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Gao v. JPMorgan Chase & Co.

United States District Court, S.D. New York

June 9, 2015

HARRY GAO and ROBERTA SOCALL, on behalf of themselves and all others similarly situated, Plaintiffs,
v.
JPMORGAN CHASE & CO. and CHASE BANK USA, N.A., Defendants.

OPINION & ORDER

PAUL A. CROTTY, District Judge.

Plaintiffs Harry Gao ("Gao") and Roberta Socall ("Socall") (collectively, "Plaintiffs") bring this putative class action against Defendants JPMorgan Chase & Co. ("JPM") and Chase Bank USA, N.A. ("Chase") (collectively, "Defendants") for breach of contract, breach of the covenant of good faith and fair dealing, fraudulent inducement, unjust enrichment, and violations of the Ohio and Florida state statutes prohibiting unfair and deceptive acts and practices following the termination of their credit card accounts and the ensuing loss of their credit card rewards points. For the following reasons, the motion is granted in part and denied in part.

BACKGROUND[1]

Rewards programs for cardholders are offered by almost all major credit card issuers in the United States, including Chase. Compl. ¶ 1. These programs "entice consumers to apply for credit cards and, once enrolled, to use the credit cards more frequently." Id. The Chase Freedom credit card is part of the Chase Ultimate Rewards program, pursuant to which cardholders earn one point or 1% rebate for each dollar charged to the card. Id. ¶ 5. Advertisements for the program "tout[] the fact that Chase rewards points do not expire." Id. The points earned by using the card "have a real, ascertainable value" and can be redeemed "for cash or merchandise." Id. ¶ 7.

In 2011, Gao applied for a Chase Freedom credit card at a Chase Bank branch location. Id. ¶ 36. Gao received the card in the mail, along with a copy of the Ultimate Rewards Program Rules and Regulations ("Program Rules") and a copy of the Cardmember Agreement. Id. ¶ 36, Ex. A, B, D, E. From 2011 until 2013, Gao made numerous purchases with his credit card, amounting to thousands of dollars. Id. ¶ 37. Pursuant to the Program Rules, Gao expected to receive one rewards point for every dollar charged to his credit card account. Id. He also expected that the rewards points would never expire. Id. Gao redeemed portions of his rewards points. Id. ¶ 7.

By July 2013, he had 10, 000 rewards points, worth approximately $100. Id. ¶ 39. During this time, he had never missed a card payment and his account was in good standing. Id. In July 2013, he unexpectedly received written notification from Chase that his credit card was terminated. Id. ¶ 40. Chase revoked the unredeemed rewards points when terminating his account. Id. Chase did not compensate Gao for the revocation of these points. Id.

Socall "applied for and received a Chase Freedom credit card in approximately 2006." Id. ¶ 41. In 2010, she applied for and received another Chase Freedom card. Id. With both of these cards, she received copies of the Program Rules. Id. Socall made numerous purchases with these credit cards, amounting to thousands of dollars. Id. ¶ 42. She made these purchases "with the belief that her expenditures would result in the accumulation of rewards points or rebates and that they would not expire." Id. ¶ 42. The Program Rules specifically stated, "Points/rebates earned in this Program will not expire." Id. As of September 2011, Socall had over 12, 000 points entitling her to a cash rebate of over $120. Id. ¶ 43. Socall never missed a monthly card payment and her account was in good standing. Id. Socall redeemed "a portion of [her] Chase Ultimate Rewards points without difficulty." Id. ¶ 7. In September 2011, she unexpectedly received written notification from Chase that her credit cards were terminated. Id. ¶ 44. Chase revoked the unredeemed rewards points when terminating her accounts. Id. Chase did not compensate Socall for the revocation of these points. Id.

This case is not about Gao and Socall getting their points back or a cash rebate. Instead, they seek to represent one main class and two subclasses of putative plaintiffs. First, they seek to represent a "National Class, " consisting of "cardholders enrolled in a Chase Rewards program during the applicable statutory period who were not in Default and had their accounts closed and their rewards points taken without compensation." Id. ¶ 48. Gao seeks to represent an "Ohio Subclass, " consisting of Ohio residents enrolled in the Rewards program "who were not in Default and had their accounts closed and their rewards points taken without compensation." Id. Socall seeks to represent a "Florida Subclass, " consisting of Florida residents enrolled in the Rewards program "who were not in Default and had their accounts closed and their rewards points taken without compensation." Id. ¶ 48.

DISCUSSION

I. Applicable Law

"To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). At this stage, "[w]hen there are well-pleaded factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement to relief." Id. at 679. The Court does not "assay the weight of the evidence which might be offered in support thereof" but instead "assess[es] the legal feasibility of the complaint." Lopez v. Jet Blue Airways, 662 F.3d 593, 596 (2d Cir. 2011) (internal citation and quotation marks omitted).

II. Analysis

A. Breach of Contract[2]

To state a claim for breach of contract under Delaware law, a plaintiff must allege "(1) the existence of the contract, whether express or implied; (2) the breach of an obligation imposed by that contract; and (3) any damages that the plaintiff incurred as a result of the breach." Yellow Pages Grp., LLC v. Ziplocal, LP, 2015 WL 358279, at *3 (Del. ...


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