U.S. Supreme Courts Enters Important Decision Regarding Arbitration

Today, the United States Supreme Court entered a decision finding that an interlocutory appeal of whether a case may proceed in federal district court or, alternatively, should be dismissed in favor of enforcing an arbitration provision, automatically stays further proceedings in the district court pending the outcome of the appeal. In a 5-4 split, the majority concluded the above.

It is becoming increasingly frequent in contracts and terms and conditions found in online agreements or otherwise, that disputes among the parties will be resolved by private arbitration rather than through the court system. Today’s decision involved such online terms and conditions where a user of the Coinbase platform sought to bring a class action in district court and Coinbase sought to dismiss that relying upon an arbitration provision found in the terms agreed to at the opening of an account.

The majority held that the Defendant’s interlocutory appeal of the refusal of the district court to enforce the arbitration provision, divested the district court of jurisdiction to hear any other issues in the underlying proceeding, pending the outcome of the appeal of the enforceability of the arbitration provision.

The four-justice dissent authored by Justice Jackson with whom Justices Sotomayor, Kagan, and Thomas joined (in various parts) disagreed with the majority conclusion finding that neither past Supreme Court precedent nor the Federal Arbitration Act provided that an interlocutory appeal of the arbitration issue should stay other proceedings in the underlying matter. The dissent specifically found that in enacting the Federal Arbitration Act, where Congress intended to impose mandatory stays, it did so expressly, and, therefore, by implication the lack of a specified mandatory stay of all other proceedings should not have been interpreted as authorized by the Federal Arbitration Act.

The case is Coinbase, Inc. v. Bielski, and a link to the opinion is found here: https://www.supremecourt.gov/opinions/22pdf/22-105_5536.pdf