US SUPREME COURT HOLDS THAT LOWER COURTS PROCEEDINGS MUST BE STAYED PENDING APPEAL OF ARBITRABILITY
Should a trial court do nothing, or should it proceed toward trial when an appeal of arbitrability is pending? The US Supreme Court answered this question in a 23 June 2023 decision in Coinbase, Inc. v. Bielski. The Supreme Court, with a narrow five to four majority, decided that, when a party files an immediate (interlocutory) appeal of a district court order denying arbitration, the district court must automatically stay its proceedings pending resolution of an appeal on arbitrability.
The case arose from a purported class action lawsuit over consumer practices. Respondents were users of the appellant Coinbase’s cryptocurrency exchange platform and had agreed to Coinbase’s user agreement. Coinbase believed that its user agreement required arbitration, but the district court disagreed and Coinbase appealed.
Justice Kavanaugh’s majority opinion
The Supreme Court, in a majority opinion written by Justice Kavanaugh (with Justices Alito, Barrett and Gorsuch and Chief Justice Roberts joining), resolved a divide among circuit courts by ruling in favour of staying proceedings while an interlocutory appeal on arbitrability is being decided. The Third, Fourth, Seventh, Tenth, Eleventh and DC Circuits took the view that district courts lacked jurisdiction once an appeal on arbitrability was filed, and stays were, therefore, automatic. But the Second, Fifth and Ninth Circuits took the view that stays were discretionary.
Oct-Dec 2023 issue
Goldman Ismail Tomaselli Brennan & Baum LLP