In a decisive opinion delivered last Thursday, the Supreme Court clarified who has the authority to determine whether disputes relate to arbitration agreements, in the context of a Dogecoin sweepstakes offered by Coinbase. The case, Coinbase v. Suski, centered on conflicting documents concerning arbitration: Coinbase’s user agreement, which mandated arbitration, and the sweepstakes rules, which were silent on the matter.
In a unanimous opinion authored by Justice Ketanji Brown Jackson, the Supreme Court dismissed Coinbase’s arguments about arbitrability, relying on fundamental contract principles. Justice Jackson broadly outlined that disputes about the nature of arbitration agreements are multi-layered: first-order disputes concern the merits of the case, second-order disputes question whether the parties agreed to arbitrate, and third-order disputes address who should decide the second-order issues. The case presented a novel “fourth-level” dispute: what happens when multiple agreements conflict over who decides arbitrability.
Justice Jackson concluded unequivocally that courts must decide such fourth-level questions based on “traditional contract principles,” emphasizing that only courts are equipped to determine whether parties agreed to send the given dispute to arbitration. This decision starkly rebuffed Coinbase’s appeals to the severability principle and concerns about potential chaos, noting that the peculiar circumstances of this case involve an apparent amendment and rescission of the original arbitration agreement by a later contract.
To read the full opinion and analysis, visit the SCOTUSblog.