SCOTUS Hears Oral Argument in Suski
Posted on Categories Arbitration Agreements, Fed Arbitration Act, News, SCOTUSTags , , ,

By George H. Friedman, SAA Publisher & Editor-in-Chief

The Supreme Court heard oral argument February 28 in Coinbase v. Suski, No. 23-3, the second case involving arbitration heard this month. The other case is Bissonnette v. LePage Bakeries Park St. LLC, No. 23-51, which was heard February 20 (ed: see our February 21 blog post). The Suski audio is here and the transcript can be found here.

Certiorari Petition

Recall that we reported in SAA 2023-25 (Jun. 29) and blogged in June 2023 that the Supreme Court had decided Coinbase, Inc. v. Bielski, No. 22-105, ruling mostly along ideological lines that courts must stay underlying litigation while an appeal of a denial of a motion to compel arbitration is pending. The 5-4 decision, which was released on June 23, was authored by Justice Kavanaugh. He was joined outright by Chief Justice Roberts, and Justices Alito, Barrett, and Gorsuch. Justice Jackson wrote a dissenting opinion, in which Justices Kagan and Sotomayor joined in full, and in which Justice Thomas joined for the most part. Buried in a footnote was this landmine: “The Court’s judgment today pertains to respondent Abraham Bielski. The writ of certiorari as to respondents David Suski et al. is dismissed as improvidently granted.”

We further reported that back with a June 2023 Certiorari Petition was Coinbase, which raised this issue: “Whether, where parties enter into an arbitration agreement with a delegation clause, an arbitrator or a court should decide whether that arbitration agreement is narrowed by a later contract that is silent as to arbitration and delegation.” In a three-item Miscellaneous Order released November 3, 2023, SCOTUS granted Certiorari. As usual, there was no explanation. Several amicus briefs were filed. Noteworthy briefs in Suski were filed by the American Bankers Association, the American Tort Reform Association, the Atlantic Legal Foundation Cato Institute, and the Chamber of Commerce of the United States.

The Oral Argument

With a full complement of Justices, the oral argument in this case was audio livestreamed via the SCOTUS Website. The discussion focused squarely on the limits of delegation under the Federal Arbitration Act. Petitioner Coinbase’s counsel Jessica Lynn Ellsworth stated:

“The Federal Arbitration Act requires courts to enforce arbitration agreements according to their terms. Respondents and Coinbase agreed to arbitrate any disputes about Coinbase services and to delegate to an arbitrator any threshold disputes about whether specific claims were subject to arbitration. Despite this delegation clause, the parties have spent nearly three years disputing this threshold issue. That's because, instead of enforcing the delegation clause, the courts below came up with rationales to evade it and to instead answer the question of arbitrability for themselves.”

Respondents’ counsel David John Harris Jr. led with:

“I'm going to abandon what I planned to talk about and try to answer Justice Gorsuch's question. Why are they fighting this so hard? And that only occurred to me within the last week or so. And the answer is there's a strategic reason. They want the Court -- they don't care who decides arbitrability. All they care about is how arbitrability gets decided because that's what goes to liability at the end of the day. And so the plan is we need the Supreme Court to overrule.”

Questions were posed by all of the Justices, with the bulk of the questions coming from Justices Jackson, Sotomayor, and Thomas. Several Justices on both sides struggled with what instructions should be given to the Ninth Circuit in the event of a remand from SCOTUS. For a comprehensive “chapter-and-verse” analysis, we recommend that readers peruse these February 28 blog posts: SCOTUS Frustration: How to Move the Coinbase Arbitrability Case Forward, CPR Speaks Blog; Supreme Court Hears Coinbase Dogecoin Sweepstakes Case, UPI; and Supreme Court Likely to Side With Coinbase on Arbitration, Bloomberg.

Two Down, One to Go

With Bissonnette and Suski having been heard, one more arbitration-centric case remains to be argued. As reported in SAA 2024-08 (Feb. 22), the Court has set Monday April 22 for the oral argument in Smith v. Spizzirri, No. 22-1218. SCOTUS agreed in a January 12 Miscellaneous Order to take on the case. As reported in SAA 2023-36 (Sep. 21), the June 14, 2023 Petition for Certiorari states:

“This case presents a clear and intractable conflict regarding an important statutory question under the Federal Arbitration Act (FAA), 9 U.S.C. 1-16.[] The FAA establishes procedures for enforcing arbitration agreements in federal court. Under Section 3 of the Act, when a court finds a dispute subject to arbitration, the court ‘shall on application of one of the parties stay the trial of the action until [the] arbitration’ has concluded. 9 U.S.C. 3 (emphasis added).... The question presented is: Whether Section 3 of the FAA requires district courts to stay a lawsuit pending arbitration, or whether district courts have discretion to dismiss when all claims are subject to arbitration.”

(ed: *We think Coinbase will prevail. One clue? Justice Sotomayor said to Respondents’ counsel Mr. Harris: “I think you just gave away your case. [repeats] I think you just gave away your case.” Added Justice Gorsuch: “I'm struggling. I certainly see the argument that the second agreement modifies where this thing should go and should be resolved and by whom ultimately. But I think you've just conceded over and over again that the first agreement says those questions go to the arbitrator and it's broad in scope and it covers everything, all relationships with Coinbase.” Although, Mr. Harris countered the Justices’ assertions, the colloquy in our view was telling.)