The U.S. Supreme Court granted a reprieve to the crypto exchange Coinbase on Friday. It ruled that the lawsuit brought by one of its users could not proceed until Coinbase defended an appeal of a ruling from a lower court.
The majority of 5-4 allowed Coinbase to proceed with its efforts to force arbitration in response to the alleged class action lawsuit. This decision halted the progress of the case through the federal courts. Coinbase has won, but it doesn’t have much of an impact on the crypto market.
“The sole question here is whether the district court must stay its pre-trial and trial proceedings while the interlocutory appeal is ongoing. The answer is yes: The district court must stay its proceedings,” wrote Justice Brett Kavanaugh on behalf of the majority.
Coinbase was denied an initial ruling in the putative class-action lawsuit when the U.S. District Court for the Northern District of California refused its motion to force arbitration. Coinbase also lost its appeal against that ruling. The original plan was to have the lawsuit proceed based on certain merits.
The Supreme Court’s ruling does not touch on crypto-related issues, other than the fact that Coinbase was one of the parties involved. It is the first time that a crypto company has argued in front of the U.S. Supreme Court, and this could have an impact on any other lawsuits brought against the crypto exchange.
After Friday’s decision, Coinbase may continue to try and compel arbitration.
“We anticipate that the Ninth Circuit here, as we anticipate in [appeals] more generally, will proceed with appropriate expedition when considering Coinbase’s interlocutory appeal from the denial of the motion to compel arbitration,” the ruling said. “We reverse the judgment of the Court of Appeals and remand the case for further proceedings consistent with this opinion.”
“The Court concludes for the first time that an interlocutory appeal about one matter (arbitrability) bars the district court from proceeding on another (the merits). That logic has such significant implications for federal litigation that the majority itself shies away from the Pandora’s box it may have opened,” Jackson wrote.