Nunez v. JPMorgan Chase Bank, N.A.

Background

Grissel Nunez sued JPMorgan Chase Bank, N.A. (“Chase”) on behalf of her daughter, I.N.P., and a proposed class of minors. I.N.P. received $750,000 in a medical-malpractice settlement. The New York state court handling that settlement ordered $200,000 to be deposited with Chase “in the highest interest bearing account possible.”

Nunez opened a Chase certificate-of-deposit account on July 7, 2023, and deposited the relevant funds. According to the complaint, Chase instead offered a savings account paying 0.01% interest rather than the then-prevailing 4.5% rate. Nunez alleged that Chase committed a tortious act by failing to follow the state-court order. She sought class certification, conversion of the account to one paying the highest current interest rate, damages, punitive damages, and attorneys’ fees.

Nunez filed the case in New York state court on July 26, 2023. Chase removed it to federal court, asserting jurisdiction under the Class Action Fairness Act and diversity jurisdiction. Nunez moved to remand the case to state court. Chase moved to compel arbitration and stay the case based on a deposit-account agreement Nunez signed when she opened the account.

Motion to Remand

The court held that removal was proper under the Class Action Fairness Act. That statute permits federal jurisdiction over qualifying class actions when the proposed class has more than 100 members, at least one plaintiff and one defendant are citizens of different states, and the amount in controversy exceeds $5 million.

The court found a reasonable probability that the proposed class had more than 100 members based on a Chase employee’s declaration identifying thousands of open court-controlled accounts involving beneficiaries under 18, including hundreds in New York. It found minimal diversity because Nunez was a citizen of New York and Chase, a national banking association, was a citizen of Ohio. It also found a reasonable probability that the amount in controversy exceeded $5 million, relying in part on Nunez’s counsel’s estimate that the potential class verdict could be $50 million.

The court separately held that diversity jurisdiction also existed. Nunez and Chase were completely diverse, and the court could not conclude to a legal certainty that Nunez’s individual claim was worth less than $75,000. The court considered Nunez’s claimed actual damages and requested punitive damages in determining the amount in controversy. It therefore denied Nunez’s motion to remand.

Motion to Compel Arbitration

The deposit-account agreement stated that disputes concerning the account generally had to be resolved through binding arbitration, and that customers could opt out within 60 days of opening the account. The agreement identified a telephone number for opting out but did not expressly state that calling that number was the exclusive method.

Nunez did not call the number. Instead, she filed and served this lawsuit 19 days after opening the account, within the 60-day opt-out period. The court found the agreement ambiguous about whether filing and serving a lawsuit constituted an effective opt-out. Applying New York contract law, including the rule that ambiguities in a contract are generally construed against the party that prepared it, the court interpreted the agreement to permit opt-out by any method that gave Chase actual notice. Filing and serving the lawsuit gave Chase that notice.

The court held, alternatively, that Nunez substantially complied with the opt-out provision even if the agreement required a particular communication method. Chase had actual notice of Nunez’s decision to proceed in court and did not claim prejudice from the method she used. The court rejected Nunez’s separate argument that the agreement was an unconscionable contract of adhesion, but that conclusion did not change the result because the court found that she effectively opted out.

Disposition

Judge Paul A. Engelmayer denied both Nunez’s motion to remand and Chase’s motion to compel arbitration. The case remained in federal court, and Chase was ordered to respond to the complaint by February 13, 2024. The court stated that an initial pretrial conference would be scheduled by separate order.