{"id":1457,"date":"2024-05-24T08:54:52","date_gmt":"2024-05-24T12:54:52","guid":{"rendered":"https:\/\/blogs.duanemorris.com\/classactiondefense\/?p=1457"},"modified":"2024-05-24T08:54:52","modified_gmt":"2024-05-24T12:54:52","slug":"u-s-supreme-court-holds-that-judges-and-not-arbitrators-must-decide-whether-contracting-parties-agreed-to-delegate-arbitrability-issues-to-an-arbitrator","status":"publish","type":"post","link":"https:\/\/blogs.duanemorris.com\/classactiondefense\/2024\/05\/24\/u-s-supreme-court-holds-that-judges-and-not-arbitrators-must-decide-whether-contracting-parties-agreed-to-delegate-arbitrability-issues-to-an-arbitrator\/","title":{"rendered":"U.S. Supreme Court Holds That Judges, And Not Arbitrators, Must Decide Whether Contracting Parties Agreed To Delegate Arbitrability Issues To An Arbitrator"},"content":{"rendered":"

\"\"<\/a>By Eden E. Anderson, Rebecca S. Bjork, and Gerald L. Maatman, Jr.<\/strong><\/p>\n

Duane Morris Takeaways: <\/strong>\u00a0On May 23, 2024, the U.S. Supreme Court issued its decision<\/a> in Coinbase, Inc. v. Suski, Case No. 23-3 (2024).\u00a0 The Supreme Court held that, where parties have agreed to two contracts \u2014 one sending arbitrability disputes to arbitration, and the other sending arbitrability disputes to the courts \u2014 a judge (and not an arbitrator) must decide which contract governs.\u00a0 Thus, if a company rolls out successive contracts containing inconsistent terms regarding the forum for dispute resolution, a court will decide which of the two contracts applies.\u00a0 Companies with arbitration programs should take heed of the decision, and make sure that the wording of later issued contracts do not impair previously existing contractual rights to compel disputes to arbitration.\u00a0\u00a0 <\/em><\/p>\n

Case Background <\/strong><\/p>\n

Coinbase operates a cryptocurrency exchange platform where users can buy and sell cryptocurrency.\u00a0 Coinbase offered a sweepstakes that users could enter for a chance to win cryptocurrency.\u00a0 In connection with the sweepstakes, users filed a class action complaint alleging that the sweepstakes violated various California consumer protection statues.<\/p>\n

Citing an arbitration clause in the User Agreement, Coinbase moved to compel arbitration and to dismiss the class claims based on a class action waiver contained therein.\u00a0 The arbitration clause in the User Agreement included a delegation clause and, per that provision, an arbitrator was to decide whether a given dispute was arbitrable.\u00a0 The users argued that the court, and not an arbitrator, should decide the arbitrability issue.<\/p>\n

In support, the users cited a second contract \u2014 the Official Rules \u2014 they had agreed to in connection with the sweepstakes.\u00a0 In contrast to the earlier executed User Agreement, the Official Rules contained a forum selection clause providing that all disputes related to the sweepstakes had to be decided in California courts.\u00a0 The users also argued that the Official Rules superseded the User Agreement and its arbitration and class action waiver provision.\u00a0 Coinbase responded that the delegation clause in the User Agreement was meant to govern all agreements moving forward and that the issue of arbitrability should be left in the hands of an arbitrator, and not the court.<\/p>\n

The district court denied Coinbase\u2019s motion to compel arbitration and the Ninth Circuit affirmed.\u00a0 Both reasoned that deciding which contract governed was a question for the court, and not an arbitrator, to answer; that the User Agreement\u2019s arbitration provision conflicted with the forum selection clause in the Official Rules; and that the Official Rules superseded the User Agreement.<\/p>\n

The U.S. Supreme Court then granted review to answer the question of who \u2014 a judge or an arbitrator \u2014 should decide whether a subsequent contract supersedes an earlier arbitration agreement that contains a delegation clause.<\/p>\n

The Supreme Court\u2019s Decision <\/strong><\/p>\n

The Supreme Court held that, where parties have agreed to two contracts \u2014 one sending arbitrability disputes to arbitration, and the other sending arbitrability disputes to the courts \u2014 a court must decide which contract governs.\u00a0 By contrast, in cases where only one contract is at issue, and that contract contains an arbitration clause with a delegation provision, courts must send all arbitrability disputes to arbitration, absent a successful challenge to the delegation clause.<\/p>\n

Thus, the Supreme Court determined that it was correct for the district court (and the Ninth Circuit) to have determined which contract governed the claims concerning the sweepstakes.\u00a0 Although Coinbase sought to challenge the Ninth Circuit\u2019s ruling that the Official Rules superseded the User Agreement, the Supreme Court declined to consider that issue.<\/p>\n

Implications Of The Decision <\/strong><\/p>\n

The Suski<\/em> decision serves as a cautionary reminder to companies that roll-out successive contracts that bear on the forum for dispute resolution.\u00a0 A court\u2019s task is to determine what the parties\u2019 agreement was or if a contract was not formed.\u00a0 If an earlier contract contains an arbitration clause with a delegation provision, but a later contract does not and refers disputes to the courts, it will be up to a judge to decide which contract governs.<\/p>\n

Anytime a company issues successive contracts addressing topics such as the forum for disputes, it is important to ensure there is consistency in the forum selected or else the right to arbitration and dismissal of class claims (based on a class action waiver) may be lost.<\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

By Eden E. Anderson, Rebecca S. Bjork, and Gerald L. Maatman, Jr. Duane Morris Takeaways: \u00a0On May 23, 2024, the U.S. Supreme Court issued its decision in Coinbase, Inc. v. Suski, Case No. 23-3 (2024).\u00a0 The Supreme Court held that, where parties have agreed to two contracts \u2014 one sending arbitrability disputes to arbitration, and … <\/p>\n

Continue reading “U.S. Supreme Court Holds That Judges, And Not Arbitrators, Must Decide Whether Contracting Parties Agreed To Delegate Arbitrability Issues To An Arbitrator”<\/span><\/a><\/p>\n","protected":false},"author":583,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[41],"tags":[],"ppma_author":[30],"class_list":["post-1457","post","type-post","status-publish","format-standard","hentry","category-arbitration-issues"],"authors":[{"term_id":30,"user_id":583,"is_guest":0,"slug":"classactiondefense","display_name":"Class Action Defense","avatar_url":"https:\/\/blogs.duanemorris.com\/classactiondefense\/wp-content\/uploads\/sites\/56\/2020\/10\/dmlogo.jpg","0":null,"1":"","2":"","3":"","4":"","5":"","6":"","7":"","8":""}],"_links":{"self":[{"href":"https:\/\/blogs.duanemorris.com\/classactiondefense\/wp-json\/wp\/v2\/posts\/1457","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/blogs.duanemorris.com\/classactiondefense\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blogs.duanemorris.com\/classactiondefense\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blogs.duanemorris.com\/classactiondefense\/wp-json\/wp\/v2\/users\/583"}],"replies":[{"embeddable":true,"href":"https:\/\/blogs.duanemorris.com\/classactiondefense\/wp-json\/wp\/v2\/comments?post=1457"}],"version-history":[{"count":0,"href":"https:\/\/blogs.duanemorris.com\/classactiondefense\/wp-json\/wp\/v2\/posts\/1457\/revisions"}],"wp:attachment":[{"href":"https:\/\/blogs.duanemorris.com\/classactiondefense\/wp-json\/wp\/v2\/media?parent=1457"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blogs.duanemorris.com\/classactiondefense\/wp-json\/wp\/v2\/categories?post=1457"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blogs.duanemorris.com\/classactiondefense\/wp-json\/wp\/v2\/tags?post=1457"},{"taxonomy":"author","embeddable":true,"href":"https:\/\/blogs.duanemorris.com\/classactiondefense\/wp-json\/wp\/v2\/ppma_author?post=1457"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}