In a win for defendants facing class action lawsuits under the Telephone Consumer Protection Act (TCPA), the Supreme Court held that when a federal district court denies a motion to compel arbitration, the district court must stay, i.e., pause all pre-trial and trial proceedings while the losing party appeals the decision to the appellate court.
In Bielski v. Coinbase, Inc., plaintiff filed a class action on behalf of Coinbase users after the online currency platform failed to replace funds fraudulently taken from the users’ accounts. Coinbase argued its agreement required binding arbitration. The district court denied its motion, which Coinbase appealed to the Ninth Circuit. Meanwhile, the district court denied Coinbase’s request to stay the proceedings pending appeal. The Ninth Circuit also denied Coinbase’s request to stay the proceedings.
Coinbase appealed to the Supreme Court. In its ruling, the Supreme Court suggested that allowing plaintiffs to continue litigating during an appeal to the appellate court could force defendants to settle because of litigation costs when they might not otherwise even if the trial court wrongly refused to compel arbitration. Coinbase, Inc. v. Bielski, 143 S. Ct. 1915 (2023).
This decision underscores the importance of not only having an arbitration clause in your business’s terms and conditions, but also ensuring it is enforceable by including a link to those terms in the TCPA disclosure language when you obtain prior express written consent from a consumer.
TCPA class actions are complex and can be very expensive to defend, but an enforceable arbitration clause can significantly reduce this risk.
