Arbitration’s SCOTUS Return: Bitcoin Firm Seeks to Halt Litigation While ADR Is on Appeal

Posted By: Cenadra Gopala-Foster CPR Speaks,

The U.S. Supreme Court agreed to hear cryptocurrency exchange Coinbase Inc.'s petition to stop lawsuits the company contends belong in private arbitration under its user agreement. A decision in the case would resolve a question about general arbitration practice on litigation stays while arbitration-seeking parties appeal interlocutory orders.

The Court accepted the consolidated cases in Coinbase Inc. v. Bielski, No. 22-105, in December, and has announced that the case will be argued March 21.

The justices agreed to consider whether two proposed class actions by customers suing San Francisco-based Coinbase could move forward while the company appeals judges' rulings declining to compel its customers to arbitrate their claims. The question presented in the case is whether a non-frivolous appeal of the denial of a motion to compel arbitration ousts a district court’s jurisdiction to proceed with litigation pending appeal.

Coinbase’s main argument is that a non-frivolous appeal of the denial of a motion to compel arbitration divests the district court of its control. The argument is based on the petitioner’s plain interpretation of the Federal Arbitration Act, and what it describes as the controlling rule that an appeal divests the district court of its control over those aspects of the case involved in the appeal. Griggs v. Provident Consumer Discount Co., 459 U.S. 56, 58 (1982) (per curiam).

Coinbase, which provides a platform for buying and selling digital currency, argues that the issue on appeal is whether a motion to compel arbitration should be granted, and the entire point of the appeal is to decide whether the case will proceed in court or arbitration. Coinbase contends that, according to Griggs, the district court jurisdiction should be divested.

Furthermore, Coinbase emphasizes that in the FAA, Congress grants defendants the right to an immediate interlocutory appeal on the question of arbitrability, indicating an intention to prevent district court proceedings from continuing during an appeal.

Specifically, Coinbase argues that Congress made an exception for arbitration in the FAA that grants defendants the statutory right to an immediate appeal. See 9 U.S.C. § 16(a). In doing so, Congress recognized that an arbitration agreement provides “a right not to litigate the dispute in a court.” Blinco v. Green Tree Servicing, LLC, 366 F.3d 1249, 1252 (11th Cir.) Once a defendant is wrongfully forced to proceed in federal court, despite a pending appeal, the defendant loses that right forever, Coinbase argues.

On the other side of the issue are former Coinbase customers Bielski and Suski, with two separate cases. The main argument in their joint brief before the Court is that Ninth Circuit’s narrow application of Griggs is correct. Their briefs stress that every circuit presented with an opportunity to address the issue has applied Griggs. The Second U.S. Circuit Court of Appeals when applying Griggs under similar circumstances concluded “further district court proceedings in a case are not ‘involved in’ the appeal of an order refusing arbitration.” Motorola Credit Corp. v. Uzan, 388 F.3d 39, 53 (2d Cir. 2004).

In the cases now before the Supreme Court, the Ninth Circuit applies Griggs based on another 32-year-old holding that a party losing a motion to compel arbitration is not entitled to an automatic stay for proceedings pending its appeal of the ruling. See Britton v. Co-op Banking Group, 916 F.2d 1405 (9th Cir. 1990).  “Since the issue of arbitrability was the only substantive issue presented [on appeal],” the Ninth Circuit stated, the district court could “proceed with the case on the merits.” Britton, 916 F.2d at 1412. The Ninth Circuit also cited support by the Supreme Court explaining that the nation’s top Court has held that the merits of claims are “easily severable’ from the dispute over the arbitrability of those claims. Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 21 (1983).

In addition, respondents undercut Coinbase’s persuasive FAA argument by focusing on the lack of evidence in the law’s text and legislative history that Congress intended for district courts to lose their jurisdiction during an interlocutory appeal on a motion to compel arbitration. 

The Supreme Court’s docket page, with links to the briefs and the Court’s actions, can be found here.

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The author is a 2022-2023 CPR Intern under CPR’s consortium agreement with the ADR Program at Washington, D.C.’s Howard University School of Law, where she is a second-year student.