The US Supreme Court rejected Coinbase’s request for arbitration concerning its Dogecoin (DOGE) sweepstakes on May 23. The court ruled that a judicial decision, not arbitration, should determine which of Coinbase’s agreements takes precedence.

The first agreement, Coinbase’s User Agreement, stipulates that disputes are subject to arbitration. The second is the official sweepstakes rules, which include a forum selection clause designating California courts as the sole jurisdiction for sweepstakes-related disputes.

This ruling represents a setback for Coinbase, which had sought arbitration. Coinbase's Chief Legal Officer, Paul Grewal, acknowledged the outcome with a brief statement, expressing acceptance of the court’s decision.

The Supreme Court’s decision upholds previous rulings from the US Court of Appeals for the Ninth Circuit and the Northern District of California. Both courts concluded that the sweepstakes rules governed the dispute and precluded arbitration.

Justice Ketanji Brown Jackson clarified that disputes are arbitrable only when both parties agree to arbitration, even if they disagree over which agreement mandates arbitration. She also addressed Coinbase’s argument that California state law was improperly applied by the Ninth Circuit, stating that the Supreme Court did not consider these additional legal questions.

Regarding concerns about potential legal complexity, Justice Jackson emphasized that courts are responsible for determining which contract governs when parties are subject to conflicting agreements.

The underlying lawsuit involves allegations in a class action case against Coinbase and its sweepstakes partner Marden-Kane. Plaintiffs claimed that Coinbase required participants to buy or sell $100 or more of DOGE to enter the sweepstakes, omitting alternative participation methods. They also accused the companies of violating California consumer protection laws, including the False Advertising Law and Unfair Competition Law.