Smith v. JPMorgan Chase Bank, N.A.

Opinion

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 MARCIA SMITH, Case No.: 24-CV-1287 JLS (MSB)

12 Plaintiff, ORDER (1) DISCHARGING ORDER 13 v. TO SHOW CAUSE AND (2) SETTING NEW DEADLINE TO 14 JPMORGAN CHASE BANK, N.A., a RESPOND TO COMPLAINT business entity; SADAF ZADEH, an 15 individual; ANGEL ARENAS, an (ECF Nos. 4 & 5) 16 individual; and DOES 1–10, inclusive, 17 Defendants. 18 19 20 On July 31, 2024, the Court ordered Defendant JPMorgan Chase Bank, N.A. 21 (“Chase”) to show cause why this action should not be remanded for lack of subject matter 22 jurisdiction. See generally ECF No. 4 (“OSC”).1 Specifically, the Court questioned 23 whether Chase had satisfied its burden to establish the Court’s jurisdiction under either of 24 the bases asserted in the Notice of Removal (“Notice,” ECF No. 1): (1) jurisdiction under 25 the Edge Act (12 U.S.C. § 632); and (2) diversity jurisdiction. See id. The latter theory 26 relied on a fraudulent joinder argument. See id. at 5–8. 27 28 1 Presently before the Court is Chase’s timely Response (“Resp.,” ECF No. 5) to the 2 OSC, in which Chase doubles down on its original jurisdictional contentions. Chase’s 3 fraudulent joinder argument—though less anemic than the version included in the Notice— 4 remains unpersuasive.2 Regarding the Edge Act, however, Chase makes more compelling 5 points.3 Though the Court continues to find it bizarre for federal jurisdiction to turn 6 essentially on random chance,4 Congress appears to have made it so. See 12 U.S.C. § 632; 7 Lin v. JPMorgan Chase Bank N.A., No. 2:24-CV-01837-JLS-E, 2024 WL 2272387, at *4 8 (C.D. Cal. May 19, 2024) (“The Court admits that it is somewhat strange for federal-court 9 jurisdiction to turn on the happenstance of where a wire transferee is located, but that result 10 flows from Congress requiring a nexus to an ‘international’ transaction.”). 11 12 13 2 Chase begins by relying on Mercado v. Allstate Insurance Co., 340 F.3d 824 (9th Cir. 2003). Resp. at 12. But as the Court previously explained, questions surrounding the applicability of Mercado to 14 factually distinguishable cases preclude its application here, as the Court must resolve “all ambiguities in controlling state law” in Plaintiff Marcia Smith’s favor. OSC at 6–7 (quoting Padilla v. AT & T Corp., 15 697 F. Supp. 2d 1156, 1158 (C.D. Cal. 2009)). Chase also argues the Complaint (“Compl.,” ECF No. 1-2) 16 fails to state claims against Chase’s co-defendants. Resp. at 14–15. Again, however, Chase overlooks the Court’s prior admonition: even “[i]f a defendant cannot withstand a Rule 12(b)(6) motion, the 17 fraudulent inquiry does not end there.” OSC at 8 (quoting Grancare, LLC v. Thrower ex rel. Mills, 889 F.3d 543, 550 (9th Cir. 2018)). Chase further asserts Plaintiff “cannot prove” and “cannot establish” 18 the necessary elements of her claims. Resp. at 14–15. Chase supports these points with only Declarations (“Decls.,” ECF Nos. 5-1, 5-2) that dispute factual allegations underlying Plaintiff’s claims. This falls 19 short of what is needed to establish fraudulent joinder at this stage. See, e.g., Michaels v. Pentair Water 20 Pool & Spa, Inc., No. 10-CV-500, 2010 WL 3168253, at *7 (D. Nev. Aug. 9, 2010) (rejecting fraudulent joinder argument that asked the court to “mak[e] findings of contested facts in [defendant’s] favor”). 21 3 In relevant part, the Edge Act states: “Notwithstanding any other provision of law, all suits of a civil 22 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 23 to arise under the laws of the United States, and the district courts of the United States shall have original 24 jurisdiction of all such suits; and any defendant in any such suit may, at any time before the trial thereof, remove such suits from a State court . . . .” 12 U.S.C. § 632 (emphasis added). 25 4 Chase’s Edge Act argument relies on the fact that one of the two alleged scam transactions was a wire 26 transfer with an overseas recipient (the other transaction was a domestic cash withdrawal). See Resp. at 5–11. Despite Chase’s protestations to the contrary, the Court sees little in the Complaint to suggest 27 that the international nature of said wire transfer bears on Plaintiff’s claims. Nevertheless, the Court is 28 satisfied that the harm Plaintiff alleges derives in significant part from a wire transfer that happened to be 1 As Chase has quelled the Court’s jurisdictional concerns, the Court DISCHARGES 2 || the Order to Show Cause. Defendants SHALL RESPOND to Plaintiff's Complaint within 3 || twenty-one (21) days of the date of this Order. 4 IT IS SO ORDERED. 5 Dated: August 21, 2024 he it. J, areas ite □ 6 on. Janis L. Sammartino United States District Judge 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28