Opinion
2:24-cv-01837-JLS-E
05-19-2024
Alice Lin v. JPMorgan Chase Bank N.A. et al
Present: HONORABLE JOSEPHINE L. STATON, UNITED STATES DISTRICT JUDGE
CIVIL MINUTES - GENERAL
PROCEEDINGS: (IN CHAMBERS) ORDER DENYING PLAINTIFF'S MOTION TO REMAND (Docs. 13 & 14)
Before the Court is Plaintiff Alice Lin's motion to remand. (Mot., Docs. 13 & 14.) Defendants JP Morgan Chase Bank, N.A. and Cheryl McMurray opposed, and Lin replied. (Opp., Doc. 16; Reply, Docs. 17 & 18.) The Court finds this matter appropriate for decision without oral argument, and the hearing set for May 24, 2024, at 10:30 a.m. is VACATED. Fed.R.Civ.P. 78(b); C.D. Cal. R. 7-15. For the reasons explained below, Lin's motion is DENIED.
Lin twice filed both her motion to remand and her reply in support of that motion. Going forward, Lin shall refrain from making duplicative filings.
I. BACKGROUND
Lin brought this action against Defendants in California state court. (See Compl., Doc. 1-1, Ex. A.) An unknown non-party defrauded Lin, an elderly woman, out of $720,000 of her retirement savings. (Id. ¶ 4.) The non-party perpetuated the fraud by having Lin wire money out of her Chase account. (See id. ¶ 13.) Lin sued Defendants Chase and McMurray, a Branch Manager at Chase under California state law for financial elder abuse and violation of the Unfair Competition Law for failing to flag Lin's wire transfers as suspicious and instead processing them. (See id. ¶¶ 72-94.)
Defendants timely removed this action to federal court. (NOR, Doc. 1 ¶ 2.) In their notice of removal, Defendants contend that this Court has two bases for jurisdiction: (1) Edge Act jurisdiction under 12 U.S.C. § 632; and (2) diversity jurisdiction under 28 U.S.C. § 1332 because McMurray was allegedly fraudulently joined as a defendant. (See id. ¶¶ 8-15.) Lin moved to remand, arguing that neither of Defendants' asserted bases provides this Court with subject-matter jurisdiction. (See generally Mot.)
II. LEGAL STANDARD
As the party invoking the removal jurisdiction of this Court, Defendants bear “the burden of establishing federal jurisdiction.” California ex. rel. Lockyer v. Dynegy, Inc., 375 F.3d 831, 838 (9th Cir. 2004). The Edge Act provides:
Notwithstanding any other provision of law, all suits of a civil nature at common law or in equity to which any corporation organized under the laws of the United States shall be a party, arising out of transactions involving international or foreign banking, . . . shall be deemed to arise under the laws of the United States, and the district courts of the United States shall have original jurisdiction of all such suits[] . . . .Thus, Edge Act jurisdiction has three requirements: (1) a civil action, (2) in which a “corporation organized under the laws of the United States” is a party, and which (3) “aris[es] out of transactions involving international or foreign banking.” See Am. Int'l Grp., Inc. v. Bank of Am. Corp., 712 F.3d 775, 780 (2d Cir. 2013); Gray v. Ben, 2022 WL 3928375, at *2 (C.D. Cal. Aug. 31, 2022).
III. ANALYSIS
The Court DENIES Lin's motion to remand because the Court has subject-matter jurisdiction under the Edge Act. Because of this conclusion, the Court need not determine whether McMurray was fraudulently joined. And because the Court denies Lin's motion to remand, it also DENIES her request for attorney fees and costs.
A. Arising Out of an International Banking Transaction
Lin brings a civil suit against Chase, satisfying the first requirement of Edge Act jurisdiction. (See Compl.) Chase is a national bank organized under the laws of the United States, satisfying the second requirement of Edge Act jurisdiction. (NOR ¶ 8.) The only requirement at issue is whether Lin's suit “aris[es] out of transactions involving international or foreign banking.” (See Mot. at 22.)
Defendants argue that this action “aris[es] out of” international banking transactions because one of the fraudulent transfers was sent to the bank account of a non-U.S. individual at a non-U.S. bank. As mentioned, the non-party defrauded Lin of $720,000. (Compl. ¶¶ 4.) That fraud occurred over the course of seven wire transfers. (Id. ¶ 50.) One of those wire transfers for $200,000 was sent to an account at HSBC Bank, a United Kingdom entity, and the account holder has a listed residence in Hong Kong.(Id.; RJN, Doc. 3; Chase Records, Doc. 3-1.)
On several occasions, Lin notes that her complaint does not allege the international aspect of this wire transfer. (E.g., Mot. at 11 (“no allegations of foreign or international business transactions”). The Court GRANTS Defendants' request for judicial notice (“RJN”) and takes notice of the business records they provided. (RJN; Chase Records.) Moreover, by specifying that defendants in actions meeting the Edge Act's factual predicates may remove “at any time before the trial,” the Edge Act “overcomes the well-pleaded-complaint rule,” cf. Mesa v. California, 489 U.S. 121, 136 (1989) (cleaned up) (concluding that the federal-officer removal statute displaces the well-pleaded complaint rule); see Westmoreland Cap. Corp. v. Findlay, 100 F.3d 263, 268 (2d Cir. 1996) (citing the Edge Act as an example of Congress “explicitly” displacing the well-pleaded complaint rule), abrogated on other grounds by Vaden v. Discover Bank, 556 U.S. 49 (2009). The opposite conclusion would allow plaintiffs to render the Edge Act's grant of federal-court jurisdiction a nullity simply by omitting from their complaint the international nature of a banking transaction.
In Gray v. Ben, 2022 WL 3928375 (C.D. Cal. Aug. 31, 2022), a court in this District found that it had Edge Act jurisdiction under substantially similar circumstances. In Gray, the plaintiffs brought negligence and financial elder abuse claims, alleging that the defendants had “failed to make reasonable inquiries” of one of the plaintiffs before “authorizing [a] wire transfer to Bangkok Bank.” Id. at *1. The court found that the plaintiffs' claims arose out of an international banking transaction because “[t]he alleged failures that give rise to potential liability stem directly from Defendants' processing [of] the wire transfers authorized by [one of the plaintiffs] without inquiring about their purpose.” Id. at *3. The Court finds the Gray approach to be persuasive and follows it here: Lin's claims arise from an international banking transaction because they “stem directly from Defendants' processing [of] the wire transfer[].” Id.
Lin makes four arguments to resist the conclusion that this action meets the Edge Act's “arising out of” requirement; the Court finds none to be persuasive.
First, Lin primarily argues that “it is not [the] foreign transaction[] . . . that [is] at issue in this case” but instead “Defendant[s'] knowing assistance in the blatant financial elder abuse.” (Mot. at 23.) However, a review of Lin's complaint reveals that this a false dichotomy and that Chase's processing of the wire transfers is the alleged “blatant financial elder abuse.” For example, Lin's complaint alleges:
• “[T]he scammers then require the assistance of financial institutions, like Chase, and bank managers, like McMurray to authorize large transactions ....” (Compl. ¶ 7 (emphasis added).);
• “Chase representatives across two branches . . . failed to protect Plaintiff . . . when they wired nearly three quarters of a million dollars from the Chase account in question . . . without performing a sufficient risk assessment.” (Id. ¶ 13 (emphasis in original).);
• “In violation of their own obligations . . ., Chase representatives completed the following wire transfers from Plaintiff's Chase account ....” (Id. ¶ 50 (emphasis added).);
• “None of this banking activity . . . was monitored, flagged, reported as suspicious, reported to the co-account holder, or prevented by [Defendants] or representatives who approved or effectuated the wire transfers.” (Id. ¶ 53 (emphasis added).);
• “Chase employees continued to knowingly and substantially assist the blatant financial elder abuse, completing five more enormous transfers ....” (Id. ¶ 64 (emphasis added).); and
• “[T]he failure to report, prevent or delay the suspicious transfers . . . constituted assisting in taking of funds from Plaintiff ....” (Id. ¶ 78 (emphasis added).)
Second, Lin relies on out-of-District cases to argue that Edge Act jurisdiction exists only where a case implicates “banking law,” a term that Lin leaves undefined. (Mot. at 25; Reply at 8.) See Weiss v. Hager, 2011 WL 6425542, at *3 (S.D.N.Y. Dec. 19, 2011) (“[t]his case involves no banking law issues”); Bank of N.Y. v. Bank of Am., 861 F.Supp. 225, 233 (S.D.N.Y. 1994) (summarizing Edge Act cases as having “required [courts] to consider and apply principles of banking law to resolve them”). But the statute asks whether the action “aris[es] out of” international banking transactions, a phrase that “asks about causation.” Ford Motor Co. v. Montana Eighth Jud. Dist. Ct., 592 U.S. 351, 362 (2021) (describing “arise out of” language in personal-jurisdiction test). Had Congress wished to limit jurisdiction to cases involving “banking law,” it could have easily done so; instead, Congress broadly granted jurisdiction over cases “arising out of” international banking transactions, and this Court must adhere to that decision. Accordingly, the Court does not find Weiss and Bank of New York to be persuasive and declines to add a “banking law” requirement to the Edge Act's text.
If, by noting the lack of federal “banking law” at issue in this case, Lin intends to suggest that the Edge Act's conferral of jurisdiction is unconstitutional because it falls outside of Article III's grant of “arising under” jurisdiction, the Court rejects that argument. “As long ago as Osborn [v. Bank of U.S. in 1824], [the Supreme] Court held that Article III's ‘arising under' jurisdiction is broad enough to authorize Congress to confer federal-court jurisdiction over actions involving federally chartered corporations.” Am. Nat'l Red Cross v. S.G., 505 U.S. 247, 264 (1992) (citing Osborn v. Bank of U.S., 22 U.S. 738 (1824)). Admittedly, the Supreme Court has noted “[t]he breadth” of Osborn “has been questioned.” Verlinden B.V. v. Cent. Bank of Nigeria, 461 U.S. 480, 492 (1983) (ultimately not deciding the viability of Osborn because the statute in question “necessarily raise[d] questions of substantive federal law at the very outset”); see also Mesa v. California, 489 U.S. 121, 136 (1989) (noting there would be “serious doubt” that the federal-officer removal statute were constitutional in the absence of a “federal defense requirement”). But where “a precedent of [the Supreme] Court has direct application in a case, yet appears to rest on reasons rejected in some other line of decisions, the [lower court] should follow the case which directly controls, leaving to [the Supreme] Court the prerogative of overruling its own decisions.” Agostini v. Felton, 521 U.S. 203, 237 (1997) (quotation omitted). Thus, the Court concludes that it has Article III arising-under jurisdiction under Osborn and its progeny, which have direct application in this case involving a nationally chartered bank.
Third, Lin argues that the “arising out of” requirement is not met because only one of the seven wires was an international transaction. (Mot. at 24; Reply at 10.) However, that one wire was for $200,000 roughly 28% of the defrauded funds. Whether or not the Edge Act admits a de minimis exception, that issue is not relevant here given the substantial portion of the funds that were transferred via an international bank wire.
Fourth, Lin argues that this case does not “aris[e] out of” an international banking transaction because “a portion of Plaintiff's money” just “happened to be ultimately wired to a foreign bank” and that, “[i]f that single international wire” had not occurred, then no Edge Act jurisdiction would exist. (Mot. at 24.) The Court admits that it is somewhat strange for federal-court jurisdiction to turn on the happenstance of where a wire transferee is located, but that result flows from Congress requiring a nexus to an “international” transaction.
B. Federal-State Comity
Lin also argues that, even if the Court has Edge Act jurisdiction, “princip[les] of comity support” this Court exercising some unspecified font of discretion to remand this case back to state court. (Mot. at 26-27.) But “federal courts have a strict duty to exercise the jurisdiction that is conferred upon them by Congress.” Quackenbush v. Allstate Ins. Co., 517 U.S. 706, 716 (1996). Of course, “[t]his duty is not absolute” and there are “exceptional circumstances” well-established abstention doctrines where a federal court may properly decline to exercise jurisdiction. Id. (citing Colorado River abstention as an example). Because Lin does not argue that an abstention doctrine applies, the Court has a duty to hear this case over which it has jurisdiction.
IV. CONCLUSION
For the above reasons, Defendants' motion to remand (Docs. 13 & 14) is DENIED.