The US Supreme Court on May 23 denied Coinbase’s request to compel arbitration regarding the Dogecoin (DOGE) sweepstakes.
The judge ruled that “a court, not an arbitrator” should decide whether one of Coinbase’s agreements supersedes the other.
The first agreement is the Coinbase User Agreement, which states that an arbitrator will hear disputes. The second agreement concerns the Official Sweepstakes Rules, which contain a forum selection clause that gives the California courts exclusive jurisdiction over sweepstakes-related controversies.
The case represents a loss for Coinbase, which has filed for arbitration.
Coinbase CLO Paul Grewal briefly commented on the outcome, writing: “some you win… some you lose,” and thanked the court for its consideration.
Previous statements were confirmed
The Supreme Court’s ruling affirms an earlier decision by the U.S. Court of Appeals for the Ninth Circuit and, in turn, a decision by the Northern District of California. Both courts ruled that the official sweepstakes rules governed the dispute and that it was not eligible for arbitration.
Judge Ketanji Brown Jackson said disputes can be settled if both parties agree to arbitration, but parties may have a secondary disagreement over whether they agreed to arbitration.
Jackson also commented on Coinbase’s claim that the Ninth Circuit courts had incorrectly applied California state law in previous decisions. Jackson said the Supreme Court “rejects[s] to consider additional questions” on this matter, which are beyond the scope of the question asked.
Additionally, Jackson denied that the decision would “lead to chaos” by allowing challenges to delegation causes, stating:
“Anyway, whatever the parties agree on two contracts, a court must decide which contract applies.”
Dogecoin Sweepstakes
The broader dispute involves a class action lawsuit involving Coinbase and its sweepstakes partner Marden-Kane. The plaintiffs alleged that the exchange incentivized users to buy or sell $100 or more of DOGE to enter the lottery, while concealing alternative ways to participate in the offering.
Plaintiffs also alleged that the companies violated California’s False Advertising Law, Unfair Competition Law and Consumer Legal Remedies Act.