On February 29, 2024, the U.S. Supreme Court heard oral arguments in the case of Coinbase v. Suski. The case involves a sweepstakes that Coinbase sponsored related to the infamous Dogecoin, and whether the dispute should be resolved through arbitration or litigation.
Coinbase operates a large cryptocurrency exchange platform, and all of its users sign a user agreement that includes an arbitration clause. The agreement also includes a “delegation clause,” which gives the arbitrator the power to determine whether any particular dispute falls within the scope of the arbitration agreement.
David Suski and a group of other Coinbase users filed a putative class action in a California federal district court, arguing that the inclusion of a forum-selection clause in the sweepstakes rules took the dispute out of the scope of the arbitration clause in Coinbase’s user agreement. Both the trial court and the 9th Circuit agreed with Suski, concluding that the dispute should be resolved through litigation rather than arbitration.
Coinbase argues that the lower courts erred in arrogating to themselves the right to consider whether the sweepstakes rules superseded the agreement to arbitrate in the user agreement. Coinbase draws on a wealth of pro-arbitration decisions under the Federal Arbitration Act (FAA) to support its argument. Its position is that the lower courts should have enforced the delegation clause and sent the dispute to arbitration.
Suski argues that the dispute should be resolved through litigation because the inclusion of the forum-selection clause in the sweepstakes rules took the dispute out of the scope of the delegation clause in the user agreement. He contends that he should not be forced to arbitrate any dispute that a court has not determined falls within the scope of the delegation clause.
Public Citizen, in a friend-of-the-court brief, argues that the key feature of this case is supersession. For Public Citizen, this is not a case about deciding whether a particular dispute falls within the scope of the user agreement as originally written. Instead, this case involves a logically prior question: whether that agreement has been superseded by a later contract. None of the court’s earlier cases have involved disputes about the supersession of a first-in-time arbitration agreement by a second-in-time agreement between the parties.
The Supreme Court’s decision in this case will have significant implications for the enforceability of arbitration agreements in the context of cryptocurrency exchanges and sweepstakes. It remains to be seen whether the Court will side with Coinbase and enforce the delegation clause, or whether it will agree with Suski and hold that the dispute should be resolved through litigation.
