JPMorgan Chase Bank Wins SDNY Remand to Arbitration of Cashier's Checks Escheat Case

August 4, 2020

Notwithstanding that I'm a lawyer, I'm still puzzled when I see a contract that proscribes "any and all" conduct of a particular nature. What the hell falls under "any" but not under "all," and vice versa? Imagine a sign in the window of a local store that says "Closed on all Sundays." Now imagine a sign that says "Closed on any Sunday" And, okay, just to beat this to death, imagine a sign that says "Closed on any and all Sundays." Oh yes, there are legal and grammatical experts who will make an arcane case about the distinction but, c'mon, it's a distinction without much of a difference. No matter which of the three signs are hanging in the window, the shop ain't open on Sunday, right? Never on a Sunday! All of which provides a segue into a recent federal case involving JPMorgan Chase Bank and an agreement that requires arbitration of "any," "all," and/or "any or all" claims and disputes.  

The Uncashed Cashier's Checks

Harold Dill and Edward Appleby purchased cashier's checks from JPMorgan Chase Bank in the respective aggregate amounts of about $13,000 and $10,000 in 2012 and 2013 respectively. Dill and Appleby allege that their cashier's checks were never negotiated and JPM never paid a penny on the instruments. Accordingly, Dill and Appleby assert that their cashier's checks became "abandoned property" subject to state escheat laws. Apparently, JPM didn't quite see it that way. Which would explain why we have: Harold R. Dill, Edward M. Appleby, and Kari Garber, Plaintiffs, v. JPMorgan Chase Bank, N.A., Defendant (Opinion and Order, United States District Court for the Southern District of New York ("SDNY"), 19-CV-10947)

Plaintiffs' claims stem from their aforementioned purchases of the Checks from Defendant with funds from their respective accounts with Defendant. (Compl. ¶¶ 1-2, 11-12; Villarreal Decl. ¶ 4). They allege that the Checks were never negotiated (i.e., cashed) and that Defendant paid no funds on the Checks. (Compl. ¶ 2). Thus, Plaintiffs claim that the Checks eventually became abandoned property subject to applicable state laws of escheatment and to 12 U.S.C. § 2503, the federal statute governing the priority of escheatment of written instruments (including cashier's checks). (Id. at ¶¶ 19- 25). However, instead of following the applicable state laws of escheatment and § 2503, Defendant allegedly delivered the funds from the Checks to Ohio. (Id. at ¶¶ 11-12). Plaintiffs further allege that Defendant failed to provide them with proper notice that the Checks had been deemed abandoned. (Id.). Such notice would have enabled Plaintiffs to claim the funds to which they were entitled. (Id.). As a result of Defendant's alleged misconduct, Plaintiffs claim that they were deprived of proper notice, of the use of funds from the uncashed Checks, and of the interest thereon. (Id. at ¶ 32).

at Page 6 - 7 of the SDNY Opinion and Order

You know that expression about making a "federal case" out of something? Well, this is the living embodiment of that expression because in November 2019, the dispute turned into a class action alleging conversion, negligence, unjust enrichment, and unfair competition. In response to the Complaint, JPM filed a Motion to Compel Arbitration and to Stay the Action. At issue is JPM's "Account Rule & Regulations" (the "Deposit Account Agreement" or the "DAA"). JPM says that Plaintiffs' claim fall under the DAA but they disagree. For a sense of how complicated the DAA issue was, consider this:

Dill was an account holder with Washington Mutual ("WaMu") in Connecticut when Defendant sent Dill a welcome letter informing him that his WaMu deposit account and services would become a similar account and services with Defendant (the "7236 Account"). (Deck Decl. ¶¶ 2-4; id. at Ex. A). Along with the letter, Defendant sent Dill a copy of its DAA (the "2009 DAA"), which informed Defendant's account-holders that they agreed to be bound by its terms and conditions. (Id. at ¶¶ 3-4; id. at Ex. B). In June 2011, Dill opened an additional account with Defendant in Connecticut, ending in 5692 (the "5692 Account"). (Id. at ¶ 5). Dill executed a signature card acknowledging receipt of the 2009 DAA when he opened the 5692 Account. (Id.). Thereafter, Defendant revised the terms of the DAA and included it as an insert to the December 2011 monthly statement sent to Dill, with an effective date of February 1, 2012 (the "2012 DAA"). (Id. at ¶ 6; id. at Ex. C). In October 2012, Dill closed the 7236 and 5692 Accounts. (Id.). In November 2012, Dill opened another account with Defendant in Connecticut, ending in 6980, which remains open today (the "6980 Account"). (Id.). Dill executed a signature card acknowledging receipt of the 2012 DAA when he opened the 6980 Account. (Id. at ¶ 5). 

In July 2012, Plaintiff Appleby was added as an account holder to an account with Defendant, ending in 8419 (the "8419 Account"), and executed a signature card acknowledging receipt of the 2012 DAA. (Deck Decl. ¶ 7; id. at Ex. D). The account was located in California. (Id. at ¶ 7). In February 2013, Appleby opened another account ending in 9517 (the "9517 Account"). (Id.). The 8419 Account was closed in November 2013 and the 9517 account was closed in January 2014. (Id.).

at Pages 3 - 4 of the SDNY Opinion and Order

The DAA Arbitration Clause: Any, All, and Any and All

The 2012 DAA contains an arbitration clause, which, in pertinent part states:

You and we agree that upon the election of either of us, any dispute relating in any way to your account or transactions will be resolved by binding arbitration as discussed below, and not through litigation in any court (except for matters in small claims court). This arbitration agreement is entered into pursuant to the Federal Arbitration Act, 9 U.S.C. §§ 1-16 ("FAA"). . . .



. . .

Claims or disputes between you and us about your deposit account, transactions involving your deposit account, safe deposit box, and any related service with us are subject to arbitration. Any claims or disputes arising from or relating to this agreement, any prior account agreement between us, or the advertising, the application for, or the approval or establishment of your account are also included. Claims are subject to arbitration, regardless of what theory they are based on or whether they seek legal or equitable remedies. Arbitration applies to any and all such claims or disputes, whether they arose in the past, may currently exist, or may arise in the future. All such claims or disputes are referred to in this agreement as "Claims." The only exception to arbitration of Claims is that both you and we have the right to pursue a Claim in a small claims court instead of arbitration, if the Claim is in that court's jurisdiction and proceeds on an individual basis.

. . .

YOU HAVE A RIGHT TO OPT OUT OF THIS AGREEMENT TO ARBITRATE, AS DISCUSSED BELOW. . . . You have the right to opt out of this agreement to arbitrate if you tell us within 60 days of opening our account (or within 60 days of the effective date of this agreement, if your account was already open).

"Any" Time At All

In addressing JPM's Motion to Compel Arbitration, SDNY finds that the parties' dispute falls within the scope of the DAA's arbitration provision. 

[T]he DAA states, inter alia, that "any dispute relating in any way to your account or transactions will be resolved by binding arbitration"; that "ALL DISPUTES, EXCEPT AS STATED BELOW, MUST BE RESOLVED BY BINDING ARBITRATION"; that "[c]laims and disputes . . . about your deposit account, transactions involving your deposit account, safe deposit box, and any related service with us are subject to arbitration"; and that "[a]ny claims or disputes arising from or relating to this agreement . . . are included." (Deck Decl., Ex. C at 26 (emphases added)). The Second Circuit has consistently construed similar language as broad. See, e.g., Gaul v. Chrysler Fin. Servs. Ams. LLC, 657 F. App'x 16, 17 (2d Cir. 2016) (summary order) (explaining how an arbitration agreement containing language that "any claim or dispute . . . which arises out of or relates to [the] Lease or any resulting transaction or relationship arising out of [the] Lease shall" was broad); Holick, 802 F.3d at 394 ("[T]he arbitration clause at issue here is broad because it applies to '[a]ll claims, disputes, or controversies arising out of, or in relation to this document or Employee's employment.' "); see also Getz, 2018 WL 5276246, at *2 (finding that a clause covering "any dispute that in any way relates to or arises . . . from any equipment, products, or services you receive from [Verizon]" was "sufficiently broad to create a strong presumption of arbitrability"). There is therefore little question that the arbitration provisions at issue in the instant motion are sufficiently broad to create a strong presumption of arbitrability.

at Pages 12 - 13 of the SDNY Opinion and Order

A Host of Unpersuasive Objections

Having found that the DAA casts a broad net in terms of what constitutes an arbitrable dispute, SDNY rejects Plaintiffs' efforts to restrict the jurisdictional grasp of the agreement [Ed: footnotes omitted]: 

Plaintiffs raise a host of objections, none of which is persuasive. For example, Plaintiffs argue that their claims are about Defendant's failure to abide by its obligations under various escheatment laws, not about Defendant's conduct in relation to Plaintiffs' acquisition of the Checks. (See Pl. Opp. 16- 17). However, the DAA's arbitration provision does not limit itself to claims challenging the lawfulness of cashier's check transactions; it covers "any dispute relating in any way" to Plaintiffs' accounts or transactions. (Deck Decl., Ex. C at 26).3 Plaintiffs are thus reading into the DAA a limitation that does not, in fact, exist. 

Plaintiffs also attempt to argue that, because cashier's checks are paid out from a bank's own resources, as opposed to from the purchaser's account, the Checks, once purchased, ceased to have any connection with Plaintiffs' respective deposit accounts. (See Pl. Opp. 17-19). Thus, the Court understands Plaintiffs to argue, the DAA's arbitration provision cannot cover their escheatment-related claims because there is a temporal and financial disconnect between the Checks and Plaintiffs' deposit accounts with Defendant. (See id.). Plaintiffs cite no authority to support this particular proposition. Moreover, Plaintiffs' argument conveniently ignores again the broad nature of the DAA's arbitration provision. The arbitration provision covers any claim or dispute about Plaintiffs' deposit accounts, transactions involving their deposit accounts, and any related service. (See Deck Decl., Ex. C at 26; id., Ex. D at 19-20). It is irrelevant that the funds for the Checks would not eventually be drawn from Plaintiffs' deposit accounts; what is important is that Plaintiffs used their respective accounts to purchase the Checks. Thus, claims relating to those Checks fall within the scope of the arbitration provision.

at Pages 15 - 16 of the SDNY Opinion and Order

Ultimately, SDNY find that the Plaintiffs and Defendants are parties to an enforceable arbitration agreement, which was broadly drafted and, by virtue of its expansive coverage, the presumption is that the instant dispute falls within its ambit. For the reasons noted above, SDNY granted Defendant JPM's Motion to Compel Arbitration, ordered a Stay as to Plaintiffs Dill and Appleby only, ordered Defendant to answer, move or otherwise respond to Plaintiff Kari Garber's claims.