Dill v. JPMorgan Chase Bank
| Decision Date | 04 August 2021 |
| Docket Number | 19 Civ. 10947 (KPF) |
| Parties | HAROLD R. DILL and EDWARD M. APPLEBY, Plaintiffs, v. JPMORGAN CHASE BANK, N.A., Defendant. |
| Court | U.S. District Court — Southern District of New York |
On July 29, 2020, this Court issued an Opinion and Order (the “July 29 Order”) granting Defendant JPMorgan Chase Bank, N.A.'s motion to compel arbitration of the claims of Plaintiffs Harold R. Dill and Edward M. Appleby and staying this action as to those Plaintiffs pending the outcome of arbitration. The Court's decision to stay the action, implemented in accordance with Second Circuit precedent, effectively prevented the parties from appealing the July 29 Order. Plaintiffs now move, pursuant to 28 U.S.C § 1292(b), for certification of an interlocutory appeal of the July 29 Order. They separately move to vacate the July 29 Order pursuant to Rule 54(b) of the Federal Rules of Civil Procedure, citing the Second Circuit's recent decision in Cooper v. Ruane Cunnif &Goldfarb Inc., 990 F.3d 173 (2d Cir. 2021) (“Ruane”). For the reasons set forth in the remainder of this Opinion, the Court denies both of Plaintiffs' motions.
BACKGROUND[1]
On November 26, 2019, Plaintiffs Harold R. Dill and Edward M. Appleby commenced this action with the filing of their initial Complaint. (Dkt. #1). Plaintiffs asserted claims against Defendant JPMorgan Chase Bank, N.A. for conversion, negligence, negligence per se, and unjust enrichment on behalf of themselves and various putative classes of plaintiffs. (See id.). In broad summary, Plaintiffs alleged that: (i) they had purchased cashier's checks from Defendant (the “Checks”), using funds from their accounts with Defendant; (ii) the Checks eventually became abandoned property subject to applicable state and federal laws of escheatment; and (iii) Defendant failed to follow the applicable escheatment laws and to provide Plaintiffs with proper notice that the Checks had been deemed abandoned. (See id.).
On January 31, 2020, Defendant filed a motion to compel arbitration of Plaintiffs' claims pursuant to the Federal Arbitration Act, 9 U.S.C. §§ 1-16 (the “FAA”), and to stay this case pending the outcome of that arbitration. (Dkt. #18). In particular, Defendant argued that Plaintiffs' claims were governed by the arbitration provision of Defendant's Account Rules & Regulations (the “Deposit Account Agreement, ” or “DAA”). (See id.). Plaintiffs opposed the motion on April 27, 2020, arguing that the parties' dispute fell outside the scope of the DAA's arbitration provision. (Dkt. #35). The motion became fully briefed and ripe for review when Defendant filed its reply brief on May 26, 2020. (Dkt. #37).
On June 26, 2020, prior to resolving Defendant's motion to compel arbitration, the Court granted Plaintiffs' motion to add Kari Garber as a party plaintiff and Defendant's cross-motion for an extension of time to file its responsive pleading. (Dkt. #54). Plaintiffs' Amended Complaint was filed on July 6, 2020. (Dkt. #55).
The July 29 Order granted Defendant's motion to compel arbitration of Plaintiffs' claims and stayed the action pending resolution of the arbitration. Dill v. JPMorgan Chase Bank, N.A., No. 19 Civ. 10947 (KPF), 2020 WL 4345755 (S.D.N.Y. July 29, 2020). On the threshold issue of arbitrability, the Court found that the DAA's arbitration provision was “indisputably broad” and created a strong presumption of arbitrability. Id. at *5-6. The Court then turned to Plaintiffs' allegations in the instant suit and concluded that they fell within the scope of the DAA's arbitration provision. Id. at *6-8.
In reaching this conclusion, the Court considered several decisions - both in-Circuit and out-of-Circuit - proffered by Plaintiffs in support of their arguments that the claims were not covered by the DAA's arbitration provision. Dill, 2020 WL 4345755, at *7-8. First, the Court addressed Plaintiffs' argument that their claims arose from “Defendant's failure to abide by its obligations under various escheatment laws, ” rather than “Defendant's conduct in relation to Plaintiffs' acquisition of the Checks.” Id. at *7. The Court found this to be a distinction without a difference, as the DAA arbitration provision did not limit itself to “claims challenging the lawfulness of cashier's check transactions, ” but instead covered “any dispute relating in any way” to Plaintiffs' accounts or transactions. Id. (citation omitted). Second, the Court reviewed four cases relied upon by Plaintiffs in support of the argument that the Court should consider whether the dispute at issue was “foreseeable” at the time of contracting. Id. at *7-8. The Court determined that only one of these cases was from this Circuit and could thus “stand as binding authority”; even as to that case, the Court found that it neither stood for the proposition that “a claim must have been foreseeable at the time of forming the arbitration agreement” nor was factually applicable to the agreement and claims at issue in this matter. Id.
The Court proceeded to stay the action as to Plaintiffs Dill and Appleby pending arbitration, and directed Defendant to respond to Kari Garber's claims. Dill, 2020 WL 4345755, at *9; see generally Dylan 140 LLC v. Figueroa as Tr. of Bldg. Serv. 32BJ Health Fund, 982 F.3d 851, 859 (2d Cir. 2020) (observing that “we traditionally counsel that courts should stay litigation pending arbitration to avoid ‘convert[ing] an otherwise-unappealable interlocutory stay order into an appealable final dismissal order' thus ‘enabl[ing] parties to proceed to arbitration directly'” (quoting Katz v. Cellco P'Ship, 794 F.3d 341, 345, 346 (2d Cir. 2015) (alterations in Dylan 140 LLC)).
On September 1, 2020, Plaintiffs moved to certify the July 29 Order for interlocutory appeal. (Dkt. #58-59). The Court approved the parties' proposed briefing schedule (Dkt. #63), pursuant to which Defendant's opposition brief was filed on September 22, 2020 (Dkt. #67), and Plaintiffs' reply brief was filed on October 9, 2020 (Dkt. #70). Defendant subsequently filed a letter regarding cases brought by Plaintiffs' counsel in state courts in California and Illinois, in further opposition to Plaintiffs' motion, on January 8, 2021. (Dkt. #81). Plaintiffs responded to Defendant's letter on January 11, 2021 (Dkt. #84), and the Court issued a memorandum endorsement on January 14, 2021, indicating that it considered briefing on the issue to be closed (Dkt. #86). Accordingly, the motion for certification of the July 29 Order for interlocutory appeal is fully briefed and ripe for review.
Separately, on September 15, 2020, Plaintiffs filed a Second Amended Complaint that added Laura Stanczyk as a party plaintiff. (Dkt. #64). Defendant subsequently filed a motion to dismiss the Second Amended Complaint on November 5, 2020. (Dkt. #73-76). On December 10, 2020, Kari Garber and Laura Stanczyk voluntarily dismissed their claims (Dkt. #80), and the Court subsequently denied Defendant's motion to dismiss as moot (Dkt. #87).
Shortly after issuance of the Ruane decision, on March 12, 2021, Plaintiffs moved to vacate the July 29 Order in light of the new decision. (Dkt. #91-92). Defendant filed an opposition brief on March 26, 2021 (Dkt. #94), and briefing was completed with the submission of Plaintiffs' reply brief on April 2, 2021 (Dkt. #95).
Section 16(b) of the FAA provides generally that “an appeal may not be taken from an interlocutory order ... granting a stay of any action under section 3 of this title, ” 9 U.S.C. § 16(b)(1), or “compelling arbitration under section 206 of this title, ” id. § 16(b)(3); see Katz, 794 F.3d at 346 (). The Second Circuit has recognized that this provision “furthers [the FAA's] aim of eliminating barriers to arbitration by promoting appeals from orders barring arbitration and limiting appeals from orders directing arbitration.” Ermenegildo Zegna Corp. v. Zegna, 133 F.3d 177, 180 (2d Cir. 1998) (internal quotation marks and brackets omitted).
Section 16(b) explicitly permits appellate review of orders that a district court certifies for interlocutory appeal pursuant to 28 U.S.C. § 1292(b). See 9 U.S.C. § 16(b) (“Except as otherwise provided in section 1292(b) of title 28, an appeal may not be taken from an interlocutory order....”); 28 U.S.C. § 1292(b) (); see generally Accenture LLP v. Spreng, 647 F.3d 72, 74-75 (2d Cir. 2011) (). Under Section 1292(b), a district court may certify an order for interlocutory appeal when it is “of the opinion that such order [i] involves a controlling question of law [ii] as to which there is substantial ground for difference of opinion and [iii] that an immediate appeal from the order may materially advance the ultimate termination of the litigation.” 28 U.S.C. § 1292(b); see also Casey v. Long Island R.R. Co., 406 F.3d 142, 145-46 (2d Cir. 2005).[2] The Second Circuit has warned, however, that Section 1292(b) must be strictly construed, because “the power to grant an interlocutory appeal must be strictly limited to the precise conditions stated in...
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