Ferdowsi v. JPMorgan Chase Bank, N.A.

Background

The action had two parts: (1) Arash Ferdowsi and the Arash Ferdowsi Revocable Trust's complaint against JPMorgan Chase Bank, N.A. and the Federal Deposit Insurance Corporation as receiver for First Republic Bank; and (2) the receiver's counterclaims against Ferdowsi.

Ferdowsi had also started an arbitration before the Financial Industry Regulatory Authority against JPMorgan Private Wealth Advisors LLC, JPMorgan Securities LLC, and Arif Ahmed. Ferdowsi alleged that those respondents placed him, without his knowledge, into investments that allowed them to collect excessive fees. The parties did not dispute that the investment-mismanagement claims fell within the arbitration agreement or that the arbitration respondents were subject to an arbitration agreement.

The receiver asserted that claims against First Republic Bank had to be pursued through an administrative claim submitted to the receiver. The parties disputed whether Ferdowsi's claims against the JPMorgan wealth entities and Ahmed, including claims based partly on conduct before First Republic Bank entered receivership, could be pursued against those parties or only against the receiver. Ferdowsi sought a ruling that the claims did not have to be brought against the receiver; the receiver's counterclaims sought the opposite ruling.

Issue and court's reasoning

In an earlier order, the court directed the parties to explain why the action should not be dismissed for lack of subject-matter jurisdiction. The court noted that the arbitration hearing was set for December 2025, the arbitrator had not yet decided whether the claims against the JPMorgan wealth entities and Ahmed could only be asserted against the receiver, and Ninth Circuit authority strongly counseled against district-court intervention in an ongoing arbitration.

Ferdowsi did not disagree with that analysis and agreed that his complaint could be dismissed without prejudice if the receiver's counterclaims were dismissed as well. JPMorgan Chase Bank and the receiver objected to dismissal of the counterclaims. They argued that district courts can decide whether an arbitration was properly instituted and cited decisions addressing whether a party was bound by an arbitration agreement or whether claims fell within the agreement's scope.

The court distinguished those decisions because no one contended that the JPMorgan wealth entities or Ahmed were outside the arbitration agreement or that the investment-mismanagement claims fell outside its language. The court also distinguished cases in which federal courts decided whether claims could only be brought against the FDIC, explaining that those cases involved claims pending only in federal court. Here, the issue was pending in an ongoing arbitration, and the Ninth Circuit had never approved district-court intervention in such a proceeding for purposes of deciding an issue pending there.

Disposition

For the reasons stated in the earlier order and in this order, Judge Maxine M. Chesney ordered that the entire action be DISMISSED, without prejudice. The order therefore dismissed both Ferdowsi's complaint and the FDIC receiver's counterclaims without prejudice.