May 23, 2024

Supreme Court Decides Coinbase, Inc., v. Suski

On May 23, 2024, the U.S. Supreme Court decided Coinbase, Inc., v. Suski, No. 23-3, holding that when parties have agreed to two contracts — the first sending arbitrability disputes to arbitration, and the second sending arbitrability disputes to the courts — a court, not an arbitrator, must decide which contract governs.

Coinbase, Inc., a cryptocurrency exchange platform, and Coinbase users executed two contracts. In the first contract, the Coinbase User Agreement, the parties agreed that an arbitrator would decide all arbitrability disputes. In the second contract, the Official Rules for a “Dogecoin” sweepstakes, the parties agreed to a forum selection clause that gave sole jurisdiction over sweepstakes-related disputes to California courts. 

Once the sweepstakes concluded, the tension between these two contracts came to a head. Respondents filed a class action complaint in the U.S. District Court for the Northern District of California, alleging that the sweepstakes violated various California laws. Coinbase moved to compel arbitration, relying on the arbitration clause in the first contract. The District Court denied Coinbase’s motion, holding that the court should decide which contract governed and that the Official Rules’ forum selection clause controlled the parties’ sweepstakes-related dispute under California contract law. The Ninth Circuit affirmed.

The Supreme Court agreed that courts, not arbitrators, decide whether a subsequent contract supersedes an earlier arbitration agreement that includes a delegation clause. The Court explained that courts cannot assume that parties have agreed to arbitrate absent clear and unmistakable evidence. The Supreme Court reasoned that before referring disputes to arbitrators, courts must determine what the parties had agreed to, including, as here, whether the parties had agreed to arbitrate arbitrability for sweepstakes-related disputes. On that question, the Supreme Court noted that Coinbase appeared to concede the point by admitting that “the Court can and should assess whether the Official Rules displaced the parties’ consent to have an arbitrator decide arbitrability.”

The Court rejected the argument that the severability principle — under which a party seeking to avoid arbitration must directly challenge the arbitration or delegation clause, rather than the contract as a whole — would alter the analysis. The Court reasoned that because respondents’ challenge applied “equally” to the whole contract, including the delegation provision, the severability principle was satisfied. 

The Supreme Court declined to address whether the Ninth Circuit was wrong to hold that the Official Rules’ forum selection clause superseded the first contract’s delegation provision as outside the scope of the question presented. The Court also rejected the idea that its decision would invite “chaos” by inviting challenges to delegation clauses. 

Justice Jackson delivered the opinion for a unanimous Court. Justice Gorsuch filed a concurring opinion.

Download Opinion of the Court

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