Kardonick v. JP Morgan Chase & Co. et al

Filing 464

REPLY to Response to Motion re 456 Defendant's MOTION for Order to Show Cause and Supporting Memorandum of Law filed by Chase Bank USA, N.A.. (Attachments: # 1 Exhibit Declaration of R. Wick, # 2 Exhibit Responses & Objections to Request for Production, # 3 Exhibit Responses & Objections to Interrogatories, # 4 Exhibit Correspondence to counsel, # 5 Exhibit Correspondence to counsel, # 6 Exhibit E-mail between counsel, # 7 Exhibit Transcript of hearing)(Campbell, Dennis)

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Robert I. Noone

June 7, 2012

Robert D. Wick. Esq.
Andrew Soukup, Esq.
Covington & Burling, LLP
1201 Pennsylvania Avenue, NW
Washington, DC 20004-2401
RE:

State of West Virginia cx reL McGraw v. JP Morgan Chase & Co.
Civil Action No. 11-C-094-N. Mason County Circuit Court

Gentlemen:
I will start by pointing out that the Attorney General cannot enter into a stipulation that
extinguishes claims or rights vested with the State. The private agreement between parties in a
prior class action does not prohibit public proceedings brought by a non-party to that release.
Support for this proposition can be found in the Supreme Court’s decision in Equal Employment
Opportunity Commission v. WaffleHouse, 534 U.S. 279 (2002), where the Equal Employment
Opportunity Commission (EEOC) filed an enforcement action against an employer on behalf of
a former employee for violations of the Americans with Disabilities Act. The Supreme Court
held that a mandatory arbitration clause in the former employee’s employment contract did not
bar the EEOC from pursuing victim-specific judicial relief on behalf of the employee. The Court
reasoned that “[t]o hold otherwise would undermine the detailed enforcement scheme created by
Congress simply to give greater effect to an agreement between private parties that does not even
contemplate the EEOC’s statutory function.” Id. at 296.
Similarly, in Commodity Futures Trading Commission v. Commercial Hedge Services,
Inc., 422 F. Supp. 2d 1057 (D. Neb. 2006), a federal district court held that a federal agency was
not barred from seeking restitution for private parties who had entered into settlement
agreements with the company and received money. The court found that when private parties
settle their disputes, without the consent of the government agency, those settlements cannot
preclude the government agency from later seeking additional or full restitution for those specific
individuals. Id. at 1061 See also, Herman v. South Carolina National Bank, 140 F.3d 1413.
th
1425 (1 1 Cir. 1998) (recognizing the “well-established general principle that the government is
not bound by private litigation when the government’s action seeks to enforce a federal statute
that implicates both public and private interests”).
By comparison, the plaintiffs in Kardonick did not have the authority to waive or release
any right inherent and statutorily vested with the sovereign. See, commonwealth v. Budget Fuel
Co., 122 F.R,D. 184, 185-186 (ED. Pa, 1988). As such, the proposed stipulation limits the

213 Hale Street, Charleston WV
DIRECT

Box 3712 Charleston, WV 25337
1) 72O9 167

Ky)

rights of the State more so than the Kardonick settlement when considered in light of prevailing
law.
In the instant state court enforcement action, the West Virginia Attorney General’s
Office, pursuant to the West Virginia Consumer Credit and Protection Act (WVCCPA). seeks
injunctive relief, civil penalties, disgorgernent. restitution, as well as all other relief as the court
deems appropriate. Courts have consistently held that the consumer protection law is to be
broadly construed to effect its object of preventing unfair and deceptive practices and protecting
the public. Duncan v. JP. Morgan Chase NA., 2011 WL 5359698 (S.D. W.Va. 2011), Stale ex
rel. McGraw v. Imperial Marketing, 472 S.E.2d 792, 798 (1996). The WVCCPA grants a
number of remedies to the Attorney General.
Although the release in the Kardonick settlement is intended to limit members of the
class the right to seek further relief it does not prohibit the State from enforcing the provisions of
the WVCCPA, W. Va. Code § 46A-l..10l, et seq. Rather, because this release was part of an
agreement entered into by private parties, its effect is only binding on the parties to the
settlement.
Nevertheless, the State agrees that entering into a stipulation to clarify some of the issues
addressed in the Kardonick settlement would aid all parties in the instant action. Accordingly,
I’ve attached an alternative stipulation (which is not much different from your proposal) that
would address the issues mentioned and allow the lawsuit to continue appropriately.
Sincerely,

TI

213 Hale Street. Charleston WV 25301 MAHJNG ADDRESS Post Office Box 3712 Charleston, WV 25337
POONE [phone] sx [phone]

IN THE CIRCUIT COURT OF MASON COUNTY, WEST VIRGINiA
STATE OF WEST VIRGINIA ex rel.
DARRELL V. McGRAW, JR.,
ATTORNEY GENERAL,
P!aintjff

v.

Civil Action No. 1l-C-94-N

JPMORGAN CHASE & CO. and
CHASE BANK, USA, N.A.
Defendant.

AGREED STIPULATION
Whereas, Defendants JPMorgan Chase & Co. (“JPMorgan”) and Chase Bank USA, N.A.
(“Chase”) aver that they have made certain monetary refunds to some of their West Virginia
credit card customers as a result of a class action settlement in Kardonick v. JPMorgan Chase,
No. lO-cv-23235 (U.S. District Court, S.D. Fla.) (“Kardonick”). and
Whereas, the West Virginia class members did not have standing to bring or dismiss
claims that are inherent and statutorily vested with the State of West Virginia, and the State was
not a class member to the Kardonick settlement, and
Whereas, in the instant action the State of West Virginia, ex rel. Darrell V. McGraw, Jr.,
Attorney General is not seeking to recover funds that have actually been paid to West Virginia
consumers by virtue of the Kardonick settlement, therefore, the State will agree to a dollar for
dollar credit for any sums received by West Virginia consumers as a result of the Kardonick
settlement, and

JPMorgan, Chase, and the State, acting through its Attorney General, Darrel
l V.
McGraw, Jr., hereby STIPULATE as follows:
I

The State will grant Defendants JPMorgan and Chase a dollar-for-dollar credit

offset in the amount of money actually paid by said Defendants to their
West Virginia credit card
customers as restitution for payment protection plan charges in the Kardon
ick settlement as an
offset in any recoveries obtained in the instant action. The State otherwise
reserves all other
rights that it may have in the instant action, including without limitation,
the right to pursue
injunctive relief civil penalties, equitable remedies, the equitable relief
of disgorgement, fees
and costs of court, interest on amounts other than the dollar-for-dollar credit,
and any other
damage elements that may otherwise be available to the State under law or equity
.
2. The rights reserved by the State include without limitation the State’s rights
pursuant to Article 7 of the West Virginia Consumer Credit and Protec
tion Act, including the
State’s rights to seek disgorgement and/or restitution and any other approp
riate relief under W.
Va. Code

46A-7- 108, and also including without limitation the State’s rights to seek
relief,

such as statutory penalties, pursuant to W. Va. Code

§ 46A-7-l 11(2).

3. In consideration for the foregoing stipulation, Chase agrees (a) not to seek
enforcement of the Kardonick inj unction against the State or its counsel in connec
tion with any
claim asserted in this action, and (b) not to undertake any action of any kind agains
t the State or
its counsel in the Kardonick court in connection with the claims asserted in this
action. Chase
reserves all other rights and defenses it may have to the claims asserted in the action.
including
but not limited to any rights and defenses that Chase may have under W. Va. Code
111(1).
DATED:

May

,2012

§

46A-7-

STIPULATED AND AGREED TO BY:

L. Lee Javins. 11 (WVSB No 6613)
Special Assistant Attorney General
BUCCI BAILEY & JAVINS LC
213 Hale Street
Charleston, WV 25301
Frances A. Hughes. WV Bar No. 1816
Chief Deputy of the Attorney General
James M. Casey, WV Bar No 667
Managing Deputy Attorney General
Office of the Attorney General
State Capitol Complex
Building 1, Room E-26
Charleston, West Virginia 25305
Phone: [phone]
Fax: [phone]
Attorneys for Plaintiff

N:’CL1ENTS\04081\PLEA\LLJ Stipulation Version,docx

William W. Booker (WVSB #401)
Thomas H, Ewing (WVSB #9655)
KAY CASTO & CHANEY PLLC
1500 Chase Tower
707 Virginia Street, East
Charleston, WV 25301
Tel: [phone]
Attorneys for Defendant