Woody v. Coinbase Global, Inc.

Background

Named plaintiffs Dallas Woody and Peter Hrehorovich brought a proposed class action against Coinbase Global, Inc. and other defendants. They alleged that Coinbase promised to deliver “airdrops”—online transfers of newly created digital assets—to owners of an existing asset from the Flare blockchain network. The plaintiffs alleged that they were entitled to airdrops in 2021 and 2023, that Coinbase did not timely deliver the new coins to their wallets, and that they lost money as a result. They asserted common-law and California statutory claims for a proposed nationwide class of Coinbase customers.

Coinbase moved under the Federal Arbitration Act to require the plaintiffs to arbitrate their claims individually, relying on arbitration provisions in Coinbase’s User Agreements. The plaintiffs had opened their accounts in 2017 and accepted the agreements then in effect. They later accepted the 2022 User Agreement, which included an arbitration provision, a class-action waiver, and a provision delegating to the arbitrator the authority to decide disputes about the arbitration agreement’s enforceability, scope, and validity. The agreements also incorporated the American Arbitration Association’s arbitration rules.

Court’s Analysis

The court found no genuine dispute that an arbitration agreement had been formed. Coinbase gave users reasonably noticeable terms and required them to take affirmative action to accept them. The court relied in part on records showing that the plaintiffs clicked “Accept terms” on a pop-up containing the 2022 User Agreement. The court also characterized the 2017 and 2022 agreements as “clickwrap” agreements because users had to affirmatively accept the terms before proceeding.

The court concluded that the agreements clearly and unmistakably delegated most questions about whether the claims belonged in arbitration to the arbitrator. The 2017 agreements incorporated the American Arbitration Association rules, which the court treated as sufficient delegation. The 2022 agreement also expressly gave the arbitrator authority over the arbitration agreement’s enforceability, revocability, scope, and validity.

The plaintiffs raised objections involving the agreement’s scope, alleged unfairness, customer-support requirements, batch arbitration, discovery, and fees. The court said those objections challenged the arbitration agreement as a whole rather than the specific delegation provision, so the arbitrator—not the court—would resolve them. The court also rejected the plaintiffs’ argument that their California Unfair Competition Law claim sought “public injunctive relief,” explaining that the requested injunction would benefit only Coinbase customers, not the general public as a whole. The court further said any conflict between the User Agreement and a separate Coinbase-Flare agreement was a question for the arbitrator.

Disposition

The court ordered the plaintiffs’ claims to arbitration on an individual basis and dismissed the case without prejudice. This order required arbitration but did not decide whether Coinbase breached any promise or violated the law. Judge James Donato signed the order on October 17, 2023.