Minnesota Arbitration and the Account You Never Opened

A Minnesota consumer opens a checking account. Years later she finds out the bank opened three more in her name — accounts she never applied for, on a signature card she never signed. She sues. The bank moves to compel arbitration, relying on the arbitration clause in the checking account she did open.

Your gut says the motion should fail for the obvious reason: you can’t enforce a contract against someone for a transaction they never agreed to. Minnesota law has a rule that looks exactly like that gut reaction — and it probably doesn’t decide this case.

The difference sounds academic. It decides the motion. Minnesota’s rule is about whether a contract exists. The bank’s argument is about how far an existing contract reaches. Different questions, different tests, and Minnesota’s answer to the second is a lot less friendly to the consumer than its answer to the first. The story that prompted this piece — the same clause setup, litigated to opposite postures in California and Utah — is here.

Who decides — a Minnesota judge or the arbitrator?

Start here, because if you lose this one you never get to the rest. Minn. Stat. § 572B.06(b) states the Minnesota default:

The court shall decide whether an agreement to arbitrate exists or a controversy is subject to an agreement to arbitrate, except in the case of a grievance arising under a collective bargaining agreement when an arbitrator shall decide.

Both halves of the fight — existence (“whether an agreement to arbitrate exists”) and scope (“or a controversy is subject to an agreement to arbitrate”) — go to the court, in the statute’s own words. The very next subsection hands some of it back. Section 572B.06(c):

An arbitrator shall decide whether a condition precedent to arbitrability has been fulfilled and whether a contract containing a valid agreement to arbitrate is enforceable.

And the nonwaivable-provisions section leaves a seam a bank’s drafter can use: § 572B.04(b)(1), which lists what parties may not vary before a dispute arises, protects “572B.06, subsection (a)” — not subsection (b). We’ve written about that seam, and about the Minnesota Supreme Court’s delegation analysis in Glacier Park. Instead of repeating it, see Minnesota keeps legislating against forced arbitration. The short version: a clause that clearly and unmistakably sends arbitrability to the arbitrator can move this question out of court, and bank deposit agreements are written to do exactly that.

So the first thing to read isn’t the “any dispute relating to” language. It’s the sentence that says who decides what that language means.

The Minnesota rule that helps you: void versus voidable

Minnesota has a supreme court decision holding that some contract challenges belong in court no matter how broad the arbitration clause is. In Onvoy, Inc. v. SHAL, LLC, 669 N.W.2d 344 (Minn. 2003), Justice Meyer wrote for the court: “The court of appeals held that the claims must be arbitrated. We reverse.” The court adopted an exception to the federal severability rule of Prima Paint and stated it in one sentence:

[P]arties may not be compelled to arbitrate claims if they have alleged that the contract at issue never legally existed. Therefore, allegations that a contract is void may be heard by a court, even if not specifically directed to the arbitration clause, while allegations that a contract is voidable must be sent to arbitration.

The reasoning is the one you’d expect. Describing the federal decisions it followed, the court wrote: “These federal courts reason that parties should not be forced to arbitrate under an agreement that they allege never existed.”

The consumer-facing version of the rule is in a footnote, and you should know it’s a footnote. In note 6, discussing criticism of mandatory arbitration in consumer contracts, the court wrote: “The rule we adopt today, allowing courts to retain jurisdiction over credible claims that a contract is void, leaves room for consumers to escape obvious abuses of power in contracting.”

Onvoy also confirms that state contract law decides whether an agreement to arbitrate exists: “In determining whether a valid agreement to arbitrate exists, courts look to applicable state law, as long as the state law invoked applies to contracts generally and is not aimed at arbitration clauses specifically.”

Why Onvoy does not automatically win the case

Here’s the catch.

Onvoy is a rule about existence — whether the contract holding the clause ever legally came into being. The consumer in our example isn’t saying that. She signed the checking account agreement, doesn’t deny it, concedes it’s valid, and isn’t asking a court to undo it. Her claim is that three other accounts were made up.

That makes hers a scope problem: does a concededly valid clause in Agreement A reach claims about conduct involving Accounts B, C, and D? Onvoy’s void/voidable line doesn’t answer it, because nothing here is void. That gap is why the move works. The bank doesn’t need to defend the fake accounts as contracts. It only needs the real agreement — which the consumer won’t disown, because it’s her money — to have language wide enough to swallow disputes “relating in any way to” her accounts.

Onvoy makes it worse in one way:

Parties who want the courts to retain jurisdiction over matters of contract formation, or any other particular issues they foresee may arise in the business relationship, must expressly state such an intent when drafting the arbitration clause in the contract.

That’s a drafting instruction. Nobody who’s ever been handed a deposit account signature card was in a position to follow it.

The Minnesota rule that hurts you: “relating to” is read broadly

Minnesota reads broad arbitration language broadly, and the leading case is a consumer’s problem, not a consumer’s friend.

Michael-Curry Cos. v. Knutson Shareholders Liquidating Trust, 449 N.W.2d 139 (Minn. 1989), asked whether a clause covering “[a]ny controversy or claim arising out of or relating to * * * the making” of a contract required arbitration of a claim that an amendment had been fraudulently induced. Justice Keith, for the court, said yes. The clause read:

13.01 Arbitration. Any controversy or claim arising out of, or relating to, this Agreement, or the making, performance, or interpretation thereof, shall be settled by arbitration * * *.

The test had two prongs: the clause must “either (1) specifically show that the parties intended to arbitrate fraud in the inducement, or (2) be ‘sufficiently broad to comprehend that the issue of fraudulent inducement be arbitrated.’” The clause never mentioned fraud and won anyway on the second prong. Here’s the court’s summary, and it’s the sentence a bank will quote at you:

It is difficult to see how the parties in this case could have drafted a “broader” agreement.

Two cautions. Michael-Curry was decided under the old act, Minn. Stat. ch. 572, and applies the framework of Atcas v. Credit Clearing Corp. — which Onvoy later overruled to the extent it conflicts with governing federal precedent, noting in a footnote that Atcas “may still govern the rare agreements that do not involve interstate commerce.” And the opinion carries a warning aimed at the party resisting arbitration: the court was “concerned that parties often allege fraud in the inducement as a final attempt to avoid arbitration,” and stressed that on an application to stay arbitration, “circumstances constituting fraud * * * shall be stated with particularity.” That lines up with Minn. R. Civ. P. 9.02: “In all averments of fraud or mistake, the circumstances constituting fraud or mistake shall be stated with particularity.”

In plain English: vague allegations that the bank “did something fraudulent” won’t turn a scope case into an existence case. Particularized allegations about how a specific account came into being might.

The move that matters: make it a formation case, and know what Minnesota gives you if you do

If the consumer’s leverage is on the existence side, the real question is what she can honestly put in issue.

Not the checking account. But the arbitration agreement isn’t always the one on the checking account signature card. In real deposit relationships, arbitration provisions show up later — added by change-in-terms notice, carried over in a bank conversion, or attached to a separate online-access agreement — and each of those is a formation event with its own facts about notice and assent. Whether a particular customer ever formed that agreement is a question of contract formation, not of clause scope.

Federal practice shows what happens when a plaintiff frames it that way. Section 4 of the FAA provides:

If the making of the arbitration agreement or the failure, neglect, or refusal to perform the same be in issue, the court shall proceed summarily to the trial thereof.

9 U.S.C. § 4. A federal court that finds a genuine fact dispute about the making of the agreement doesn’t compel arbitration. It tries the issue, and the section goes on to give the party alleged to be in default the right to demand a jury on it.

Minnesota’s version is different, and that matters before you pick a forum. Minn. Stat. § 572B.07(a) provides that where the refusing party opposes the motion, “the court shall proceed summarily to decide the issue,” and that “[i]f the court finds that there is no enforceable agreement, it may not order the parties to arbitrate.” In Minnesota, the court decides. The making of the agreement doesn’t go to a jury.

Two more provisions go right alongside it:

• § 572B.07(c): “The court may not refuse to order arbitration because the claim subject to arbitration lacks merit or grounds for the claim have not been established.” Don’t count on the strength of the underlying fraud claim to help at this stage.
• § 572B.28(a)(1): an appeal may be taken from “an order denying a motion to compel arbitration.” The bank gets an immediate appeal if it loses the motion. That subsection’s list doesn’t include an order granting one.

The jury-trial argument — and its actual pedigree

There’s a Minnesota constitutional argument here, and people miscite it all the time. It’s a concurrence, not the holding of the Minnesota Supreme Court.

In Onvoy, Justice Paul H. Anderson wrote separately, concurring, to say he was concerned “that too broad a construction of arbitration clause language when applied to issues such as the formation of the arbitration clause may deprive some individuals of their right to a trial by jury as guaranteed by the Seventh Amendment to the United States Constitution and Article I, Section 4 of the Minnesota Constitution.” He quoted the state provision, which provides in part:

The right of trial by jury shall remain inviolate, and shall extend to all cases at law without regard to the amount in controversy.

Minn. Const. art. I, § 4. His warning was aimed at exactly this situation:

When we construe arbitration clauses to encompass issues of contract formation, we need to be mindful of the potential for individuals to unknowingly and involuntarily waive their constitutional right to a trial by jury.

He tied it to the standard for waiving a constitutional right: “our courts must carefully scrutinize a waiver of the right of trial by jury to ascertain that it was done knowingly, voluntarily, and intelligently,” and “waiver of that right is not to be lightly presumed.”

Justice Anderson said outright that the issue “is not directly before us in this case.” It’s a signal, not a holding. Cite it as a concurrence or don’t cite it. Calling it “the Minnesota Supreme Court” misstates the authority, and that’s the kind of mistake a court remembers about a lawyer.

The route that goes around the clause entirely

Minnesota has one appellate decision here that a consumer lawyer should know, and it isn’t about reading the clause at all. In State ex rel. Hatch v. Cross Country Bank, Inc., 703 N.W.2d 562 (Minn. App. 2005), the State sued a credit card issuer and its collector under the Uniform Deceptive Trade Practices Act, the Consumer Fraud Act, the Automatic Dialing-Announcing Devices Act, and for invasion of privacy. The bank moved to compel arbitration of the tort claim, arguing that the State — suing parens patriae — stood in the cardholders’ shoes and was bound by their arbitration clauses.

The court of appeals said no, starting from first principles: “Arbitration is a matter of contract, and a party that has not agreed to arbitrate a dispute cannot be required to arbitrate.” The State wasn’t a party to the credit card agreement, “which binds only persons ‘who applied to [CCB] for … a credit card account.’” And on the FAA:

But, as noted in Waffle House, it is the language of the contract, not the FAA policy in favor of arbitration, that defines the scope of disputes subject to arbitration. “[N]othing in the statute authorizes a court to compel arbitration of any issues, or by any parties, that are not already covered in the agreement.”

The court held: “The FAA policy favoring arbitration of disputes does not compel the state to arbitrate its tort claim in this case, and the district court did not err by denying appellants’ motion to compel arbitration of the state’s claim for intrusion upon seclusion.”

That has real-world teeth. The Minnesota Attorney General’s authority under Minn. Stat. § 8.31 doesn’t depend on anyone’s consent: subdivision 1 directs the attorney general to investigate violations of the state’s consumer-protection statutes, and subdivision 3 gives the courts jurisdiction, on the attorney general’s suit, “to prevent and restrain violations of those laws” and to impose civil penalties. A private arbitration clause can’t reach that. A consumer headed for a closed arbitration should ask whether the conduct is also a matter for the AG — and should read the private attorney general provision at § 8.31, subd. 3a, a fee-shifting private remedy for the same violations. On the underlying claims, see the Consumer Fraud Act and Deceptive Trade Practices Act.

What Minnesota law has not decided

We’ve found no Minnesota appellate decision resolving whether a valid arbitration clause in an agreement the customer did sign reaches claims arising from an account the customer never opened. We looked — across Minnesota Supreme Court and Court of Appeals decisions, for arbitration paired with unauthorized accounts, forged signatures, accounts opened without consent, and identity theft — and found nothing on point. Read what follows as an open question, not a settled one. That’s a reason to brief the threshold motion as if it were the case, because in this setting it usually is.

When the bank moves to compel

1. Get the whole contract history, not just the current agreement. Arbitration provisions in deposit relationships are often added later or inherited in an acquisition. When and how the clause showed up is a formation fact, and formation facts are where the leverage is.
2. Read the delegation sentence before the “any dispute” sentence. If arbitrability is clearly and unmistakably delegated, the scope argument may never reach a judge.
3. Plead the account-opening facts with particularity. Michael-Curry and Minn. R. Civ. P. 9.02 point the same way; a general fraud allegation won’t move a court.
4. Don’t assume the fake accounts fall outside the clause just because they should. In this setting, “should” has lost more than once.
5. Ask whether the same conduct supports an Attorney General referral, and preserve the individual claim while you do.
6. Watch the forum. Minnesota decides the making of an agreement summarily under § 572B.07(a); the FAA tries it under 9 U.S.C. § 4, with a jury available on demand.

For the clause features that decide these motions — breadth, delegation, class waivers, opt-out windows, and the nonwaivable floor in § 572B.04 — see what to look for in a Minnesota bank arbitration clause. For the federal frame, see our piece on the FAA and what you cannot agree to under Minnesota law. If the accounts have already hurt your credit, start with the steps for Minnesota identity-theft victims.

Madgett Law, LLC represents Minnesota consumers against banks, debt collectors, and credit reporting agencies, including the threshold fight over whether an arbitration clause reaches a claim at all. If a bank has moved to compel arbitration of a dispute about an account you didn’t open, send us a message or call 612-470-6529.

Sources: Minn. Stat. § 572B.06 (validity of agreement to arbitrate — subsection (b), court decides existence and scope; subsection (c), arbitrator decides conditions precedent and enforceability of a contract containing a valid agreement to arbitrate); § 572B.04 (effect of agreement; nonwaivable provisions — subsection (b)(1), which protects § 572B.06, subsection (a) and not subsection (b)); § 572B.07 (motion to compel or stay arbitration — subsection (a), “the court shall proceed summarily to decide the issue” and no order to arbitrate absent an enforceable agreement; subsection (c), no refusal to order arbitration for lack of merit); § 572B.28 (appeals — subsection (a)(1), appeal from an order denying a motion to compel arbitration); and § 8.31 (additional duties of attorney general — subdivision 1, duty to investigate; subdivision 3, injunctive relief and civil penalties; subdivision 3a, private remedies) — all Minnesota Office of the Revisor of Statutes. Minn. Const. art. I, § 4 (trial by jury), Minnesota Office of the Revisor of Statutes. Minn. R. Civ. P. 9.02 (fraud pleaded with particularity), Minnesota Office of the Revisor of Statutes, Minnesota Court Rules. Onvoy, Inc. v. SHAL, LLC, 669 N.W.2d 344 (Minn. Sept. 25, 2003) — majority opinion by Meyer, J. (reversing the court of appeals; adopting the void/voidable exception to Prima Paint; “parties should not be forced to arbitrate under an agreement that they allege never existed”; state law governs whether a valid agreement to arbitrate exists; drafting instruction that parties wanting courts to retain formation questions “must expressly state such an intent”; note 6, “credible claims that a contract is void”; note 7, Atcas “may still govern the rare agreements that do not involve interstate commerce”) and the separate opinion of Anderson, Paul H., J., concurring (jury-trial concerns; Minn. Const. art. I, § 4; waiver “not to be lightly presumed”) (Caselaw Access Project). Michael-Curry Cos. v. Knutson Shareholders Liquidating Trust, 449 N.W.2d 139 (Minn. Dec. 15, 1989) (Keith, J.) (clause covering “the making” of the contract broad enough to send fraud in the inducement to arbitration; the two-prong test; “It is difficult to see how the parties in this case could have drafted a ‘broader’ agreement”; fraud must be stated with particularity on an application to stay), Caselaw Access Project. State ex rel. Hatch v. Cross Country Bank, Inc., 703 N.W.2d 562 (Minn. App. 2005) (Stoneburner, J.) (the State suing parens patriae is not bound by cardholders’ arbitration clauses; “it is the language of the contract, not the FAA policy in favor of arbitration, that defines the scope of disputes subject to arbitration,” quoting EEOC v. Waffle House, Inc., 534 U.S. 279 (2002)), Caselaw Access Project. 9 U.S.C. § 4 (summary trial, and jury demand, where the making of the arbitration agreement is in issue), Cornell Legal Information Institute. We searched Minnesota Supreme Court and Court of Appeals decisions for authority resolving whether a valid arbitration clause reaches claims arising from an account the customer never opened and found none; that search is described in the text.

This article is general legal information about Minnesota and federal law, not legal advice, and reading it does not create an attorney–client relationship. The central question it discusses is unresolved in Minnesota, and nothing here predicts how any court would rule on any particular arbitration clause, contract history, or set of facts. Whether the Federal Arbitration Act governs a given agreement, and what a particular clause covers, depend on the document and the transaction. No outcome is promised or implied.