DAVID SUSKI V. COINBASE, INC. ( 2022 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
DAVID SUSKI; JAIMEE No. 22-15209
MARTIN; JONAS CALSBEEK;
THOMAS MAHER, Individually DC No. 3:21-cv-
and on Behalf of All Others, 04539-SK
Plaintiffs-Appellees,
v. OPINION
COINBASE, INC.,
Defendant-Appellant,
and
MARDEN-KANE, INC.;
COINBASE GLOBAL, INC.,
Defendants.
Appeal from the United States District Court
for the Northern District of California
Sallie Kim, Magistrate Judge, Presiding
2 SUSKI V. COINBASE, INC.
Argued and Submitted November 18, 2022
San Francisco, California
Filed December 16, 2022
Before: A. Wallace Tashima and Richard A. Paez, Circuit
Judges, and William K. Sessions III,* District Judge.
Opinion by Judge Tashima
SUMMARY**
Arbitration
The panel affirmed the district court’s order denying
Coinbase, Inc.’s motion to compel arbitration in a diversity
suit brought by four Coinbase users who opted into
Coinbase’s Dogecoin Sweepstakes in June 2021.
When plaintiffs created their Coinbase accounts, they
agreed to the “Coinbase User Agreement,” which contained
an arbitration provision. They later opted into the
Sweepstakes’ “Official Rules,” which included a forum
selection clause providing that California was the exclusive
*
The Honorable William K. Sessions III, United States District Judge
for the District of Vermont, sitting by designation.
**
This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
SUSKI V. COINBASE, INC. 3
jurisdiction for controversies regarding the sweepstakes.
First, Coinbase challenged the district court’s ruling that
the Coinbase User Agreement did not delegate to an arbitrator
the question of whether the forum selection clause in the
Sweepstakes’ Official Rules superseded the arbitration clause
in the User Agreement. Coinbase argued that the issue of any
superseding effect of the Sweepstakes’ Official Rules
concerned the scope of the arbitration clause and therefore
fell within the User Agreement delegation clause. The panel
held that the “scope” of an arbitration clause concerns how
widely it applies, not whether it has been superseded by a
subsequent agreement. The district court therefore correctly
ruled that the issue of whether the forum selection clause in
the Sweepstakes’ Official Rules superseded the arbitration
clause in the User Agreement was not delegated to the
arbitrator, but rather was for the court to decide.
Second, Coinbase challenged the district court’s ruling
that the forum selection clause in the Sweepstakes’ Official
Rules superseded the User Agreement’s arbitration
clause. Coinbase argued that the User Agreement contained
an integration clause, and procedures for amendment of the
User Agreement, and the User Agreement therefore could not
have been superseded by the Official Rules. The panel held
that the district court correctly ruled that because the User
Agreement and the Official Rules conflict on the question
whether the parties’ dispute must be resolved by an arbitrator
or by a California court, the Official Rules’ forum selection
clause supersedes the User Agreement’s arbitration clause.
4 SUSKI V. COINBASE, INC.
COUNSEL
Kathleen R. Hartnett (argued), Michael G. Rhodes, Travis
LeBlanc, Joseph D. Mornin, Bethany C. Lobo, and David S.
Louk, Cooley LLP, San Francisco, California, for Defendant-
Appellant.
David J. Harris Jr. (argued), Finkelstein & Krinsk LLP, San
Diego, California, for Plaintiffs-Appellees.
OPINION
TASHIMA, Circuit Judge:
Coinbase, Inc., an online cryptocurrency exchange,
appeals the district court’s order denying its motion to compel
arbitration in a diversity suit brought by David Suski and
three other Coinbase users who opted into Coinbase’s
Dogecoin Sweepstakes in June 2021. We affirm.
When plaintiffs created their Coinbase accounts, they
agreed to the “Coinbase User Agreement,” which contains an
arbitration provision. They later opted into the Sweepstakes’
“Official Rules,” which include a forum selection clause
providing that California courts have exclusive jurisdiction
over any controversies regarding the sweepstakes. Plaintiffs
brought claims under California’s False Advertising Law,
Unfair Competition Law, and Consumer Legal Remedies Act
against Coinbase and Marden-Kane, Inc., a company hired by
Coinbase to design, market, and execute the sweepstakes.
Coinbase filed a motion to compel arbitration, which the
SUSKI V. COINBASE, INC. 5
district court denied. The district court concluded that a
delegation clause in the Coinbase User Agreement did not
delegate to the arbitrator the issue of which contract governed
the dispute. The district court further ruled that, under state-
law principles of contract interpretation, the Official Rules
superseded the Coinbase User Agreement and, therefore, that
the User Agreement’s arbitration clause did not apply.
We have jurisdiction under 9 U.S.C. § 16(a)(1). We
review de novo the district court’s order denying Coinbase’s
motion to compel arbitration. Mohamed v. Uber Techs., Inc.,
848 F.3d 1201, 1207 (9th Cir. 2016).
I. The Delegation Clause
First, Coinbase challenges the district court’s ruling that
the User Agreement did not delegate to an arbitrator the
question of whether the forum selection clause in the
Sweepstakes’ Official Rules superseded the arbitration clause
in the User Agreement.
“[W]hether the court or the arbitrator decides arbitrability
is an issue for judicial determination unless the parties clearly
and unmistakably provide otherwise.” Oracle Am. Inc. v.
Myriad Grp. A.G., 724 F.3d 1069, 1072 (9th Cir. 2013)
(internal quotation marks and citations omitted). Issues of
contract formation may not be delegated to an arbitrator.
Ahlstrom v. DHI Mortg. Co., 21 F.4th 631, 635 (9th Cir.
2021). But “if the parties [formed] an agreement to arbitrate
containing an enforceable delegation clause, all arguments
going to the scope or enforceability of the arbitration
provision are for the arbitrator to decide in the first instance.”
Caremark, LLC v. Chickasaw Nation, 43 F.4th 1021, 1030
(9th Cir. 2022); see Henry Schein, Inc. v. Archer & White
6 SUSKI V. COINBASE, INC.
Sales, Inc., 139 S. Ct. 524, 527 (2019) (recognizing that the
Federal Arbitration Act “allows parties to agree by contract
that an arbitrator, rather than a court, will resolve threshold
arbitrability questions as well as underlying merits disputes”).
The delegation clause in the User Agreement accepted by
three plaintiffs provides that the arbitrator shall decide
“disputes arising out of or related to the interpretation or
application of the Arbitration Agreement, including the
enforceability, revocability, scope, or validity of the
Arbitration Agreement.” Suski accepted a different version
of the Coinbase User Agreement, but the American
Arbitration Association rules incorporated in that agreement
similarly grant the arbitrator the power to rule on “the
existence, scope, or validity of the arbitration agreement.”
Coinbase argues that the issue of any superseding effect
of the Sweepstakes’ Official Rules concerns the scope of the
arbitration clause and therefore falls within the User
Agreement’s delegation clause. Coinbase cites Mohamed,
which held that delegation clauses in the parties’ arbitration
agreements served as clear and unmistakable evidence of the
parties’ intent to delegate questions of arbitrability, even
though the parties’ agreements also contained forum selection
clauses granting “‘exclusive jurisdiction’” to state and federal
courts in San Francisco over “‘any disputes, actions, claims
or causes of action arising out of or in connection with this
Agreement.’” Mohamed, 848 F.3d at 1209. In Mohamed,
however, the delegation clause and the forum selection clause
were included in the same contract, and there was no question
about a later, potentially-superseding agreement. We held
that the delegation clause remained clear and unmistakable
despite the presence of the forum selection clause because
SUSKI V. COINBASE, INC. 7
any conflicts between them were “artificial.” Id. (“It is
apparent that the venue provision . . . was intended . . . to
identify the venue for any other claims that were not covered
in the arbitration agreement.”).
We find well-taken plaintiffs’ argument that under
Goldman, Sachs & Co. v. City of Reno, 747 F.3d 733 (9th Cir.
2004), the existence rather than the scope of an arbitration
agreement is at issue here. In Goldman, plaintiff Goldman,
a broker-dealer and member of the Financial Industry
Regulatory Authority (“FINRA”), sought to enjoin a FINRA
arbitration that the City of Reno had initiated against it. Id.
at 735. As a FINRA member, Goldman had a default
obligation under the FINRA Rules to arbitrate at the request
of a customer such as Reno. Id. at 742. The contracts
between the parties, however, included forum selection
clauses providing that actions arising out of the contracts
must be brought in the United States District Court for the
District of Nevada. Id. at 736–37. Goldman held that the
issue of whether the forum selection clauses applied and
superseded Goldman’s arbitration obligation was an issue of
whether a contractual obligation to arbitrate existed. Id. at
743.
The “scope” of an arbitration clause concerns how widely
it applies, not whether it has been superseded by a subsequent
agreement. See id.; cf. Portland Gen. Elec. Co. v. Liberty
Mut. Ins. Co., 862 F.3d 981, 985–86 (9th Cir. 2017)
(explaining that issues regarding whether an arbitration
agreement included a dispute were questions of the scope of
the arbitration agreement, delegated to the arbitrators). The
district court therefore correctly ruled that the issue of
whether the forum selection clause in the Sweepstakes’
8 SUSKI V. COINBASE, INC.
Official Rules superseded the arbitration clause in the User
Agreement was not delegated to the arbitrator, but rather was
for the court to decide. See Ahlstrom, 21 F.4th at 635 (issues
of contract formation may not be delegated to an arbitrator).
II. The Forum Selection Clause
Coinbase also challenges the district court’s ruling that
the forum selection clause in the Sweepstakes’ Official Rules
superseded the User Agreement’s arbitration clause.
When determining whether parties have agreed to submit
to arbitration, courts apply state-law principles of contract
formation and interpretation. Holl v. U.S. Dist. Court (In re
Holl), 925 F.3d 1076, 1083 (9th Cir. 2019). A contract
containing a forum selection clause supersedes an arbitration
agreement where “the forum selection clause[] . . .
sufficiently demonstrate[s] the parties’ intent to do so.”
Goldman, 747 F.3d at 741. Under California law, “‘[t]he
general rule is that when parties enter into a second contract
dealing with the same subject matter as their first contract
without stating whether the second contract operates to
discharge or substitute for the first contract, the two contracts
must be interpreted together and the latter contract prevails to
the extent they are inconsistent.’” Capili v. Finish Line, Inc.,
116 F. Supp. 3d 1000, 1004 n.1 (N.D. Cal 2015) (quoting
17A C.J.S. Contracts § 574), aff’d, 699 F. Appx. 620 (9th Cir.
2017); see also Williams v. Atria Las Posas, 24 Cal. Rptr. 3d
341, 345 (Ct. App. 2018) (holding that later-signed arbitration
agreement superseded parties’ original agreement, which did
not include an arbitration clause); Masterson v. Sine, 436 P.
2d 561, 563 (Cal. 1968) (Any “collateral agreement itself
must be examined . . . to determine whether the parties
SUSKI V. COINBASE, INC. 9
intended the subjects of negotiation it deals with to be
included in, excluded from, or otherwise affected by the
writing”).
Coinbase argues that the User Agreement contains an
integration clause, and procedures for amendment of the User
Agreement, and the User Agreement therefore could not have
been superseded by the Official Rules. Coinbase also argues
that the Official Rules concern a different subject matter from
the User Agreement and do not evince the parties’ intent to
amend, revise, revoke, or supersede any prior agreement,
including the User Agreement. An integration clause,
however, does not preclude a superseding contract from being
formed in the future. See In re Ins. Installment Fee Cases,
150 Cal. Rptr. 3d 618, 632 (Ct. App. 2012) (“‘[A]n
integration clause only covers antecedent and
contemporaneous agreements; it does not foreclose the
possibility of future agreements.’” (quoting Nakashima v.
State Farm Mut. Auto. Ins. Co., 153 P. 3d 664, 668 (N.M. Ct.
App. 2007))). Coinbase is correct that the Official Rules
contain no language specifically revoking the parties’
arbitration agreement in the User Agreement. By including
the forum selection clause, however, the Official Rules evince
the parties’ intent not to be governed by the User
Agreement’s arbitration clause when addressing controversies
concerning the sweepstakes. See Goldman, 747 F.3d at 741.
Coinbase contends that, even if the Official Rules
amended the User Agreement, the two agreements can and
should be read harmoniously. It argues that, like the forum
selection clause in Mohamed, the forum selection clause here
must be read to apply only to non-arbitrable claims and to
suits seeking enforcement of any arbitration awards. See
10 SUSKI V. COINBASE, INC.
Mohamed, 848 F.3d at 1209. As stated above, however,
Mohamed is distinguishable because there, the arbitration
clause and the forum selection clause were included in the
same contract. Coinbase also cites Peterson v. Minidoka
County School District No. 331, 118 F.3d 1351, 1359 (9th
Cir.), amended by 132 F.3d 1258 (9th Cir. 1997), for the
proposition that in situations involving multiple contracts, the
contractual provisions should be read “so that they harmonize
with each other, not contradict each other.” Peterson,
however, also involved a single contract that incorporated a
statute and a policy, rather than an original contract and a
subsequent contract. Id.Finally, as the district court explained, the Official Rules
cannot be reconciled with the User Agreement. The Official
Rules apply to all Sweepstakes entrants, including entrants
who are not subject to the User Agreement because they used
an alternative mail-in procedure. Despite Coinbase’s
arguments, the Official Rules make no distinction between
entrants who are Coinbase users subject to the User
Agreement’s arbitration clause and those who are not because
they used an alternative mail-in entry procedure.
The district court correctly ruled that because the User
Agreement and the Official Rules conflict on the question
whether the parties’ dispute must be resolved by an arbitrator
or by a California court, the Official Rules’ forum selection
clause supersedes the User Agreement’s arbitration clause.
See Goldman, 747 F.3d at 741. We therefore affirm the
district court’s order denying Coinbase’s motion to compel
arbitration.
AFFIRMED.