On May 23, 2024, the United States Supreme Court ruled that courts, not arbitrators, decide which contract governs when the same parties agree to two contracts that require different forums for dispute resolution: one requiring arbitration, the other requiring court. Coinbase, Inc. v. Suski, 602 U.S. ___, 2024 WL 2333424, at *6 (2024). In other words, the Court clarified that a judge—not an arbitrator—“should decide whether a subsequent contract supersedes an earlier arbitration agreement that contains a delegation clause.” Id. at *3.
Coinbase users—the plaintiffs in the trial court—agreed to two contracts: one when first signing up for Coinbase, and another when entering a specific sweepstakes to win some of the cryptocurrency Dogecoin (to the moon!). Id. at *2-3. The first included a delegation clause, which requires an arbitrator to decide whether the dispute is even subject to the agreement’s arbitration clause in the first instance. Id. at *2. The second agreement, though, dictated that the California courts “shall have sole jurisdiction of any controversies regarding” the Dogecoin sweepstakes. Id. at *3.
After the Coinbase users filed a class action complaint in California federal court over the Dogecoin sweepstakes, Coinbase moved to compel arbitration. Id. The district court denied the motion, the appellate court affirmed the denial, and the Supreme Court affirmed, as well. Id.
The Court asked, as courts do, did the parties agree to have an arbitrator decide whether disputes over the Dogecoin sweepstakes are subject to arbitration? Id. at 4. Because the sweepstakes-specific contract required disputes be resolved via court and not arbitration, the Court answered no, the parties did not agree to that. Id. Accordingly, the California trial court was the proper tribunal to decide whether the sweepstakes dispute was subject to arbitration. Id. at 6.
This case serves as an important reminder that dispute resolution terms must remain consistent through all contracts the parties enter. If those provisions are inconsistent, even the most formidable dispute resolution clause can be undone by a conflicting term in a later contract. On the other hand, in cases where multiple contracts are in play, litigants seeking to avoid arbitration may use this decision to buttress an argument that a court, not an arbitrator, should decide whether the matter is subject to arbitration even when there is a valid delegation clause.
Josiah Contarino is a senior associate at Dhillon Law Group Inc. where he practices commercial litigation, First Amendment, Second Amendment, defamation, and election law matters in state and federal courts.
