One more US Supreme Court case on arbitration coming soon

The US Supreme Court seems to love arbitration cases. On November 3, 2023 the Court granted certiorari to decide Coinbase v. Suski [Briefs].

It's all about delegation clauses, and which issues are for a court to decide or for an arbitrator to decide.

When David Suski and three others opted into a sweepstakes, they created their online Coinbase accounts, and agreed to a user agreement which contains an arbitration provision. That provision has a delegation clause which says the arbitrator will decide any dispute over the validity of the arbitration agreement.

Later, the plaintiffs opted into the sweepstakes' Official Rules, which include a forum selection clause providing that California courts have exclusive jurisdiction over any controversies regarding the sweepstakes.

When the plaintiffs sued claiming various consumer protection violations, Coinbase filed a motion to compel arbitration, which the trial court denied. The trial court concluded that a delegation clause in the user agreement did not delegate to the arbitrator the issue of which contract governed the dispute. The trial court further ruled that the Official Rules superseded the user agreement and, therefore, that the user agreement's arbitration clause did not apply.

And the 9th Circuit affirmed.

The 9th Circuit said that the issue is not the scope of an arbitration agreement (clearly something for an arbitrator to decide), but whether an arbitration agreement exists at all (clearly an issue for the court to decide).

The court put it this way: "The district court correctly ruled that because the User Agreement and the Official Rules conflict on the question whether the parties' dispute must be resolved by an arbitrator or by a California court, the Official Rules' forum selection clause supersedes the User Agreement's arbitration clause."

There is definitely a split of authority on this issue. The 1st and 5th Circuits and Alabama hold that a valid delegation clause commits to the arbitrator any questions about the narrowing or superseding effect of a subsequent agreement. In contrast, the 3rd and 9th Circuits, Alaska, Texas, and Wisconsin refuse to enforce a delegation clause in this context.