Shahriar Jabbari and Kaylee Heffelfinger opened bank accounts at Wells Fargo. Then, according to their complaint, Wells Fargo opened other accounts in their names that they’d never asked for, and moved money out of the real accounts to pay the fees the fake ones ran up.
They sued. Wells Fargo moved to compel arbitration. And the tool it grabbed was the arbitration clause in the account agreements the plaintiffs had actually signed.
Think about that for a second. The customers said the bank faked their consent. The bank’s answer was their consent. Not consent to the accounts in the lawsuit. Consent to different accounts, in a document signed years earlier, with language broad enough — the bank argued, and the court agreed it was at least arguable — to swallow a dispute about accounts nobody had agreed to open.
It worked. On September 23, 2015, Judge Vince Chhabria granted the motions and dismissed the complaint. Jabbari v. Wells Fargo & Co., No. 3:15-cv-02159-VC (N.D. Cal.), ECF No. 69.
How does a clause about your accounts reach accounts that aren’t yours?
The order rests on two moves. Neither one was a trick, and that’s exactly why the result is worth your time. Both are as ordinary as arbitration law gets.
The first move: the customer had already agreed that an arbitrator, not a judge, would decide what’s arbitrable. Jabbari’s provision sent to an arbitrator “any disagreement about . . . whether a disagreement is a ‘dispute’ subject to binding arbitration.” Heffelfinger’s said an arbitrator would decide “disagreements about the . . . application . . . of this arbitration agreement.” The court needed one sentence:
These provisions clearly assign arbitrability determinations to the arbitrator.
And nothing in the paperwork cut the other way: “Nor do the plaintiffs’ agreements with Wells Fargo contain other language that would create doubt about whether the parties intended to delegate the arbitrability determination.”
The second move: the clause language was wide enough to keep the bank’s position off the floor. Jabbari’s clause covered “any unresolved disagreement between or among you and the Bank . . . includ[ing] any dispute relating in any way to your Accounts and Services . . . .” Heffelfinger’s reached “any unresolved disagreement between you and the Bank . . . includ[ing] any disagreement relating in any way to services, accounts or matters . . . .”
Back then, a federal court applying a delegation clause could still run one narrow sanity check. If the defendant’s argument that the dispute fell inside the clause was “wholly groundless,” the court could keep arbitrability for itself. Judge Chhabria ran the check. Wells Fargo passed it:
The misuse of information and funds associated with their accounts may “relate” to the legitimate accounts, so Wells Fargo’s assertion of arbitrability is not wholly groundless.
The plaintiffs’ best shot was Heffelfinger’s calendar. Two accounts were opened in her name in January 2012, weeks before she opened legitimate accounts in March 2012. So her claims about those accounts “may have arisen before she had any voluntary involvement with Wells Fargo. If so, it’s difficult to imagine that this aspect of the dispute would be subject to the arbitration provision.” The court sent it to arbitration anyway. At argument, Wells Fargo’s lawyer suggested its employees may have created the January accounts after Heffelfinger first walked into a branch and handed over her information. That bare possibility was enough. “In other words, Wells Fargo’s argument that this aspect of the dispute is arbitrable is not wholly groundless.”
Here’s what matters most about this order in 2026: that sanity check is gone. In Henry Schein, Inc. v. Archer & White Sales, Inc., 586 U.S. 63 (2019), a unanimous Supreme Court held, through Justice Kavanaugh:
We conclude that the “wholly groundless” exception is inconsistent with the text of the Act and with our precedent.
And the Court didn’t leave anything behind:
When the parties’ contract delegates the arbitrability question to an arbitrator, a court may not override the contract. In those circumstances, a court possesses no power to decide the arbitrability issue.
Judge Chhabria’s review was already thin. He checked whether the bank’s argument was colorable, not whether it was right. A court handed the same clause today couldn’t do even that much. Where a delegation provision is valid and the dispute is covered by the contract, whether a claim about a fabricated account belongs in arbitration is itself a question for the arbitrator.
Utah: same bank, same clauses, a very different road
A parallel class action in Utah shows where the real pressure point is. It isn’t where most people push.
Mitchell v. Wells Fargo Bank, N.A., No. 2:16-cv-00966-CW (D. Utah), was filed September 16, 2016. Wells Fargo moved to compel arbitration again, leaning on the account agreements again. On November 29, 2017, Judge Clark Waddoups didn’t grant the motion and didn’t deny it. He issued a “Memorandum Decision and Order Reserving Ruling on Defendants’ Motion to Compel Arbitration Pending a Summary Trial,” ECF No. 114 — and set the arbitration question for trial.
The reason is in the text of the Federal Arbitration Act itself. Section 4 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. The Utah plaintiffs had put the making of the agreements in issue: whether particular plaintiffs ever formed an arbitration agreement at all, and whether they ever formed the separate agreement to delegate arbitrability. The court put the burden where the Tenth Circuit puts it: “Wells Fargo, as the party seeking to compel arbitration, has the burden to show that arbitration agreements exist and apply to these Plaintiffs.” Then it noted what a fight over formation does to the thumb on the scale. The general presumption favoring arbitration “disappears when the parties dispute the existence of a valid arbitration agreement,” quoting Dumais v. American Golf Corp., 299 F.3d 1216, 1220 (10th Cir. 2002).
Its conclusion listed what the trial would decide:
The court will resolve material issues of fact regarding the existence of certain arbitration agreements, the parties’ intent to delegate questions of arbitrability and the potential unconscionability of doing so in these circumstances, and the possibility that Wells Fargo intentionally waived its right to arbitrate through its CEO’s statements under oath to Congress that it is no longer pursuing arbitration in these cases.
There was no summary trial. On December 26, 2017, Wells Fargo withdrew its motion to compel arbitration. ECF No. 131.
Two cases. One bank. One set of form clauses. Opposite results — and the difference was never the clause. The Jabbari plaintiffs didn’t deny that their real account agreements existed. They fought about how far a clause everyone agreed was valid could reach. The Mitchell plaintiffs went after formation itself. Scope questions go to the arbitrator when the contract says so. Existence questions don’t. When one of these files lands on my desk, that’s the first fork I look for.
The scale, the settlement, and the rule Congress killed
Nobody disputes the regulatory numbers. On September 8, 2016, the Consumer Financial Protection Bureau fined Wells Fargo Bank, N.A. “$100 million for the widespread illegal practice of secretly opening unauthorized deposit and credit card accounts,” In re Wells Fargo Bank, N.A., No. 2016-CFPB-0015. The Bureau’s action page states that “[a]ccording to the bank’s own analysis, employees opened more than two million deposit and credit card accounts that may not have been authorized by consumers,” and describes an additional “$35 million penalty to the Office of the Comptroller of the Currency, and another $50 million to the City and County of Los Angeles.”
Jabbari settled after the appeal. Class counsel’s motion for preliminary approval, filed April 20, 2017, describes a “$142 million non-reversionary Class Action Settlement” covering people for whom Wells Fargo opened an account, enrolled a product, or submitted an application without consent between May 1, 2002 and April 20, 2017. Judge Chhabria granted preliminary approval on July 8, 2017.
That same motion has the most revealing sentence in the whole file. Explaining why settling beat litigating, class counsel wrote that Wells Fargo’s contracts contain broad arbitration clauses with “an equally broad delegation provision, plus a bar to classwide arbitration,” and that “[t]he arbitration clause—and particularly its delegation provision—may very well have ended up barring classwide relief.” Lawyers don’t write that sentence about a problem they think they can beat.
The federal rule that would have dealt with this was killed before it took effect. The CFPB’s 2017 arbitration rule would have barred class-action waivers in consumer financial contracts. Congress disapproved it under the Congressional Review Act:
Resolved by the Senate and House of Representatives of the United States of America in Congress assembled, That Congress disapproves the rule submitted by the Bureau of Consumer Financial Protection relating to “Arbitration Agreements” (82 Fed. Reg. 33210 (July 19, 2017)), and such rule shall have no force or effect.
Pub. L. No. 115-74, 131 Stat. 1243 (approved Nov. 1, 2017). Nothing federal has replaced it. What’s left is the contract in front of you and your state’s arbitration act. For a Minnesotan, that means what the state can and cannot resist under the FAA.
Where would a Minnesotan’s version of this fight get decided?
Wells Fargo isn’t a Minnesota bank and isn’t headquartered here. The Minnesota connection is corporate family history, and it’s specific: on October 14, 1998, the Federal Reserve Board announced its approval of “the proposal of Norwest Corporation, Minneapolis, Minnesota, to acquire Wells Fargo & Company, San Francisco, California . . . .” The merged company took the Wells Fargo name. The SEC registrant that files as WELLS FARGO & COMPANY/MN (CIK 0000072971) is the same registrant that filed as NORWEST CORP until October 1998. That’s a fact about a merger and nothing more. It’s certainly not a basis for jurisdiction.
The reason a Minnesotan should care has nothing to do with the letterhead. The same “relating in any way to” language sits in deposit agreements signed all over this state, and a Minnesota consumer who brings this fight in a Minnesota court gets Minnesota’s arbitration act for procedure.
Start with Minn. Stat. ch. 572B. Section 572B.06(b) sets a default that points away from the Jabbari result:
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.
Section 572B.07(a) supplies the procedure, and it’s worth laying its language next to 9 U.S.C. § 4 word for word. If the party resisting arbitration opposes the motion, “the court shall proceed summarily to decide the issue,” and “[i]f the court finds that there is no enforceable agreement, it may not order the parties to arbitrate.” Where the FAA sends a contested question of formation to a trial, with a jury available on demand, Minnesota’s statute has the court decide it summarily. That’s not a small difference. It’s one reason a Minnesota consumer’s leverage at this stage isn’t the same as a federal plaintiff’s.
Section 572B.28(a)(1) then makes the ruling appealable right away. An appeal may be taken from “an order denying a motion to compel arbitration.” Notice who that helps. The consumer who loses the motion gets no comparable immediate route.
None of that answers the hard question: can a valid clause in an account you opened reach claims about an account you never opened? Minnesota has a supreme court decision drawing the line between contracts that are void and contracts that are merely voidable, and a concurrence in that same case warning about jury-trial waivers in adhesion contracts. I take that question on directly in Minnesota arbitration and the account you never opened.
Read the clause before you file anything
The Jabbari order isn’t a scandal. It’s an ordinary application of two ordinary rules — parties can delegate arbitrability, and broad clauses get read broadly — to facts those rules were never built for. The doctrine did exactly what it says. The design is the problem.
A system built on consent has a blind spot: it can’t easily handle a claim that the consent was manufactured, because the thing it looks at for the answer is the consent document. Schein then took away the last judicial check on that answer, and Congress took away the one regulatory fix anybody had managed to enact.
What’s left is the clause, read early and read closely, and in my experience that reading is most of the case. If your credit report shows an account you never opened, take the practical steps first — see our guide for identity-theft victims and, if the error won’t come off, what to do when a credit report error won’t get fixed. But pull the account agreement for the account you did open before a complaint goes anywhere near a courthouse. For the longer story of how a 1925 merchants’ statute became a consumer regime, see our piece on the FAA and the courthouse door is narrowing.
Madgett Law, LLC represents Minnesota consumers in credit reporting, debt collection, and unauthorized-account disputes, including the first fight over whether a claim belongs in court at all. If a bank has pulled an arbitration clause on you, send us a message or call 612-470-6529.
Sources: Order Granting Defendants’ Motions to Compel Arbitration, Jabbari v. Wells Fargo & Co., No. 3:15-cv-02159-VC (N.D. Cal. Sept. 23, 2015), ECF No. 69 (delegation language; “clearly assign arbitrability determinations to the arbitrator”; absence of contrary language; the Jabbari and Heffelfinger clause text; “not wholly groundless”; the Heffelfinger January 2012 / March 2012 timeline; dismissal), RECAP archive of the docket. Docket, Jabbari v. Wells Fargo & Co., No. 3:15-cv-02159 (N.D. Cal.) (Consolidated Amended Complaint filed July 30, 2015; notice of appeal filed Oct. 20, 2015, docketed as 9th Cir. No. 15-17099; Joint Notice of Settlement filed Mar. 28, 2017; order granting preliminary approval, July 8, 2017). Plaintiffs’ Motion for Preliminary Approval of Class Action Settlement, id., ECF No. 101 (filed Apr. 20, 2017), at 2 and 3 (“$142 million non-reversionary Class Action Settlement”; the delegation provision “may very well have ended up barring classwide relief”; class period May 1, 2002 to April 20, 2017) — a party’s filing, not a court holding. Henry Schein, Inc. v. Archer & White Sales, Inc., 586 U.S. 63 (2019) (Kavanaugh, J., for a unanimous Court) (abolishing the “wholly groundless” exception; “a court possesses no power to decide the arbitrability issue”), opinion text from the Cornell Legal Information Institute. Memorandum Decision and Order Reserving Ruling on Defendants’ Motion to Compel Arbitration Pending a Summary Trial, Mitchell v. Wells Fargo Bank, N.A., No. 2:16-cv-00966-CW (D. Utah Nov. 29, 2017), ECF No. 114, at 2, 8, 21, and 50 (burden on the party seeking to compel, at 8; presumption “disappears” where existence is disputed, quoting Dumais v. American Golf Corp., 299 F.3d 1216, 1220 (10th Cir. 2002), at 21; the issues reserved for summary trial, at 50), from the U.S. Government Publishing Office’s United States Courts Opinions collection; and Memorandum Decision and Order Granting Defendants’ 12(b)(1) Motion and Granting, in Part, Defendants’ 12(b)(6) Motion, Mitchell, ECF No. 164 (D. Utah Dec. 21, 2018), at 2 n.2 (complaint filed Sept. 16, 2016; Wells Fargo withdrew its motion to compel arbitration on Dec. 26, 2017, ECF No. 131), from the U.S. Government Publishing Office’s United States Courts Opinions collection. 9 U.S.C. § 4 (summary trial where “the making of the arbitration agreement . . . be in issue”), Cornell Legal Information Institute. Consumer Financial Protection Bureau, enforcement action page, In re Wells Fargo Bank, N.A., No. 2016-CFPB-0015 (initial filing date Sept. 8, 2016) ($100 million CFPB penalty; “more than two million” possibly unauthorized accounts per the bank’s own analysis; $35 million OCC and $50 million Los Angeles). Pub. L. No. 115-74, 131 Stat. 1243 (H.J. Res. 111, approved Nov. 1, 2017) (disapproving the CFPB arbitration rule, 82 Fed. Reg. 33210 (July 19, 2017)), text from govinfo. Federal Reserve Board press release, Oct. 14, 1998 (approval of Norwest Corporation’s proposal to acquire Wells Fargo & Company). U.S. Securities and Exchange Commission EDGAR submissions data, CIK 0000072971 (current name “WELLS FARGO & COMPANY/MN”; former name “NORWEST CORP” through October 1998; state of incorporation Delaware; principal offices in San Francisco). Minn. Stat. § 572B.06, subsection (b) (court decides existence and scope); § 572B.07, subsection (a) (court “shall proceed summarily to decide the issue”; no order to arbitrate absent an enforceable agreement); and § 572B.28, subsection (a)(1) (appeal from an order denying a motion to compel arbitration) — Minnesota Office of the Revisor of Statutes.
This article is general legal information about Minnesota and federal law, not legal advice, and reading it does not create an attorney–client relationship. It describes decisions in cases involving other parties and other contracts; nothing here predicts how any court would rule on any particular arbitration clause or set of facts. No outcome is promised or implied.