In a recent unanimous decision, the U.S. Supreme Court ruled against Coinbase Inc. in an arbitration dispute stemming from the company’s 2021 Dogecoin sweepstakes. The ruling clarified the need for a court to determine which legal agreement takes precedence when parties are governed by multiple contracts.
Justice Jackson, writing for the Court, emphasized the importance of determining which contract applies in cases where there is a conflict between different clauses. The Court concluded that the question of whether the parties agreed to arbitrate must be decided by a court, especially when there are conflicting terms in different agreements.
Coinbase had initially sought to settle the dispute through arbitration, citing user agreements that mandated arbitration for all customers. However, a federal judge ruled in favor of the sweepstakes terms, which specified California’s court system as the forum for related disputes. The latest Supreme Court decision affirmed the lower court’s role in determining which agreement controls the case.
Some legal experts, like Richard Silberberg, view the decision as expected given previous rulings. They believe that the court, rather than an arbitrator, must decide whether one agreement supersedes another. While Coinbase expressed disappointment with the outcome, they acknowledged the court’s consideration of the matter.
The underlying lawsuit, brought by former Coinbase user David Suski, accuses the company of misleading participants in the “Trade Doge, Win Doge” contest. The plaintiffs argue that the contest’s requirement of a $100 purchase or sale of Dogecoin for eligibility was deceptive, as the fine print revealed an alternative entry method via mail.
The Supreme Court’s ruling against Coinbase in the arbitration dispute serves as a reminder of the complexities that arise when parties are bound by multiple contracts. The decision reinforces the importance of clarity and consistency in legal agreements to avoid ambiguity and disputes in the future.