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Coinbase v. Suski

Oral argument transcript · No. 23-3 · October Term 2023 · argued February 28, 2024 · the respondent won

Decision: votes, opinion and citations · Official transcript (PDF) · Argument audio at the Supreme Court

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Transcript

From the Court's official transcript; speaker labels as in the transcript, with advocates' full names from its list of appearances.

Chief Justice Roberts: We'll hear argument next in Case 23-3, Coinbase versus Suski. Ms. Ellsworth. ORAL ARGUMENT OF JESSICA L. ELLSWORTH ON BEHALF OF THE PETITIONER

Jessica L. Ellsworth: Mr. Chief Justice, and may it please the Court: 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. The Ninth Circuit did so by Official 1 characterizing Respondents' challenge as one of contract formation, asserting that contract formation can never be delegated and sidestepping the delegation clause. The issue, as the court of appeals saw it, was whether the parties formed a contract to arbitrate these claims. If that approach were correct, courts in every case could ignore delegation clauses by just characterizing an arbitrability dispute as a question of whether the parties formed a contract to arbitrate the claims at issue. Respondents do not defend that reasoning. They agree the contracts here were formed and that they were in effect. Their argument is that the scope of the otherwise applicable arbitration agreement was narrowed by a later contract to exclude their asserted claims. That question is one of arbitrability, and the parties agreed an arbitrator would decide it. Respondents blur three distinct legal questions in a case like this one. The first is the merits of the claims the Respondents assert. The second is whether those -- the merits of Official 1 those claims should be arbitrated. And the third, which is the only question that was before the courts below and is before this Court, is who decides whether the merits should be arbitrated. This third question is antecedent to the other two. I welcome the Court's questions.

Justice Thomas: Isn't the problem the confusion that results from the difference between the official rules and the agreement?

Jessica L. Ellsworth: So, Your Honor, at some level, there is some confusion that the Respondents have argued results from looking at these two together. But the only way there is confusion is if you conflate those different layers of questions because the -- the -- the delegation clause that's in the arbitration agreement answers directly the who decides.

Justice Thomas: So what is the source of the disagreement here? Doesn't it come from the -- the -- the rules?

Jessica L. Ellsworth: So the source of the agreement is --

Justice Thomas: Disagreement.

Jessica L. Ellsworth: Certainly. The source Official 1 of the disagreement is that there is a forum selection clause in the official rules that says something about controversies regarding the promotion. And the Respondents have argued that, by using that language, the second contract somehow carved out of the arbitration agreement the claims they want to assert here.

Justice Thomas: Well, couldn't this have been solved in drafting by simply either having an express arbitration provision in the official rules or by referring back to and incorporating the user agreement?

Jessica L. Ellsworth: So, Your Honor, I think those are certainly questions that could be and should be addressed by the arbitrator when this gets there. But -- but the threshold question is whether the confusion that Your Honor is referencing has anything to do with the who decides issue. And there's nothing in the official rules language --

Justice Thomas: Well, I think it goes a little deeper because you can also say, is there actually an arbitration agreement that comes out of the -- the rules? Official

Jessica L. Ellsworth: So -- so, Your Honor, I -- I don't think there is an arbitration agreement anywhere in the official rules. The Respondents' argument is to try to take the official rules to create ambiguity about the -- or -- or -- or confusion, as Your Honor said, about what claims are actually subject to arbitration.

Justice Thomas: Yeah.

Jessica L. Ellsworth: But that is a garden-variety arbitrability question. It doesn't speak to the threshold, gateway who decides question.

Justice Jackson: So can I ask you -- oh, go ahead. Go ahead.

Justice Kavanaugh: Go ahead.

Justice Jackson: Can I ask you about the who -- who decides question? Because I -- I'm follow -- I think I'm following your argument, but I -- I guess I'm questioning whether you're right that the only way there is confusion is if you conflate the questions. So let me -- let me posit this hypothetical. Suppose we have two contracts, the first of which has a delegation clause that Official 1 answers the who decides question, and the answer in the first contract is the arbitrator decides. We have a second contract that answers the delegation question, and the answer in that case is the court decides. In that situation, where you have these two different contracts with two different clear delegation principles, isn't the question at that point, which contract controls? Which, you know, I take it is another way of the Ninth Circuit saying, well, this contract superseded that one. But, really, it's a question at that point of what did the parties intend, what was their agreement about which of these two contracts controls the situation. And in that case, I think you go to the court. Why -- why am I wrong about that? And isn't that the situation that's actually being presented on these facts?

Jessica L. Ellsworth: So I think you are right about that, not wrong about it. And I think the distinction between your hypothetical and this issue in this case is -- is -- is a very important one. You're right about it because, in your Official 1 hypothetical, you identified a -- a contract with a delegation clause and a second contract that isn't silent about delegation; it specifically addresses delegation and has a different provision. So a party could come into court resisting arbitration and make a specific challenge to the delegation clause in the first contract that is directed at whether that particular delegation clause has been superseded by the later delegation clause. It's all at this who decides level. The problem in this case is that the -- from the very beginning, the Respondents have agreed this arbitration agreement remains in effect. This delegation clause remains in effect. It would cover these claims.

Justice Jackson: I understand, but by operation of the law, don't we have the -- basically the same thing here? Because the second contract is not completely silent. The second contract says forum selection, go to -- you know, disputes go to the court. And I thought that by operation of law, when you don't speak to delegation in a Official 1 situation like that, it's -- the choice is -- the delegation is to the court. So that, in effect, even though we don't have those words in the second contract, we basically achieve the same thing. Am I wrong about that?

Jessica L. Ellsworth: I -- I think you are --

Justice Jackson: Okay.

Jessica L. Ellsworth: -- just a little bit off about that.

Justice Jackson: Okay.

Jessica L. Ellsworth: And the nuance here, I think, is the exact nuance that this Court identified really going all the way back to Prima Paint but through Rent-A-Center itself, where it talked about the fact you can have validity challenges that are -- that occur at these different levels. So you can argue that there's some sort of invalidity or some sort of supersession that occurs at the level of the arbitration agreement. You can also have one that occurs at the level of the delegation clause. And under the severability principle that this Court has consistently applied and Official 1 that it draws directly from the text of Section 2 of the FAA, the only question here is whether the -- the Respondents' argument addresses the who decides question.

Justice Kavanaugh: Can I -- keep going.

Justice Jackson: No, I'm -- it's all right. I'm done.

Jessica L. Ellsworth: So the only -- only other point I would make that I think is important to understand about this is that a delegation clause by its very nature must reach more broadly than an arbitration agreement, and that's because, when you get to the del -- when you -- when you have the delegation and you end up in front of the arbitrator, sometimes the answer will be yes, this should be arbitrated; sometimes it will be no, it shouldn't be. But the force of the delegation clause does not turn on the reach of the arbitration agreement.

Justice Kavanaugh: So, from the reply brief, page 9, I located a point of possible agreement between you and Respondent on a remand possibility. So you say on page 9 in the reply brief, "Because the Ninth Circuit did not decide Official 1 whether the sweepstakes' official rules displaced the delegation clause, this Court could vacate the judgment below and instruct the Ninth Circuit to apply the FAA's severability rules. See response 58," the response to the red brief. The red brief said "the Court should remand this case to the Ninth Circuit to more thoroughly consider whether the Official Rules partially modify the User Agreements' delegation clauses" -- they say -- "under non-preempted, State laws of contract interpretation." Are you all saying the same thing there? And if you both agree that the Ninth Circuit's analysis is wrong, it should be remanded, are we done?

Jessica L. Ellsworth: So I think, Your Honor, that we do both agree that the Ninth Circuit's analysis was wrong. I think we do both agree that this should be remanded. I think we have a disagreement when you get beyond that. And --

Justice Kavanaugh: The -- the under, the -- can we just remand and say that's for the Ninth Circuit to -- to figure out in the first Official 1 instance?

Jessica L. Ellsworth: You can. I -- I think it would be important --

Justice Kavanaugh: And if we do that, are we done? (Laughter.)

Jessica L. Ellsworth: So, Your Honor, I think you -- I think you could stop there.

Justice Kavanaugh: Okay.

Jessica L. Ellsworth: I think there are some reasons not to stop there and to add a little bit of an explanation.

Justice Kavanaugh: But we could. I just want to get the "could" and the Respondent. (Laughter.)

Jessica L. Ellsworth: Yes. Yes, Your Honor. Yes. I -- I --

Justice Kavanaugh: And then tell me why we shouldn't, but I just wanted to get the "could." Okay.

Jessica L. Ellsworth: Well, I -- I think you -- you -- you could stop there, but in saying that you're remanding the case, I think there are three important principles that the Ninth Circuit went astray on that I would recommend Official 1 that this Court provide as guidance because this is a situation, successive contracts come up not infrequently in all sorts of commercial settings, consumer settings. The first is that the severability principle applies just as much in a successive contract scenario as it does to a single contract scenario. That means that the court can only entertain challenges directly to the validity or enforceability of the delegation clause itself. The second principle that I think would be important to explain is that delegation clauses can and regularly do direct an arbitrator to resolve disputes about whether an arbitration agreement exists and whether it covers a particular dispute. The third point I think that this Court should make in remanding it is that a court cannot refuse to enforce a delegation clause based on the court's view that a later contract changes the scope of what disputes are arbitrable because, as I said in -- to -- in response to your earlier question, the force of a delegation clause does not rise or fall on the Official 1 scope of --

Justice Sotomayor: These are huge changes.

Chief Justice Roberts: Well, you -- you do --

Justice Sotomayor: I'm sorry. These are huge changes. You are now creating a whole set of federal rules on what constitutes a superseding agreement or not. I don't -- we didn't grant cert on that. We granted cert on a very narrow question, and the narrow question was where parties enter into an agreement -- an arbitration agreement with a delegation clause, should an arbitrator or a court decide whether that agreement is narrowed by a later contract that is silent as to arbitration and delegation. I don't know whether the silence or not is relevant. The question is what does state law do. We didn't answer -- we didn't ask for briefing on that. The short answer is the court decides what state law says or doesn't say. Here, the Ninth Circuit decided that three years into this litigation, two appeals to Official 1 -- to the Supreme Court that have been accepted. Why shouldn't we just answer that question? The Court decides it. State law may guide the Court in whether there's been a superseding agreement, but we shouldn't be creating federal rules for the state to follow or not follow in interpreting contracts.

Jessica L. Ellsworth: Justice Sotomayor, we are not asking for you to create any federal rules in resolving this case. The severability rule is something this Court has applied consistently. It has drawn directly from the text of Sections 2, 3, and 4. And all we're asking is that in -- in remanding this, you make clear that the severability rule applies here, just as it always does.

Justice Sotomayor: No, they've --

Chief Justice Roberts: Well --

Justice Sotomayor: -- answered that -- I'm sorry.

Chief Justice Roberts: -- I'm -- I -- I would suppose that your answer could be that it -- it depends. I mean, simply because there's a subsequent contract that is silent Official 1 doesn't mean that the delegation clause covers all of that, right? You could have a big enterprise and you have a delegation clause in a particular arbitration agreement, and there's a contract entered between the same parties somewhere down the line concerning a totally different issue. And do you think in that situation it still goes to the arbitrator --

Jessica L. Ellsworth: So, Your Honor --

Chief Justice Roberts: -- to decide whether he or she's been delegated the authority to arbitrate that agreement?

Jessica L. Ellsworth: Mr. Chief Justice, I think there is a practical answer to that and there is a doctrinal answer to that. The -- the practical answer is that a -- a party only invokes a delegation clause when it thinks it has a real claim that the dispute is actually subject to arbitration. So -- so, for example, in this case, the Respondents have agreed that absent the official rules changing it, their claims are subject to -- to arbitration. So that's the -- that's the practical answer. Official

Chief Justice Roberts: Well, put that aside. Well -- or, no, I'll answer it now. I mean, the parties invoke it or not depending upon how they regard their self-interest. I mean, they may well have a favorable view of the person who is arbitrating or not. They may well have a particular reason to proceed more promptly than litigation would. What is the internal limit that you have that says no, that contract is not sufficiently connected to why we have a delegation clause under the other one?

Jessica L. Ellsworth: Your Honor, when a party invokes a delegation clause, this Court unanimously in the Henry -- Henry Schein decision from a few terms ago made clear that courts have no power and no business answering the arbitrability question for themselves, even in a case where they think the invocation of the delegation clause was wholly groundless. We are a far cry from that scenario here. I think Your Honor's hypothetical where there are two contracts that really address totally disconnected scenarios might be closer to Henry Schein, but Henry Schein then, I think, Official 1 provides the appropriate avenue. And -- and as the Court said in that case, if someone really is frivolously or improperly invoking a delegation clause, arbitrators have ways to quickly move the matter back to court. There may be sanctions available. There are other tools --

Chief Justice Roberts: Yeah, but at some point, you get into the fundamental principle of arbitration that the parties must have agreed to turn something over to the arbitrator. And it seems to me that if you get a contract that is way out of the -- however you want to describe it -- the scope, that saying it's up for the arbitrator kind of skips over that pretty important part.

Jessica L. Ellsworth: Your Honor, in -- in this case, there is undisputedly a clear and unmistakable delegation clause of all disputes about Coinbase services. These claims are about Coinbase services. The Respondents say that they used Coinbase services to enter into a sweepstakes when they wished they had mailed in a postcard instead. That is absolutely a dispute about Official 1 Coinbase services. It is covered by the arbitration agreement as written. The question becomes does the -- do the official rules somehow carve out that particular set of claims from arbitration, but there's not a carveout from delegation. And that makes sense because the purpose of delegation is to set up a streamlined, efficient process for resolving these arbitrability disputes. It is about consent to have an arbitrator quickly and efficiently tell the parties, does this dispute belong in court or does this dispute belong in arbitration?

Justice Jackson: But on the --

Justice Alito: On the pure -- on the pure who question, which is what we agreed to review, you say on page 12 of your reply brief, "Coinbase agrees that the Court can and should assess whether the official rules displace the parties' consent to have an arbitrator decide arbitrability...". I mean, that seems to answer and concede the who question. And then there is the what question. But we didn't grant review on the what question. Official

Jessica L. Ellsworth: Right. You -- that's absolutely right, Justice Alito. You granted review on the -- on the who -- who decides question.

Justice Alito: Right.

Jessica L. Ellsworth: And the answer to the who decides question in a case like this where there is a delegation clause that remains in effect is absolutely that the arbitrator does. That --

Justice Alito: Well, you -- haven't you -- you've -- you've begged the question when you say that remains in effect. The question is whether it remains in effect after the official rules.

Jessica L. Ellsworth: Your Honor, that's correct. And that is a --

Justice Alito: And who decides that?

Jessica L. Ellsworth: So, if the parties came to court and made an argument that was specifically directed at the delegation clause somehow being undermined, this would require showing that your argument addresses the same level of concern as who decides. Again, if we think about you've got Official 1 who decides, you've got arbitrability, and you have the merits. They pointed to a provision that talks about a court deciding controversies regarding the promotion. This threshold question is not a controversy regarding the promotion. And I think that's why, in the district court, in the court of appeals, in this Court, the way Respondents see to get to a delegation invalidation is to argue that the arbitration agreement has been narrowed and there's been some corresponding narrowing of the delegation clause.

Justice Jackson: Can we set aside the way they framed it? Because I agree it's a little confusing if you start from the world of we have a delegation agreement, then we have a subsequent agreement, and the question is to what extent the subsequent agreement is a carveout or narrows or whatever. Let's say we don't frame it that way. Let's say we frame it in the way that I want to -- want to think about it, which is we have contract A that absolutely answers the who decides question, and then we have contract B Official 1 that implicitly decides the who -- who decides question, because I understood by operation of law, based on basic -- you know, what the Chief Justice was saying, is that if you don't pick arbitration, if you're silent about it, then the background rule operating is that arbitration is not what happens and any question about whether or not arbitration is what happens, the who decides, goes to the court. So we have contract number 1 that is picking arbitrator is the one who decides, and we have contract number 2 that is implicitly picking court is the one that decides. I thought you agreed with me at the beginning that in that situation, it's a question for the court. And that's what we're -- which of these contracts is actually operable today?

Jessica L. Ellsworth: Justice Jackson, I think the difference between your earlier hypothetical, as I --

Justice Jackson: Yes.

Jessica L. Ellsworth: -- understood it, and this one is that the second contract, in your earlier hypothetical, specifically said that the Official 1 delegation clause -- it -- it identified that there wouldn't be a delegation; it would be on some sort of different terms. In this case, the second contract says nothing --

Justice Jackson: Right, but --

Jessica L. Ellsworth: -- about delegation.

Justice Jackson: -- do you disagree with me that, by operation of law, when a contract says nothing, we're -- it -- it -- the court is the one that decides what it means and what happens?

Jessica L. Ellsworth: In -- in the abstract. If the only --

Justice Jackson: No, not in the abstract. In -- in -- in the way we look at the law. If it doesn't say anything about arbitration --

Jessica L. Ellsworth: So if it -- if it -- the contract didn't say anything about arbitration --

Justice Jackson: Yeah.

Jessica L. Ellsworth: -- we wouldn't be able to invoke it as part of a motion to compel arbitration. Official

Justice Jackson: No. What you're doing is you're invoking contract 1. So --

Jessica L. Ellsworth: That's right.

Justice Jackson: -- what I'm saying, he's invoking contract 2. We have two people running in with contracts, one of which suggests that this is supposed to be decided by the court. The other is -- suggests that this is supposed to be decided by the arbitrator. And so, in that situation, isn't the question which contract controls in this situation?

Jessica L. Ellsworth: So, Justice Jackson, I -- I think it's important to figure out what the correct starting point is. And I think one of the remaining places of daylight between the Respondents and the Petitioner here is what the right starting point is. We say the right starting point is the arbitration agreement that we seek to enforce.

Justice Jackson: Yeah.

Jessica L. Ellsworth: And, here, that is the delegation clause in the first contract. That delegation clause, under the -- the straightforward operation of Section 2 of the Official 1 FAA, remains valid, enforceable, and irrevocable unless they can make some state law challenge that would displace it. And so the question becomes -- and this is the analysis the Ninth Circuit didn't do -- have they -- by pointing to the forum selection clause that talks about resolving controversies about the promotion, have they done anything under state law to displace the who decides delegation clause in the first contract?

Justice Gorsuch: Counsel, can I ask you just a practical question? I fully appreciate your argument that parties might send to the arbitrator the question of who decides and, at the same time, have the -- the merits decided in one place or the other, even within a single arbitration agreement. The arbitrator decides whether agreements go to court or arbitration. Some will; some won't. I get that. I guess I'm a little curious why your -- your client is fighting this so hard if at the end of the day you're going to wind up saying, yeah, sweepstakes disputes go to court. Official 1 So, if the arbitrator is going to have to send it to court anyway, why -- why are we here?

Jessica L. Ellsworth: So, Your Honor, that's the practical point that I tried to make in response to the Chief Justice. I think, if we thought this was going to end up back in court, we wouldn't have invoked --

Justice Gorsuch: No, I -- I --

Jessica L. Ellsworth: -- the delegation clause.

Justice Gorsuch: -- I fully appreciate that, and I also appreciate that under Schein that an arbitrator has -- could sanction you for frivolous effort to keep this in arbitration. My question is more practical than that even and more nitty-gritty. Why in this case are you fighting it when you have this second agreement that would seem to route -- I -- I accept maybe the arbitrator should have decided this. I'm -- I'm spotting you that.

Jessica L. Ellsworth: So, Your Honor --

Justice Gorsuch: Why?

Jessica L. Ellsworth: -- the answer is because, when we get to the arbitrator, we think Official 1 we have very good reasons --

Justice Gorsuch: I -- I know that. What are they?

Jessica L. Ellsworth: I'm -- I'm happy to -- to talk you through a number of them. One is that this provision is in the contract. It applies to mail-in applicants who participate in the sweepstakes that way. The second is that the contract -- the -- the official rules speak about jurisdiction, and a motion to compel arbitration and an arbitration agreement are not about removing the jurisdiction of the court. It speaks to -- to personal jurisdiction. Really, that's what paragraph 10 is about. And we don't think it operates as a carveout on the arbitration agreement's scope in the way that the Respondents have argued. So -- so those are exactly the points that we would make to an arbitrator. And I think Henry Schein makes clear an arbitrator may agree, it may disagree with us, but the arbitrator gets to make that decision in the first instance.

Justice Barrett: Counsel, can I -- Official 1 are you done?

Justice Gorsuch: Yeah.

Justice Barrett: Can I just return to Justice Kavanaugh's point about what the common ground is here? So you agree that the question of whether there is a valid delegation clause is one for the court?

Jessica L. Ellsworth: The question of whether there is a -- under the severability principle, yes.

Justice Barrett: You agree that courts make that decision by clear and convincing evidence?

Jessica L. Ellsworth: I think courts make that -- they -- they make that decision, yes.

Justice Barrett: Okay. And you agree that there is a dispute here about whether there is a delegation of the arbitrability question to the arbitrator?

Jessica L. Ellsworth: I'm sorry. We agree or disagree?

Justice Barrett: You -- I'm saying -- I'm asking, do you agree with me that the dispute between you right now is about whether there is a delegation that will send, taking Official 1 these two contracts together, send this dispute to arbitration on the arbitrability question?

Jessica L. Ellsworth: So I think we agree that there is a -- I think both sides agree that there is a delegation clause and that, as originally formulated, it would cover this dispute. The Respondents say --

Justice Barrett: Right, but -- but we're looking at two -- we're looking at two contracts. So you -- you agree -- let's finish this up very quickly. You agree that there's a dispute about whether there's a valid delegation clause that applies here to send it to the arbitrator?

Jessica L. Ellsworth: We -- our position is that there is a valid delegation clause and it should be enforced.

Justice Barrett: But the -- no. I'm sorry. Maybe I was unclear. But the question is, do you agree that there -- the question here is about the existence, the validity, of a delegation clause?

Jessica L. Ellsworth: Absolutely, Your Honor. The -- the validity of the delegation clause, I think, is reserved for a court to Official 1 resolve, applying the severability principle, which limits the arguments that can be --

Justice Barrett: Okay.

Jessica L. Ellsworth: -- offered to undermine it.

Justice Barrett: But you agree on those three questions, though?

Jessica L. Ellsworth: Yes.

Chief Justice Roberts: Thank you, counsel. Justice Thomas? Justice Alito? Justice Sotomayor? Justice Kagan? Justice Gorsuch? Justice Kavanaugh?

Justice Kavanaugh: Any change from when I said "could remand"? No? (Laughter.)

Jessica L. Ellsworth: No change, Your Honor.

Justice Kavanaugh: Okay. Okay.

Chief Justice Roberts: Justice Barrett? Justice Jackson? Okay. Thank you, counsel. Official 1 Mr. Harris? ORAL ARGUMENT OF DAVID J. HARRIS, JR. ON BEHALF OF THE RESPONDENTS

David J. Harris Jr.: Mr. Chief Justice, and may it please the Court: 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 the Ninth Circuit's weird "existence" language. Why do they need that and that only? The reason is that "existence" language originated from the Goldman Sachs case that was cited in our Ninth Circuit opinion. The Goldman Sachs case was somewhat similar to this case in that there was a preexisting agreement to arbitrate but then a subsequent, more specific Official 1 agreement to litigate. The Ninth Circuit was looking at that situation and thinking: Shoot, we're bound to apply the old presumption in favor of arbitrability under federal law, but we know that as a matter of contract law, there was no real, mutual intent to arbitrate this dispute under the most recent, most specific agreement. So they made up a new federal rule. Oh, this is a formation dispute, this is an existence dispute, so that they could avoid the presumption of -- in favor of arbitrability and do the right thing under state law. We've gone to great pains to argue that non-preempted state laws are what apply here because, at the end of the day, those are the only laws that are capable of accurately discerning the parties' true intentions, no matter what type of contractual mess gets thrown in front of judges. It's impossible to make one federal rule, two federal rules, three federal rules that are going to accurately discern the parties' contractual intentions in -- in an infinite number of business situations. Official 1 Traditional state law can do that. And we ask that the Court apply that here and welcome to answer any questions.

Justice Thomas: But why wouldn't a -- a later agreement that modifies the earlier contract simply go to what the scope of the agreement is?

David J. Harris Jr.: So it goes to two scopes. It goes to the scope of the agreement to arbitrate the merits of the dispute, and in our position that we've tried to brief very heavily is that it goes to the scope of the agreement to delegate this arbitrability dispute to the arbitrator. And our reason for doing that is that under Granite Rock, consent to arbitrate is dispute-specific. If that's true in the context of an arbitration agreement, it also has to be true in the context of a delegation agreement.

Justice Gorsuch: But -- but, counsel, the arbitration agreement, you concede, is still operative, right?

David J. Harris Jr.: For -- for disputes unrelated to the sweepstakes, absolutely.

Justice Gorsuch: Yeah. Well -- Official 1 well -- and it says it applies to everything, all disputes about Coinbase services, right? The answer has to be yes.

David J. Harris Jr.: Yeah. On -- on -- on its -- its isolated terms, that's what the --

Justice Gorsuch: That's what it says, that's what it says, isolated terms, okay. And I -- I guess my question for you is the inverse of the one I asked your friend on the other side. The point in Schein was, if you agree to say the arbitrator gets to direct things, if this were all in one contract, it's possible some things would be arbitrated, agreed to arbitrate and some things would be -- you agree to send to court. And if it were in one contract, there's no doubt that the arbitrator would decide which -- which direction to route things, right? The only question is does the second contract make this different than it being in a single contract. And I struggle to see why that would be the case. And I furthermore struggle to see why you would care because your real argument is that the agreement is to litigate this in court. And the routing, who's going to Official 1 do the routing? Now we're at the Supreme Court of the United States, years have passed, we still don't know where this case is going to be. You could have had an answer from an arbitrator that you belong in -- in court years ago. Why didn't you? Again, I just struggle to see both sides why we're here.

David J. Harris Jr.: So, to deal with the first part with the Ninth Circuit and the user agreement, I just want to make clear that the Ninth Circuit didn't just rely on this existence language. After it sort of regurgitated that --

Justice Gorsuch: I'm not asking about the Ninth Circuit because it --

David J. Harris Jr.: Well -- well -- well --

Justice Gorsuch: -- seems to me both sides have disavowed the Ninth Circuit's opinion.

David J. Harris Jr.: -- it -- it really --

Justice Gorsuch: I'm asking why you are here because you could have had an answer from an arbitrator --

David J. Harris Jr.: Sure.

Justice Gorsuch: -- because I think your -- your argument's really quite strong as Official 1 to where this gets routed.

David J. Harris Jr.: Well, we've -- we've already won in court. We've already won arbitrability in court. And they haven't challenged that here. So the only way they resurrect the arbitrability dispute at all is by winning the delegation agreement.

Justice Gorsuch: My question is, though, if -- if -- if you -- if you think you can win on -- on where this goes, why didn't you just go to the arbitrator to get a quick answer? Why -- why -- why litigate it all the way to the Supreme Court of the United States? I'll try it one more time.

David J. Harris Jr.: So -- so, I mean, I guess I'd have to go back and think about why I did it in the trial court, why I did it in the --

Justice Gorsuch: Yeah.

David J. Harris Jr.: -- in the Ninth Circuit. But, here, so arbitrability, not delegation, arbitrability is finally resolved by the federal courts because -- unless this Court sends that dispute back to an arbitrator.

Justice Gorsuch: Right. Right.

David J. Harris Jr.: Or -- or the Ninth Official 1 Circuit sends it back.

Justice Gorsuch: That's why -- that's why we're here. We're at the -- at the antecedent question.

David J. Harris Jr.: Well, I don't want them to have a second chance to win arbitrability. They've already lost that.

Justice Jackson: Can I ask you about Justice Gorsuch's hypothetical about things being in one contract? Because I think it actually matters with respect to what's going on here. So, if we had one contract that just had one delegation provision and then later underneath it, it had user agreements, sweepstakes, or whatever, it didn't say anything, you would agree that that delegation clause would apply to the whole thing?

David J. Harris Jr.: I -- I think that's the best reading of the user agreements in isolation.

Justice Jackson: All right. So -- but -- but -- but you're saying that, I guess, if we had one contract that had different parts and there was a delegation agreement that was in Official 1 one part of it and then the other -- that went to the arbitrator and then, in the other, it was pretty clear the parties were saying this is delegated to the court, that you're saying that would be a contract formation, the court would have to decide which one of those parts -- which one of those delegation intents was operable?

David J. Harris Jr.: It would definitely be a different question if it -- if the two types of terms were contained in a single agreement between the same two parties.

Justice Jackson: Yes.

David J. Harris Jr.: Here, we have two separate agreements, two separate economic transactions, two separate groups of contracting parties, and that changes the intent analysis under -- under traditional rules of interpretation.

Justice Kavanaugh: The -- are you done? The -- the brief, you agree with Coinbase that the Ninth Circuit's opinion did not accurately reflect the parties' contractual disputes here, right, particularly the references to formation and existence? Official

David J. Harris Jr.: Only that part, Your Honor, yes.

Justice Kavanaugh: Right. And then you say the Court can correct the Ninth Circuit's reasonings. The Court should remand -- "Alternatively the Court should remand this case to the Ninth Circuit..." Are you -- I'm asking the same question I asked the other -- other side. Can we correct the Ninth Circuit's reasoning as both sides agree it's wrong and then send it back --

David J. Harris Jr.: So -- so -- so I only --

Justice Kavanaugh: -- for a determination of whether the sweepstakes displace the other contract, which could involve a debate about which law controls and all sorts of other things?

David J. Harris Jr.: So I only agree that the existence and formation part of the Ninth Circuit's analysis was wrong. I do not view that part of what they said as what controlled their analysis. So, if you look carefully at their opinion, they have two headings, delegation clause and arbitration or whatever the second Official 1 heading was. But they have a heading for delegation clause. Under that, Coinbase had argued that, well, this is a dispute about the scope of the arbitration agreement, and, therefore, that's the end of the analysis. It must go to the arbitrator. The Ninth Circuit said: Wait a minute, we're going to actually ask whether that scope language was intended to apply to a future contract like this one that says court only, that has a different set of parties. So -- so all that to say, they did directly address the delegation question before reaching arbitrability. And that's correct under Henry Schein. And they also, in addressing delegation, the question they answered is, is this delegation clause intended to be applicable to this arbitrability dispute? And that's -- that's one correct question to ask under Granite Rock because arbitration is always dispute-specific. It's -- we can't just label this an arbitrability dispute and move on. Official 1 We can't do that because it's also a forum dispute. It's also in substance a dispute about the official rules. We don't actually agree about the scope of the user agreements. We disagree about the scope of the official rules of the June 2021 sweepstakes. How is that not a controversy regarding the sweepstakes as to arbitrability? It's about the arbitrability of the sweepstakes.

Justice Kagan: Do you think --

David J. Harris Jr.: And that was intended for the courts.

Justice Kagan: -- do you think that the Ninth Circuit decided whether the official rules supplant the original arbitration agreement's delegation clause?

David J. Harris Jr.: No. And that -- that's where I think they went wrong if anywhere.

Justice Kagan: So that -- so -- so you think that this is not like, oh, they just forgot to put in a sentence. You think that they never addressed that question?

David J. Harris Jr.: Correct. They stopped at the question before it, which is, look, we don't even have to reach the official rules because Official 1 we're just looking at the clause, the delegation clause, and we're looking at the arbitrability dispute and we're saying we don't think this was meant to cover this. And -- and -- and that's an applicability decision that is delegation-specific. That's not preempted by the FAA. They haven't -- they haven't addressed it at all. They haven't addressed it under state law. They haven't addressed it under federal law. There's actually -- they just want to focus on this existence language so that they can go back and down and say, hey, this existence rule no longer exists, and, by the way, that was your excuse to apply state law. Now you have to apply the presumption in favor of arbitrability.

Justice Sotomayor: I think you just gave away your case. I think you just gave away your case.

David J. Harris Jr.: Well, no, Your Honor.

Justice Sotomayor: Your -- your -- they came in saying vacate and remand because they didn't address delegation and whether the Official 1 -- the user agreement -- the -- the sweepstakes agreement superseded that. And you're saying the Ninth Circuit didn't do that.

David J. Harris Jr.: Right. And -- and in my view, they didn't necessarily have to because they asked whether the delegation clause was applicable to this arbitrability dispute about the sweepstakes. They -- they looked at the delegation clause and they said: This wasn't intended to cover this particular arbitrability dispute. And so they said it's not delegated. But, to -- to some of the Justices' point, if we look at just the language of the delegation clause, it's broad enough to cover any arbitrability dispute. So the safer, better way to address this delegation question is were the official rules intended -- or -- or -- or did the official rules have the effect of modifying the delegation clause as to these types of arbitrability disputes?

Justice Gorsuch: I -- I -- I -- I just -- I'm struggling. I -- I -- 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 Official 1 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. So you want us to vacate and remand for more proceedings in the Ninth Circuit on whether that first agreement modifies the second rather than just going to get an answer from the arbitrator.

David J. Harris Jr.: I mean, remand is not our -- our first request. Our first request is to affirm the judgment and -- and just make clear that that "existence" language isn't the way to go about it. The way to go about it is ask whether the parties intended the delegation clause to apply to this arbitrability dispute. And as -- I mean, I could give you a long, economic, strategic answer --

Justice Gorsuch: Well, I'm kind of --

David J. Harris Jr.: -- for why we're --

Justice Gorsuch: -- kind of curious, I admit. I mean, this is about a sweepstakes, you know, entry. And how much money is at stake? And why are we litigating all the way to the Supreme Court of the United States up and Official 1 down and up and down over where this goes when, frankly, I would have thought you had a really good shot of getting an arbitrator to say this belongs in court.

David J. Harris Jr.: I would agree, but -- but that wasn't -- that wasn't the -- we don't want to take this to an arbitrator. And they don't -- they don't care where it goes. We care where it goes. But they don't care where the -- they don't care who decides arbitrability. They just care where the case ends up. We've already won the issue in court of where the case ends up, so we don't want it to go to an arbitrator now to review the Ninth Circuit's arbitrability decision. I'm just answering the question of why are we here. (Laughter.)

Justice Kagan: I mean, because you think an arbitrator will be less likely to send it to court? Is that the reason why you're here?

David J. Harris Jr.: Well, we -- what we have right now is a hundred percent certainty. And if an arbitrator is reviewing it, it's less than Official 1 a hundred percent certainty.

Justice Barrett: How much money are you seeking in your complaint for this sweepstakes entry thing?

David J. Harris Jr.: So it -- I mean, at the time we filed, we didn't know. At the time we filed, all we knew is that entrants were manipulated into being -- into paying $100 per person or more to -- to enter the sweepstakes. We are left to estimate, you know, how -- how many people were affected by that.

Justice Kavanaugh: It's a class action, putative, right?

David J. Harris Jr.: Putative.

Justice Barrett: Putative?

Justice Kavanaugh: Yeah. That's -- that's the answer, isn't it?

David J. Harris Jr.: Yes, Your Honor. That's essentially the answer.

Chief Justice Roberts: Thank -- counsel, if you have -- Justice Thomas? Anyone on that end? Anything further? Thank you, counsel.

David J. Harris Jr.: Thank you, Your Honor. Official

Chief Justice Roberts: Ms. Ellsworth? REBUTTAL ARGUMENT OF JESSICA L. ELLSWORTH ON BEHALF OF THE PETITIONER

Jessica L. Ellsworth: I think, as Justice Sotomayor's question made clear, this case needs to be remanded. The Respondents and the Petitioners are in agreement on that. We're here because the Ninth Circuit failed to apply the FAA's federal severability framework and, as a result, failed to do the state law analysis as applied to the delegation clause that it was required to do. The Ninth Circuit never asked whether the later contract specifically overrode the delegation clause under ordinary state law principles. And, Justice Jackson, I think some of your questions were getting at how a delegation clause could actually be overridden in a later contract. And I just want to respond to that briefly because I think it could be expressed as it was in one of your hypotheticals. It could -- a later contract could wipe out arbitration entirely from the parties' business relationship, and then someone could come into court and say that that has, under state law Official 1 principles, also wiped out the delegation clause. There could be a merger agreement -- a merger clause. There are a number of ways in which it could happen. The fact is that none of them happened here. Everyone agrees the Ninth Circuit didn't decide if the second contract displaced the delegation clause and, instead, just made a ruling on arbitrability. As I think my friend's argument shows, and it's important for this Court on remand to make clear, lower courts cannot collapse the who decides question and the Section 2 analysis for a delegation clause with the later arbitrability question. Justice Gorsuch, in response to your question about what an arbitrator would say here, one other thing to note is that the only Ninth Circuit case on point specifically finds that a forum selection clause does not displace a delegation clause. That's the Mohamed case. It's one of the many reasons that we think these operate on different levels. Just like in the Prima Paint case, where fraud in the inducement could operate differently at the level of the contract and at Official 1 the level of the arbitration agreement; in Rent-A-Center, where unconscionability could apply differently at the contract level, the arbitration agreement level, and the delegation clause level; so too here the forum selection clause could apply differently, and it's important that the Court address it at the specific who decides layer. For all of these reasons, we think the Court should reverse and remand. Thank you very much.

Chief Justice Roberts: Thank you, counsel. The case is submitted. (Whereupon, at 12:19 p.m., the case was submitted.)