-reply or Chase's May 3, 2019 response in deciding the motion before me.

On August 26, 2019, Plaintiff submitted a letter to "alert[] [me] to recently-discovered, additional information" for consideration "with respect to the pending motion to dismiss." (Doc. 52.) Chase filed a letter response on August 28, 2019, objecting to the consideration of the

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evidence. (Doc. 53.) Because the letter offered additional information only as a proffer from Plaintiff's attorney, and not in or attached to a sworn declaration or affidavit, I need not reach the question of whether or not it would be appropriately considered on a motion to dismiss.5

III. Legal Standard

To survive a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), "a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A claim will have "facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. This standard demands "more than a sheer possibility that a defendant has acted unlawfully." Id. "Plausibility . . . depends on a host of considerations: the full factual picture presented by the complaint, the particular cause of action and its elements, and the existence of alternative explanations so obvious that they render plaintiff's inferences unreasonable." L-7 Designs, Inc. v. Old Navy, LLC, 647 F.3d 419, 430 (2d Cir. 2011).

In considering a motion to dismiss, a court must accept as true all well-pleaded facts alleged in the complaint and must draw all reasonable inferences in the plaintiff's favor. Kassner v. 2nd Ave. Delicatessen Inc., 496 F.3d 229, 237 (2d Cir. 2007). A complaint need not make "detailed factual allegations," but it must contain more than mere "labels and conclusions" or "a formulaic recitation of the elements of a cause of action." Iqbal, 556 U.S. at 678 (internal

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quotation marks omitted). Finally, although all allegations contained in the complaint are assumed to be true, this tenet is "inapplicable...

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