10th Circuit Finds Borrower Discrimination Claims Subject to Arbitration Clause

A three-judge panel of the U.S. Court of Appeals for the Tenth Circuit recently reversed a district court’s order denying a defendant bank’s motion to compel arbitration of a case brought by a borrower alleging that she encountered racial discrimination while waiting in the lobby of her local branch.

The plaintiff, a Black woman and bank customer, alleged that while she was in the lobby of a bank branch unlocking her debit card before withdrawing money from her account and getting checks, a white bank manager approached her, asked her to leave, and accused her of criminal trespass.  When the plaintiff replied that she was a customer, the manager allegedly called the police, who arrived but did not charge the plaintiff.  The plaintiff filed a claim in state court under Colorado state law, which the defendant bank removed to federal court before filing a motion to compel arbitration on the grounds that it fell within the scope of the arbitration clause found in the plaintiff’s Deposit Account Agreement (DAA). 

The district court had agreed that the plaintiff entered a valid arbitration agreement, but it denied defendant’s motion to compel arbitration because it found that her claims were not within the scope of the DAA because they had little to do with her account or the parties’ relationship, did not arise from or relate to the DAA, and there was no evidence that the bank intended for the DAA to encompass racial discrimination claims.  The Tenth Circuit disagreed, holding that the trial court failed to properly apply the presumption of arbitrability.  It noted that the plaintiff admitted she was at the bank branch to conduct account business and the DAA required arbitration of “any dispute relating in any way to your account or transactions . . . regardless of what theory they are based on or whether they seek legal or equitable remedies.”  The panel concluded that, because all of the plaintiff’s interactions at the branch had some causal connection to her account, they fell under the DAA.  The Tenth Circuit reversed the order and remanded the matter so the claims could be arbitrated.