February 14, 2023. Last April, U.S. District Judge William Alsup ruled an arbitration clause in Coinbase’s user agreement is unenforceable in California because it imposed unfair and one-sided requirements on Coinbase’s users. Last week, Glenn Chappell, attorney for a Coinbase user (Abraham Bielski) who lost more than $30,000 as a result of a scam on the cryptocurrency exchange platform, asked a three-judge panel of the U.S. Court of Appeals for the Ninth Circuit to uphold that decision.
Coinbase’s popular cryptocurrency exchange platform has over 35 million users worldwide. The class-action lawsuit accuses the company of failing to protect its customers from hacks and security breaches and refusing investigate or help users recover the money lost to scammers on its platform, all in violation of federal and state consumer-protection and banking laws.
Judge Alsup found that several provisions of the arbitration agreement required users to send any legal claims they have against Coinbase to arbitration while not requiring Coinbase to arbitrate claims it has against its users. Therefore, he ruled that these provisions were unenforceable due to their lack of “mutuality.”
Mr. Chappell, Chair of TZ’s Appellate Practice Group, told the appeals court that the one-sided requirements in Coinbase’s forced arbitration clause are unprecedented, especially considering they are included in a contract of adhesion—a form of contract that users must accept on a take-it-or-leave-it basis without any opportunity to negotiate. He therefore asked the Ninth Circuit to affirm Judge Alsup’s well-reasoned and thorough ruling.
The Ninth Circuit will not issue a decision until after the U.S. Supreme Court hears argument on a different issue in the same case. TZ’s Appellate Group is representing Mr. Bielski and a proposed nationwide class of Coinbase users in the Supreme Court, and the firm’s class action team is litigating the case before Judge Alsup in the trial court.
The case is Bielski v. Coinbase Inc., case number 22-15566, in the U.S. Court of Appeals for the Ninth Circuit.