The Tenth Circuit recently interpreted the scope of an arbitration clause in a Chase bank account agreement, and in a divided opinion, the Tenth Circuit found that the customer’s claims, including racial discrimination claims, were covered by the arbitration clause. See Vaughn v. JP Morgan Chase & Co, No. 24-1016 (10th Cir. Dec. 8, 2025) (click here for a copy of the decision). However, I believe this case was wrongly decided.
The plaintiff, a Chase customer, alleged race discrimination, defamation, and emotional-distress torts. She had entered a Chase branch, sat down to retrieve her debit card, and within 90 seconds, a branch manager told her she was “not welcome,” called the police, and prevented her from completing her banking transactions.
The arbitration clause at issue stated in part: “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.”
The majority held that all of the customer’s claims must be arbitrated pursuant to the broad arbitration clause because the incident occurred while she was attempting to access her account, and thus the claims were related to her bank account. However, in a separate concurring/dissenting opinion, another judge agreed that the race discrimination claims were arbitrable, but not the defamation and emotional distress claims. According to this judge, the alleged discriminatory conduct prevented the customer from accessing her accounts, and thus the customer’s discrimination claim was related to her account and subject to the arbitration clause. However, the defamatory conduct (based on the allegation that the bank manager accused her of criminal conduct) and the resulting emotional distress claim were not related to her bank account or inability to conduct a transaction, apparently because such conduct did not prevent her from accessing her account, and thus not subject to the arbitration clause.
Contrary to the Tenth Circuit’s holding, I believe all the customer’s claims should be exempt from the arbitration clause. These claims of discrimination, defamation, and emotional distress can be asserted without reference to or reliance on her bank account agreement. Imagine a friend had accompanied the customer in this case to the Chase branch. If the hypothetical friend was told to leave on account of their race and falsely accused of criminal trespass, the friend could likely bring claims of discrimination and defamation, despite not having a bank account with Chase. I view the friend’s claims and the customer’s claims as unrelated to the bank account. Similarly, imagine if the customer, upon sitting down in the lobby, becomes injured after the bank’s chair collapses. I believe such a negligence claim would be beyond the scope of the arbitration clause because one can assert such a claim without relying on the bank account agreement (although there is at least one contrary state court opinion involving a similar negligence claim against another bank). Furthermore, if Chase desired these claims to be arbitrated, Chase could have easily drafted a broader clause covering all claims between the customer and Chase, instead of a more limited, narrower clause covering claims related to a customer’s bank account. Also, even with an “infinite,” broader clause purporting to cover all claims between the parties, I believe a limit should exist and be implied so that covered claims have a nexus with the services provided in the agreement. A slip and fall in the bank’s lobby would be lacking such a nexus in my opinion and be too far removed from the services at issue, the bank’s handling of a checking or savings account.
The Tenth Circuit’s concurring/dissenting opinion also has an interesting discussion of the Supreme Court’s decision in Granite Rock. This opinion reads Granite Rock as creating a presumption of arbitrability only if a clause is ambiguous. I believe that the Supreme Court’s more recent ruling in Morgan v. Sundance can serve as a basis for arguing that presumptions in favor of arbitration should not exist; Sundance prohibits courts from creating rules that favor arbitration. For a bank’s customer agreement, one could argue that an ambiguous clause should be interpreted against the drafter, the bank, according to general contract principles. Courts should not interpret arbitration clauses using special, judge made rules that favor arbitration. Thus, under an appropriate presumption against the drafter, the claims in this case would not be subject to an arbitration clause covering claims related to one’s bank account. Claims such as an inappropriate bank charge should be covered by the Chase agreement, but not claims of racial discrimination and defamation. Finally, I don’t believe such claims are covered by the text or original purpose of the Federal Arbitration Act, and should not be covered by the FAA as a matter of policy, although courts unfortunately and routinely compel arbitration of civil rights claims and tort claims.