The Supreme Court approved oinbase">Coinbase’s (COIN) position in a case involving a class-action lawsuit, strengthening the ability of firms to settle issues through arbitration rather than litigation. Following the verdict, shares of oinbase">Coinbase increased by nearly 4%.
The 5-4 ruling, handed down on Friday, dealt with whether a class-action lawsuit should proceed while an appeals court considered whether to refer the case to an arbitrator, as oinbase">Coinbase had requested.
The Supreme Court determined that the lawsuit must be suspended while oinbase">Coinbase challenged the federal district court’s rejection of arbitration.
By favoring oinbase">Coinbase, the court strengthened the preference for arbitration over litigation.
Companies implement arbitration because it saves money and helps them avoid expensive class-action lawsuits. Companies are increasingly including provisions in user agreements that require consumers or workers to resolve disputes through arbitration rather than litigation.
Customers are denied their day in court, according to consumer advocacy groups, and mandatory arbitration favors businesses over customers.
Justice Brett Kavanaugh wrote in the majority opinion: “If the district court could move forward with pre-trial and trial proceedings while the appeal on arbitrability was ongoing, then many of the asserted benefits of arbitration (efficiency, less expense, less intrusive discovery, and the like) would be irretrievably lost—even if the court of appeals later concluded that the case actually had belonged in arbitration all along.”
The Customers’ attorney Abraham Bielski filed a lawsuit against oinbase">Coinbase, claiming that the business failed to assist him when thieves fraudulently gained access to his account and stole $30,000.
Due to an arbitration clause in the platform’s user agreement, oinbase">Coinbase urged the court to refer the matter to arbitration but was turned down. While oinbase">Coinbase challenged that ruling in higher courts, Bielski wanted the litigation to continue, while oinbase">Coinbase wanted it to be put on hold.
