The United States Supreme Court seems to be closing in on a resolution concerning a dispute about the “delegation clause” in an arbitration agreement during a Dogecoin sweepstakes run by the cryptocurrency exchange platform, Coinbase, in 2021. The key issue before the court, as detailed by legal journalist Ronald Mann, revolves around whether the dispute should be decided by a district court or an arbitrator, a decision dependent on the contractual relationship between Coinbase and its customers.
The case, Coinbase v. Suski, is the second under the Federal Arbitration Act to be heard in February. It is being viewed as less complex than the previous case, Bissonnette v. LePage Bakeries, as the dispute in the former arises from a ‘delegation clause’ that assigns not just the role of resolving the discord between the parties involved, but also determining whether any particular dispute is within the arbitrator’s jurisdiction. This issue is unquestionably technical yet pivotal to the future of arbitration in disputes of this nature.
Coinbase asserts that its user agreement addresses this question, stating that the resolution must be done by the arbitrator for all types of disputes with its customers. However, the customers claim that the sweepstakes rules, which inadvertently omitted any reference to arbitration, select the California courts as the litigation venue.
The resolution of the dispute appeared to be closer following some strenuous and repeated questioning from Justice Brett Kavanaugh. He noted that both parties seem to concur that the U.S. Court of Appeals for the 9th Circuit never actually concluded the essential question of whether the sweepstakes rules (state contract law) supplanted the original user agreement. If correct, this would suggest a remand to the 9th Circuit might be imminent, as it has yet not definitively answered this crucial question.
Justice Kavanaugh’s views found support from his colleagues Justices Elena Kagan and Sonia Sotomayor, and if the case is remanded, the question of how state contract law would handle the relationship between the user agreement and the sweepstakes rules will come into sharper focus.
For more insight on this issue, see the full report on SCOTUSblog.