Coinbase v. Suski, 602 U.S. ___ (2024)
The case involves a dispute between Coinbase, Inc., a cryptocurrency exchange platform, and its users. The users had agreed to two contracts with Coinbase. The first contract, the User Agreement, contained an arbitration provision stating that an arbitrator must decide all disputes, including whether a disagreement is arbitrable. The second contract, the Official Rules for a promotional sweepstakes, contained a forum selection clause stating that California courts have sole jurisdiction over any controversies regarding the promotion. The users filed a class action 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 based on the User Agreement’s arbitration provision. The District Court denied the motion, ruling that the Official Rules’ forum selection clause controlled the dispute. The Ninth Circuit affirmed this decision.
The Supreme Court of the United States affirmed the Ninth Circuit's decision. The Court held that when parties have agreed to two contracts—one sending arbitrability disputes to arbitration, and the other either explicitly or implicitly sending arbitrability disputes to the courts—a court must decide which contract governs. The Court rejected Coinbase's arguments that the Ninth Circuit should have applied the severability principle and that the Ninth Circuit erroneously held that the Official Rules’ forum selection clause superseded the User Agreement’s arbitration provision. The Court also dismissed Coinbase's concern that its ruling would invite chaos by facilitating challenges to delegation clauses. The Court concluded that a court, not an arbitrator, must decide whether the parties’ first agreement was superseded by their second.
A judge, rather than an arbitrator, must decide whether a subsequent contract supersedes an earlier arbitration agreement that contains a delegation clause.
SUPREME COURT OF THE UNITED STATES
Syllabus
COINBASE, INC. v. SUSKI et al.
certiorari to the united states court of appeals for the ninth circuit
No. 23–3. Argued February 28, 2024—Decided May 23, 2024
The dispute here involves a conflict between two contracts executed by petitioner Coinbase, Inc., operator of a cryptocurrency exchange platform, and respondents, who use Coinbase. The first contract—the Coinbase User Agreement that respondents agreed to when they created their accounts—contains an arbitration provision with a delegation clause. Per this provision, an arbitrator must decide all disputes under the contract, including whether a given disagreement is arbitrable. The second contract—the Official Rules for a promotional sweepstakes respondents entered—contains a forum selection clause providing that California courts “shall have sole jurisdiction of any controversies regarding the [sweepstakes] promotion.” Respondents ultimately filed a class action 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 based on the User Agreement’s delegation clause. The District Court determined that the Official Rules’ forum selection clause controlled the parties’ dispute and accordingly denied the motion. The Ninth Circuit affirmed.
Held: Where parties have agreed to two contracts—one sending arbitrability disputes to arbitration, and the other either explicitly or implicitly sending arbitrability disputes to the courts—a court must decide which contract governs. Pp. 4–9.
(a) The Federal Arbitration Act “reflects the fundamental principle that arbitration is a matter of contract.” Rent-A-Center, West, Inc. v. Jackson, 561 U.S. 63, 67. Given that arbitration agreements are simply contracts, the first question in any arbitration dispute must be: What have these parties agreed to? Parties can form multiple levels of agreements concerning arbitration, and thus can have different kinds of disputes. At a basic level, parties can agree to send the merits of a dispute to an arbitrator. The merits of a dispute is a first-order disagreement. The parties may also have a second-order dispute—“whether they agreed to arbitrate the merits”—as well as a third-order dispute—“who should have the primary power to decide the second matter.” First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 942. Pp. 4–5.
(b) This case involves a fourth kind of dispute: What happens if parties have multiple agreements that evidence a conflict over the answer to the third-order question of who decides arbitrability? That question can be answered as to these parties only by determining which contract applies. Homing in on the conflict between the delegation clause in the first contract and the forum selection clause in the second, the question becomes whether the parties agreed to send the given dispute to arbitration. And that question must be answered by a court.
Coinbase asks the Court to revisit the Ninth Circuit’s bottom-line conclusion below, but its arguments are unpersuasive. First, Coinbase argues that the Ninth Circuit should have applied the so-called severability principle—under which “an arbitration [or delegation] provision is severable from the remainder of the contract,” Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440, 445–446—and considered only arguments specific to the User Agreement’s delegation provision. But the severability rule does not require that a party challenge only the arbitration or delegation provision. Rather, where a challenge applies “equally” to the whole contract and to an arbitration or delegation provision, a court must address that challenge. Rent-A-Center, 561 U. S., at 71.
Coinbase next contends that, as a matter of California state law, the Ninth Circuit erroneously held that the Official Rules’ forum selection clause superseded the User Agreement’s delegation provision. That issue is outside the scope of the question presented, and the Court does not address it.
Finally, the Court does not believe its ruling here will invite chaos by facilitating challenges to delegation clauses. Regardless, where the parties have agreed to two contracts, a court must decide which contract governs. To hold otherwise would be to impermissibly elevate a delegation provision over other forms of contract. See ibid. Pp. 5–8.
55 F. 4th 1227, affirmed.
Jackson, J., delivered the opinion for a unanimous Court. Gorsuch, J., filed a concurring opinion.
Adjudged to be AFFIRMED. Jackson, J., delivered the opinion for a unanimous Court. Gorsuch, J., filed a concurring opinion. |
Argued. For petitioner: Jessica L. Ellsworth, Washington, D. C. For respondents: David J. Harris, Jr., San Diego, Cal. |
Supplemental brief of respondents David Suski, et al. filed. (Distributed) |
Supplemental Brief of David Suski, et al. submitted. |
Reply of Coinbase, Inc. submitted. |
Reply of petitioner Coinbase, Inc. filed. (Distributed) |
Amicus brief of Public Citizen submitted. |
Amicus brief of American Association for Justice submitted. |
Amicus brief of Legal Scholars submitted. |
Brief amici curiae of Legal Scholars filed. (Distributed) |
Amicus brief of American Association for Justice submitted. |
Brief amicus curiae of American Association for Justice filed.(Feb. 6, 2024) (Distributed) |
Brief amicus curiae of Public Citizen filed. (Distributed) |
Record received from the United States Court of Appeals for the Ninth Circuit. The record is electronic and is available on PACER. |
Brief of David Suski, et al. submitted. |
Brief of David Suski, et al. not accepted for filing. (January 22, 2024--Incorrect version printed and electronically submitted.) |
Brief of respondents David Suski, et al. filed. (Distributed) |
CIRCULATED. |
Record requested from the United States Court of Appeals for the Ninth Circuit. |
Motion to extend the time to file respondents' brief on the merits is granted and the time is extended to and including January 22, 2024. |
SET FOR ARGUMENT on Wednesday, February 28, 2024. |
Motion for an extension of time to file respondents' brief on the merits filed. |
Motion of David Suski, et al. for an extension of time submitted. |
Brief amici curiae of The Chamber of Commerce of the United States of America, American Bankers Association, Cato Institute, American Tort Reform Association, and the Business Council of New York State filed. |
Amicus brief of The Chamber of Commerce of the United States of America, American Bankers Association, Cato Institute, American Tort Reform Association, and the Business Council of New York State submitted. |
Amicus brief of Anthony Michael Sabino submitted. |
Brief amicus curiae of Anthony Michael Sabino filed. |
Brief amicus curiae of Atlantic Legal Foundation filed. |
Amicus brief of Atlantic Legal Foundation submitted. |
Joint Appendix submitted. |
Brief of Coinbase, Inc. submitted. |
Brief of petitioner Coinbase, Inc. filed. |
Joint appendix (volumes I and II) filed. (Statement of costs filed) |
Motion to extend the time to file the joint briefs on the merits denied |
Motion to extend the time to file the briefs on the merits denied |
Motion for an extension of time to file the briefs on the merits filed. |
Motion of David Suski, et al. for an extension of time submitted. |
Motion for an extension of time to file the briefs on the merits filed. |
Petition GRANTED. |
DISTRIBUTED for Conference of 11/3/2023. |
DISTRIBUTED for Conference of 10/27/2023. |
Reply of petitioner Coinbase, Inc. filed. (Distributed) |
Brief of respondents David Suski, et al. in opposition filed. |
Response Requested. (Due September 22, 2023) |
DISTRIBUTED for Conference of 9/26/2023. |
Waiver of right of respondent David Suski, et al. to respond filed. |
Letter dated July 17, 2023 from cousel for amicus curiae Anthony Michael Sabino filed withdrawing amicus curiae brief. |
Brief amicus curiae of Anthony Michael Sabino filed. (Brief withdrawn by letter dated July 17, 2023) |
Petition for a writ of certiorari filed. (Response due July 31, 2023) |
Application (22A989) granted by Justice Kagan extending the time to file until June 23, 2023. |
Application (22A989) to extend the time to file a petition for a writ of certiorari from May 24, 2023 to June 23, 2023, submitted to Justice Kagan. |