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Supreme Court hears dispute over who decides if arbitration applies in Coinbase sweepstakes case
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Summary
At oral argument in Coinbase v. Suske, counsel for both sides told the justices they agree the Ninth Circuit's reasoning was flawed and that the case should be remanded for a proper severability and state-law analysis; the central question is whether an earlier delegation clause requires an arbitrator to decide if later sweepstakes rules displaced that clause.
Miss Ellsworth, arguing before the Supreme Court, told the justices that the Federal Arbitration Act requires courts to enforce arbitration agreements according to their terms and that the delegation clause in the parties' user agreement assigns the threshold arbitrability question to an arbitrator. "The Federal Arbitration Act requires courts to enforce arbitration agreements according to their terms," she said, urging the Court to clarify that the severability principle applies when successive contracts are at issue.
A justice pressed whether the alleged confusion comes from the sweepstakes' official rules rather than the user agreement; Ellsworth said any drafting ambiguities should be resolved by the arbitrator under the delegation clause and that the lower courts had improperly recast the dispute as one about contract formation to avoid enforcing delegation.
Mister Harris, speaking for the respondents, acknowledged that both sides agree the Ninth Circuit's "existence" language was wrong and urged the Court to allow state-law principles to govern whether a later contract can narrow or displace an earlier delegation clause. "We ask that the court apply traditional state law here," Harris said, arguing that the Ninth Circuit created a federal rule to reach a particular result instead of applying ordinary contract interpretation.
Justices repeatedly pressed both sides on the practical consequences of sending the question to an arbitrator rather than deciding it in court. One justice asked why counsel litigated to the Supreme Court instead of asking an arbitrator for a quick resolution; counsel replied that strategic considerations and prior rulings on arbitrability affected their choices and that a remand for the Ninth Circuit to apply the FAA's severability framework would be appropriate.
Both counsel discussed doctrinal precedents cited in the argument. Ellsworth repeatedly invoked the Court's severability precedents (including Prima Paint and Rent-A-Center principles) and cited Henry Schein to explain that courts should not decide arbitrability when the parties delegated that question to an arbitrator. Harris cited Granite Rock to emphasize that consent to arbitrate is dispute-specific and argued that a later, more specific agreement might alter delegation.
On the question of remedy, counsel and the bench agreed there is a role for remand: Ellsworth said that vacating and remanding for the Ninth Circuit to conduct a state-law analysis under the FAA's severability rule would correct the lower court's error; Harris said the Court should also clarify the Ninth Circuit's misapplied "existence" language. After further questioning, Miss Ellsworth concluded by reiterating that the Ninth Circuit failed to apply the FAA's severability framework to determine whether the later sweepstakes rules displaced the delegation clause.
The arguments closed and the case was submitted.