Ferdowsi v. JPMorgan Chase Bank, N.A.

Background

Arash Ferdowsi and the Arash Ferdowsi Revocable Trust filed a complaint for declaratory judgment. The complaint concerned a pending arbitration before the Financial Industry Regulatory Authority involving Arif Ahmed, JPMorgan Private Wealth Advisors LLC, and JPMorgan Securities LLC. Ferdowsi alleged that the arbitration respondents had steered him into market-linked investments while placing their financial interests ahead of his, causing losses of more than $225 million.

Ferdowsi asked the court to declare that, subject to any contrary decision by the arbitrator, he had the right under his arbitration agreements to bring and maintain the arbitration. He also asked the court to declare that the arbitration claims were not barred or otherwise affected by his failure to present them in the Federal Deposit Insurance Corporation’s administrative claims process for First Republic Bank.

The Federal Deposit Insurance Corporation, acting as receiver for First Republic Bank (the “FDIC-R”), filed counterclaims. The FDIC-R sought a declaration that Ferdowsi was barred from pursuing claims concerning conduct before First Republic Bank failed on May 1, 2023, in the arbitration or any proceeding other than this court. It also sought a permanent injunction imposing that bar.

The opinion states that Ferdowsi did not submit an administrative claim by the September 5, 2023 deadline or by the May 15, 2024 deadline for a late-filed claim after the FDIC-R notified him that it had discovered he might have a claim. The FDIC-R later filed a notice in the arbitration asserting that it was the real party in interest for claims based on acts or omissions occurring before First Republic Bank’s failure. The Financial Industry Regulatory Authority did not accept that notice of substitution. The arbitration was scheduled to begin on December 8, 2025, and conclude on January 16, 2026.

Court’s Analysis

The court considered whether it had subject-matter jurisdiction, meaning legal authority to decide the dispute. Under the Constitution’s requirement that federal courts decide only actual cases or controversies, the court explained that standing and ripeness are relevant limits. A claim is not ripe when it depends on future events that may not occur as expected or may not occur at all.

The court observed that the parties disputed whether the JPMorgan entities could be held responsible for conduct by their predecessors before First Republic Bank failed and whether Ahmed was employed by JPMorgan entities. The court stated that the arbitrator’s eventual action on those issues remained uncertain. Until those contingent events occurred, it appeared that neither side had suffered an injury concrete and particularized enough to satisfy the standing and ripeness requirements.

The court also questioned whether a favorable decision could redress any injury. It noted that neither Ferdowsi nor the FDIC-R had cited a case or statute authorizing a district court to intervene in a pending arbitration for the purposes requested. The court cited decisions stating that courts generally should not intervene in an ongoing arbitration before a final arbitration award.

Order

The court did not enter a dismissal. Instead, it directed the parties to show cause, in writing by April 16, 2025, why the entire action—including Ferdowsi’s complaint and the FDIC-R’s counterclaims—should not be dismissed for lack of subject-matter jurisdiction. The court stated that it would take the matter under submission as of April 16 unless it advised the parties that additional briefing or oral argument would assist it.