Margaretha Widjaja v. Jpmorgan Chase Bank, N.A.
21 F.4th 579
| 9th Cir. | 2021Background
- Widjaja, a foreign national with a Chase checking account, suffered over $500,000 in unauthorized electronic withdrawals between Oct. 2017 and Mar. 2019.
- A $29,000 fraudulent transfer to Union Bank in Nov. 2017 alerted Union Bank and led it to notify Chase; Union Bank refunded that transfer.
- Chase allegedly did not change account credentials, freeze the account, or notify Widjaja after learning of the suspected fraud; subsequent withdrawals continued (>100 withdrawals).
- Widjaja did not notify Chase of the unauthorized transfers until March 2019, claiming limited internet access while traveling; Chase reimbursed some losses but denied $300,000 based on the EFTA 60-day reporting rule.
- The district court dismissed Widjaja’s EFTA claim and related state-law claims for failure to timely report; the Ninth Circuit reversed dismissal of the EFTA claim but affirmed dismissal of the breach-of-contract and implied-covenant claims.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a consumer's late notice under 15 U.S.C. § 1693g(a) automatically lifts the EFTA liability cap | Widjaja: Even though she missed 60-day window, Chase must still prove subsequent losses “would not have occurred but for” her late notice; her factual allegations defeat dismissal | Chase: Late notice bars recovery for subsequent transfers as a matter of law | Court: Bank must prove causation; pleading survives because Widjaja plausibly alleged Chase knew of fraud and failed to act, so reversal of dismissal of EFTA claim |
| Whether "extenuating circumstances" (extended travel/limited internet) excuse late notice | Widjaja: Extended international travel with limited/no internet excused untimely reporting | Chase: Allegation is implausible and insufficient to excuse the delay | Court: Allegation was too conclusory; district court properly rejected extenuating-circumstances excuse |
| Whether bank awareness via a third party (Union Bank) satisfies the consumer-reporting requirement | Widjaja: Chase already knew of the initial fraud from Union Bank, so consumer notice was unnecessary | Chase: Statute requires consumer notice to trigger protections; third-party notice to bank is not a substitute | Court: The statute requires consumer notice to avoid potential lifting of cap; bank awareness from third parties does not replace consumer reporting for that purpose (though bank awareness affects other EFTA calculations) |
| Whether state-law contract and implied-covenant claims survive dismissal | Widjaja: Chase breached the Deposit Account Agreement and implied covenant by not protecting the account and by closing accounts after suit | Chase: No specific DAA provision was alleged; DAA permits discretionary prevention of transactions and account closure | Court: Affirmed dismissal—no contractual provision alleged; implied covenant cannot forbid what the contract expressly permits |
Key Cases Cited
- Bank of America v. City and County of San Francisco, 309 F.3d 551 (9th Cir.) (discussing EFTA’s purpose and consumer-protection context)
- Nayab v. Capital One Bank (USA), N.A., 942 F.3d 480 (9th Cir.) (pleading must allege facts to overcome a statutory affirmative defense)
- Carma Developers (California), Inc. v. Marathon Development California, Inc., 826 P.2d 710 (Cal. 1992) (implied covenant cannot prohibit what contract expressly permits)