In a recent development, cryptocurrency exchange Coinbase successfully persuaded the 9th U.S. Circuit Court of Appeals to mandate arbitration for account holder Abraham Bielski. Bielski had claimed that Coinbase breached federal law by failing to investigate his report that hackers had stolen $30,000 from his account.
Bielski’s name gained prominence earlier this year when the U.S. Supreme Court addressed a separate arbitration-related question in his case against Coinbase. The Supreme Court, in June, resolved a circuit split by determining that Bielski’s class action could not proceed during Coinbase’s appeal of the trial court decision denying its request to compel arbitration.
The latest decision from the 9th Circuit in Bielski’s case further exacerbates the existing circuit split, this time focusing on the fundamental requirement for plaintiffs to challenge delegation provisions in arbitration agreements.
The majority opinion from the 9th Circuit, delivered by Judges Gabriel Sanchez and Salvador Mendoza, posited that the framework established in Tuesday’s ruling aligns with precedent from the 2nd, 3rd, and 4th Circuits but contrasts with the rules outlined by the 6th and 11th Circuits.
However, a partial dissent from Judge Eric Miller questioned the majority’s characterization of the 6th and 11th Circuit decisions, arguing that there is minimal divergence between those rulings and the 9th Circuit’s Bielski opinion.
Delegation provisions, which typically assign initial questions about the arbitration contract’s validity and enforceability to an arbitrator rather than a court, lie at the heart of this legal dispute. The outcome of this case not only underscores the growing complexity of arbitration-related issues but also highlights the widening divide among various U.S. circuits on this crucial matter.
