Wilkins v. Navy Fed. Credit Union
| Decision Date | 18 January 2023 |
| Docket Number | Civil Action 22-2916 (SDW)(ESK) |
| Parties | JACQUELINE WILKINS, individually, and on behalf of all others similarly situated, Plaintiff, v. NAVY FEDERAL CREDIT UNION, Defendant. |
| Court | U.S. District Court — District of New Jersey |
NOT FOR PUBLICATION
Before this Court are (1) Defendant Navy Federal Credit Union's (“Defendant”) Motion to Dismiss, (D.E. 7 “Motion to Dismiss”), (2) Magistrate Judge Edward S. Kiel's (“Magistrate Judge Kiel”) Report and Recommendation (“R&R”), dated September 14, 2022, recommending that Plaintiff Jacqueline Wilkins's (“Plaintiff”) Motion to Remand (D.E. 16, “Motion to Remand”) be granted, (D.E 40), and (3) Defendant's objections to the R&R, (D.E 44, “Objection”). Venue is proper pursuant to 28 U.S.C. § 1391. This opinion is issued without oral argument pursuant to Rule 78. For the reasons discussed below, the R&R of Magistrate Judge Kiel is REJECTED, Plaintiff's Motion to Remand is DENIED, and Defendant's Motion to Dismiss is GRANTED without prejudice.
Plaintiff, a citizen of New Jersey, maintains a bank account with Defendant. (D.E. 1-1 ¶¶ 13, 74, “Complaint.”) Defendant is a national credit union with its principal place of business in Virginia. (Id. ¶ 14.) Defendant operates banks and conducts business in the State of New Jersey.
(Id.) Plaintiff brings this action individually and on behalf of two putative classes: (1) All persons who maintain an account with Defendant and incurred unreimbursed losses due to fraud-induced transactions on Zelle (“Nationwide Class”); and (2) all New Jersey persons who maintain an account with Defendant and incurred unreimbursed losses due to fraud-induced transactions via Zelle (“New Jersey Subclass,” and together with the Nationwide Class, “Classes”). (Id. ¶ 51.)
On or about March 17, 2021, Plaintiff received an automated voicemail from someone purporting to be an agent at her utility company, PSE&G Electric (“PSE&G”). (Id. ¶ 46.) Unbeknownst to Plaintiff, PSE&G did not leave the automated voicemail-a fraudster did. (Id. ¶ 45-49.) The voicemail explained that Plaintiff's electric bill was overdue and that her service would be disconnected unless she made an immediate payment via Zelle-a payment transfer service offered by 1,500 large banks in the United States, including Defendant. (Id. ¶¶ 2, 17, 21, 46.) Plaintiff, fearful that her power would be shut off because she indeed had not paid her electric bill for months, promptly transferred via Zelle $998.01 to the account provided in the voicemail. (Id. ¶ 46.)
To ensure receipt of her payment, Plaintiff called the number from which she received the voicemail and spoke with individuals who again falsely identified themselves as agents at PSE&G (“Fraudsters”). (Id. ¶ 47.) The Fraudsters claimed that they had not received any payment from Plaintiff and requested that she send the money again. (Id.) Because the Fraudsters reassured Plaintiff that she would be refunded any amount paid over her balance, Plaintiff transferred via Zelle another $998.01 to the Fraudsters. (Id.) Unsurprisingly, the Fraudsters-still misrepresenting themselves as agents of PSE&G-told Plaintiff that her second payment was unsuccessful and requested that she try again. (Id. ¶ 48.) This time, the Fraudsters suggested that Plaintiff split the payment into two Zelle transfers-one for $450.29 and the other for $549.71. (Id.) Unfortunately, Plaintiff did so. (Id.) In total, Plaintiff transferred via Zelle $2,996.02 to the Fraudsters. (Id. ¶ 45.) The next day, Plaintiff learned from PSE&G's customer service that she had been defrauded. (Id. ¶ 49.) Plaintiff immediately reported the fraud to Defendant, but Defendant refused to reimburse Plaintiff for the $2,996.02 she sent to the Fraudsters. (Id. ¶ 50.)
Plaintiff now claims that Defendant has falsely “market[ed] Zelle as a fast, safe, and secure way for consumers to send money,” and that Defendant has omitted from its marketing “huge, undisclosed security risks” associated with Zelle. (Id. ¶ 3.) Specifically, Plaintiff asserts that Defendant has “misrepresent[ed] and omit[ted] a key fact about [Zelle] that is unknown to accountholders: that there is virtually no recourse for consumers to recoup losses due to fraud” and that Defendant-contrary to its promises-provides no reimbursement “for [its] accountholders attempting to recoup losses due to fraud.” (Id. ¶ 4.) Indeed, Plaintiff contends, Defendant maintains a “secret policy,” i.e., “it does not and will not reimburse its accountholders for losses via Zelle due to fraud, even where those losses are timely reported by accountholders.” (Id. ¶ 6.) Plaintiff claims that Defendant, by failing to provide reimbursement for such transactions, has breached its contractual obligation. (Id. ¶ 42.) Because of Defendant's misrepresentations about Zelle, Plaintiff asserts, “users like Plaintiff sign up for and use the Zelle service without the benefit of accurate information . . . and later end up with huge, unreimbursed losses due to fraud.” (Id. ¶ 8.) Plaintiff maintains that if these “extreme risks” had been disclosed to Plaintiff and members of the Classes, they “never would have signed up for Zelle,” and thus never would “have been injured by . . . using the Zelle service. (Id. ¶¶ 8, 11-12.)
C. Procedural History On April 18, 2022, Plaintiff filed this putative class action in the Superior Court of New Jersey (“State Court”) on behalf of the Classes. (See generally id.) The Classes allegedly comprise:
thousands of similarly situated customers of [Defendant] who have signed up for the Zelle money transfer service and who: have been the victim of fraud on the Zelle service; who have incurred losses due to that fraud that have not been reimbursed by [Defendant]; and who were entitled by the marketing representations of [Defendant] regarding the Zelle service and by the [Defendant's] contract promises to a full reimbursement of losses caused by fraud on the Zelle service.
(Id.) The Complaint asserts claims under the New Jersey Consumer Fraud Act (“NJCFA”) on behalf of only the New Jersey Subclass and for breach of contract on behalf of the Nationwide Class. (Id. ¶¶ 60-83.) In addition to certain injunctive relief, the Complaint seeks several types of monetary relief: restitution of all fees that Plaintiff and the Classes paid to Defendant; disgorgement of any ill-gotten gains derived from Defendant's misconduct; actual and/or compensatory damages; punitive and exemplary damages; pre-judgment interest; and reimbursement for all costs and expenses accrued by Plaintiff arising from this action, including attorneys' fees and costs. (Id. at 18.)
On May 18, 2022, Defendant timely removed this action to federal court by invoking subject matter jurisdiction pursuant to the Class Action Fairness Act of 2005 (“CAFA”). (D.E. 1, “Notice of Removal.”) In its Notice of Removal, Defendant asserted that the three requirements of CAFA had been met: (1) there are more than 100 putative class members because, as the Complaint alleges, Plaintiff brought this action on behalf of “thousands” of class members, (id. ¶¶ 14-15); (2) there is minimal diversity because Defendant is an entity headquartered in Virginia and Plaintiff is a citizen of New Jersey, (id. ¶¶ 16-18); and (3) for several reasons, the amount in controversy exceeds $5,000,000. (Id. ¶¶ 19-22.)
On June 8, 2022, Defendant moved pursuant to Rule 12(b)(6) to dismiss Plaintiff's claims because Plaintiff failed to state any claim under the NJCFA or for breach of contract. (See generally D.E. 7.) The parties have fully briefed the Motion to Dismiss.
On June 10, 2022, Plaintiff moved to remand this action back to State Court, and the parties timely briefed the Motion to Remand. (D.E. 16.) Plaintiff argued, inter alia, that Defendant had failed to adequately prove CAFA's $5 million amount-in-controversy requirement. (D.E. 16-1 at 7-12.) According to Plaintiff, Defendant presented only “unsupported conjecture that Zelle fraud claims average approximately $3,000 and that there were thousands of such claims.” (Id. at 8.) Defendant contended that Plaintiff-rather than Defendant-had the burden to prove or disprove the amount in controversy, (D.E. 22 at 6-7); that there were no jurisdictional facts in dispute, (id. at 7-9); and that the amount-in-controversy requirement had been met based on allegations contained in the Complaint, (id. at 9-11).
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