Three for Thursday - SCOTUS Today

The U.S. Supreme Court decided three cases today, one of them on the main sequence of the practices of most of the readers of this blog and the others worth knowing about, both as lawyers and as citizens.

Adding another car to the train of decisions concerning arbitration, namely, what is arbitrable and who decides it, a unanimous Court, per Justice Jackson, has held in Coinbase, Inc. v. Suski, that where parties have agreed to two contracts, one sending disputes concerning arbitrability to arbitration, and another, either explicitly or implicitly, sending such disputes to the courts, a court must decide which contract governs. Justice Jackson first places the instant case in the hierarchy of arbitration disputes, noting that the merits of a dispute are a first-order disagreement. The second order of disputes concerns whether the parties have agreed to arbitrate the merits, and the third order concerns who should decide on the second. The instant case involves a fourth order, in which the parties have two conflicting contracts, and the issue is who answers the third-order question of who decides arbitrability.

The case itself concerned a conflict between the cryptocurrency exchange, Coinbase, and users of its platform. The Coinbase User Agreement contained a “delegation clause” requiring an arbitrator to decide all contractual disputes, including arbitrability. A second contract, known as the “Official Rules” for promotional sweepstakes, has a forum selection clause assigning sole jurisdiction over any covered controversy to California courts. When the respondent platform users sued Coinbase, alleging that the sweepstakes violated California law, Coinbase moved to compel arbitration based on the User Agreement’s delegation clause. The District Court and Ninth Circuit both disagreed, holding that the Official Rules’ forum selection clause governed, and so did the Supreme Court. The question presented to the Supreme Court was a narrow one, and the Court resolved it narrowly, as noted above. In doing so, the Supreme Court declined to address the claim that the Ninth Circuit had erred in applying California law in holding that the Official Rules’ forum selection clause superseded the delegation provision of the User Agreement, holding it outside the scope of the question presented. Nor did the Supreme Court believe that it somehow was opening the floodgates to challenges to delegation clause disputes. It sensibly has cabined its holding to situations where parties have agreed to two conflicting contracts, necessitating a court to determine which one applies.

That conclusion appears to this writer as the correct one. The lesson of Coinbase is that a court, not an arbitrator, is the proper decider of which of two conflicting contracts should apply. The outcome of a given dispute will depend upon the facts that would show which one would have precedence. Besides providing certainty as to which is the correct forum for a “fourth-order” dispute, Coinbase teaches parties to draft contracts carefully and unambiguously as to precedence.

Brown v. United States answers whether the federal and state definitions of a drug must match when the state crime is committed or at some later point in time. The Court’s answer is that a state drug conviction will count as a predicate under the Armed Career Criminal Act (ACCA) if it involves a drug on the federal prohibited drug schedule at the time of conviction. Thus, the Supreme Court applied a “backward looking” approach consistent with the federal statute’s language. Interestingly, Justice Alito wrote the majority opinion, which the Chief Justice and Justices Thomas, Kavanaugh, and Barrett joined. Perhaps surprising to some, Justice Sotomayor also joined Justice Alito’s opinion. It is also interesting to note that as Justice Jackson dissented and was joined by Justice Kagan, Justice Gorsuch also joined the first three operative parts of the dissent. Was Justice Sotomayor influenced by her experience as a trial judge? Is Justice Gorsuch the spiritual successor to Justice Scalia on civil liberties matters? There is some evidence for both hypotheses, but I’ll do no more than savor any demonstrable deviation from the all-too-common critique that the Justices are no more than slavish followers of the president or party that nominated them. In this case, there is something of an irony in Justice Jackson’s criticism of the majority as not limiting itself to what she (and Justice Gorsuch, for that matter) believed was the definitive textual language of the operative provision of the ACCA.

Notwithstanding the previous discussion of the Brown case, the Court’s decision in Alexander v. South Carolina State Conference of the NAACP does reflect the stereotype, with Justice Alito writing the Court’s majority opinion, holding that the District Court’s finding that race predominated in the design of South Carolina’s redistricting plan was clearly erroneous. Justice Alito was joined by the other five jurisprudentially conservative Justices, although Justice Thomas separately concurred. The three jurisprudential liberals, led by Justice Kagan, dissented. Full disclosure: this writer is a Trustee of the Campaign Legal Center, a leading voting rights public interest organization whose views oppose those of the Court’s majority and will, therefore, simply describe the Court’s holding without any editorializing about it.

Because the fundamental issue was whether the District Court properly disentangled race from politics, constituting an attack on the factual basis of the District Court’s findings, the Supreme Court’s majority held that this case could be disposed of on clear-error grounds. The case was predicated upon the state’s movement of nearly 200,000 people into or out of the district and whether those people were chosen on the basis of their political history or on the basis of their race. The Court found clear error because the respondents did not satisfy the demanding burden of showing that the “legislature subordinated traditional race-neutral districting principles . . . to racial considerations.” The majority held that there was no direct evidence of a racial gerrymander and that any circumstantial evidence was very weak. The majority also rejected the respondents’ expert reports and asserted that the challengers offered no alternative maps that could show that the legislature’s permissible partisan goal could be achieved in some other manner of redistribution. The majority also rejected an independent vote-dilution claim, holding that a “plaintiff pressing a vote-dilution claim cannot prevail simply by showing that race played a predominant role in the districting process, but rather must show that the state “enacted a particular voting scheme as a purposeful device to minimize or cancel out the voting potential of racial or ethnic minorities.” The dissenters argue that the majority has “reworked” the law, inverting the clear-error standard to favor the redistricting state. The dissenters suggest that the majority opinion now requires an adverse inference against plaintiffs who don’t, or can’t, submit an alternative map “no matter how much proof of a constitutional violation they otherwise present.” The opinions are lengthy and the arguments undergirding them sharp. The decision is meaningful in the context of evolving election law and, perhaps more so, as it might affect upcoming national elections.