Judge Upholds Arbitration, Carves Out Public Injunction in Iranian Asylee’s Bank Discrimination Suit

SAN FRANCISCO (LN) — U.S. District Judge Noël Wise granted in part JPMorgan Chase’s motion to compel arbitration on Wednesday, finding that the bank’s arbitration agreement was valid and enforceable for Razieh Medhat’s substantive discrimination claims. However, Wise invoked California’s McGill rule to strike the agreement’s ban on public injunctive relief, preserving Medhat’s request for such relief in court.

Medhat, an Iranian asylee who arrived in the U.S. in 2016, sued Chase after the bank restricted her accounts in June 2025. Chase required her to provide proof of immigration status, such as a green card or passport, under a policy applied to individuals from sanctioned countries. Unable to provide these documents, Medhat was forced to withdraw her funds and close her accounts. She alleges the policy violated the Equal Credit Opportunity Act, 42 U.S.C. § 1981, the Unruh Civil Rights Act, and California’s Unfair Competition Law.

Wise found that Medhat assented to Chase’s Deposit Account Agreement when she opened her account and signed a Personal Electronic Signature Card. The agreement contained a broad arbitration provision covering claims that "arise out of or relate in any way to any aspect of [the] relationship, interactions, or dealings" between Medhat and Chase.

Medhat argued the agreement was unconscionable. Wise rejected this, noting that Chase provided an all-caps notice giving depositors the right to opt out of arbitration. Because Medhat failed to demonstrate procedural unconscionability, her unconscionability claim failed as a matter of law.

Wise then addressed Medhat’s public policy arguments. Although Medhat did not cite McGill v. Citibank, N.A. or use the term "public injunctive relief" in her opposition, Wise determined that the arbitration provision’s explicit bar on seeking public injunctive relief was unenforceable under California law. The agreement prohibited Medhat from seeking "any award or remedy in arbitration against or on behalf of anyone who is not a named party to the arbitration, including but not limited to public injunctive relief."

Wise found that this prohibition could be severed of the agreement. The court noted that the agreement explicitly envisioned a scenario where liability is adjudicated in arbitration and the public injunction claim is decided in court afterward. "By way of example, if a Claim seeks both public injunctive relief and other relief, and the prohibition on an award of public injunctive relief is found to be unenforceable, then the request for public injunctive relief will be decided in litigation in court after Claims seeking other relief had been adjudicated in arbitration on an individual basis," the agreement states.

Wise stayed the public injunction determination pending the completion of arbitration. All remaining claims and prayers for relief are compelled to arbitration.

Medhat’s case highlights the ongoing tension between the Federal Arbitration Act and California’s public policy barring waivers of public injunctive relief in consumer contracts.