The US Supreme Court denied Coinbase’s motion to compel arbitration related to its Dogecoin (DOGE) sweepstakes on May 23.
The judge ruled that “a court, not an arbitrator,” must decide whether one of Coinbase’s agreements supersedes the other.
The first agreement is Coinbase’s User Agreement, which states that an arbitrator will handle disputes. The second agreement is the official sweepstake rules, which contain a forum selection clause granting California courts sole jurisdiction over sweepstakes-related controversies.
The case represents a loss for Coinbase, which sought arbitration.
Coinbase CLO Paul Grewal commented briefly on the outcome, writing: “some you win … some you lose,” and thanked the court for its consideration.
Earlier rulings affirmed
The Supreme Court ruling affirms an earlier decision by the US Court of Appeals for the Ninth Circuit and, in turn, a decision from the Northern District of California. Both courts found that the official sweepstake rules controlled the dispute and it was not eligible for arbitration.
Justice Ketanji Brown Jackson said that disputes can be arbitrated when both sides agree to arbitration but that parties may have a secondary disagreement about whether they agreed to arbitration.
Jackson also commented on Coinbase’s contention that the Ninth Circuit courts improperly applied California state law in its earlier decisions. Jackson said that the Supreme Court “decline[s] to consider auxiliary questions” on the matter, which are beyond the scope of the question presented.
Furthermore, Jackson denied that the decision would “invite chaos” by allowing challenges to delegation causes, stating:
“Regardless, where the parties have agreed to two contracts, a court must decide which contract governs.”
Dogecoin sweepstakes
The broader dispute pertains to a class action lawsuit in which Coinbase and its sweepstakes partner Marden-Kane. The plaintiffs alleged that the exchange directed users to buy or sell $100 or more of DOGE to enter the sweepstakes while hiding alternative ways to participate in the offer.
Plaintiffs also alleged that the companies committed violations under California’s False Advertising Law, Unfair Competition Law, and Consumer Legal Remedies Act.
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