Woody v. Coinbase Global, Inc.

• Court: Court of Appeals for the Ninth Circuit
• Decided: October 21, 2024
• Docket: 23-3584
• Status: Unpublished

Opinion

NOT FOR PUBLICATION FILED UNITED STATES COURT OF APPEALS OCT 21 2024 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS FOR THE NINTH CIRCUIT

DALLAS WOODY; PETER No. 23-3584 HREHOROVICH, individually and on D.C. No. behalf of all others similarly situated, 3:23-cv-00190-JD Plaintiffs - Appellants, MEMORANDUM* v.

COINBASE GLOBAL, INC.; COINBASE, INC.; BRIAN ARMSTRONG,

Defendants - Appellees.

Appeal from the United States District Court for the Northern District of California James Donato, District Judge, Presiding

Argued and Submitted October 8, 2024 San Francisco, California

Before: McKEOWN, KOH, and JOHNSTONE, Circuit Judges.

Dallas Woody and Peter Hrehorovich (“Plaintiffs”) appeal the district court’s

order compelling arbitration of their claims against Coinbase Global, Inc., Coinbase,

Inc., and Brian Armstrong (together, “Coinbase”). Though Coinbase did not file a

* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. cross-appeal, it now challenges the district court’s denial of its request for a stay

pending arbitration under 9 U.S.C. § 3 and dismissal of the action. We have

jurisdiction under 9 U.S.C. § 16(a)(3) and review de novo the denial of a stay under

§ 3. Blair v. Rent-A-Center, Inc., 928 F.3d 819, 832 (9th Cir. 2019) (reviewing de

novo the denial of a mandatory stay with jurisdiction under 9 U.S.C. § 16(a)(1)(A)).

We vacate the district court’s dismissal and remand for issuance of a stay pending

arbitration.

The district court erred in dismissing, rather than staying, the case. Section 3

of the Federal Arbitration Act (FAA) provides that, when a district court finds an

issue “referable to arbitration,” the court “shall on application of one of the parties

stay the trial of the action” pending arbitration. 9 U.S.C. § 3. At the time of the

district court’s decision, we interpreted § 3 to give courts discretion either to stay or

to dismiss a case. See Forrest v. Spizzirri, 62 F.4th 1201, 1204–05 (9th Cir. 2023),

rev’d sub nom. Smith v. Spizzirri, 601 U.S. 472 (2024). But during the pendency of

this appeal, the Supreme Court clarified that § 3 is mandatory: when a party requests

a stay in a dispute subject to arbitration, the district court has no discretion to deny

it. See Spizzirri, 601 U.S. at 475–76. Thus, the district court, relying on now-

overruled precedent, erred in denying Coinbase’s request for a stay under § 3.

Coinbase’s failure to file a timely cross-appeal does not prevent us from

correcting that error. We have “broad power” to address an issue that was not cross-

2 23-3584 appealed “as justice requires.” Stormans, Inc. v. Wiesman, 794 F.3d 1064, 1085 (9th

Cir. 2015) (quoting Lee v. Burlington N. Santa Fe Ry. Co., 245 F.3d 1102, 1107 (9th

Cir. 2001)). We exercise that discretion here because Coinbase “had no basis for

filing a cross-appeal until after the deadline to do so had lapsed” and, given that both

parties had the opportunity to brief and argue the stay issue after the Supreme Court

decided Spizzirri, “no prejudice will result from our consideration of this issue.” Lee,

245 F.3d at 1107 n.3, 1108.

We decline to reach Plaintiffs’ challenge to the district court’s order

compelling arbitration. Under § 16 of the FAA, parties may appeal an order

“refusing a stay of any action under section 3,” 9 U.S.C. § 16(a)(1)(A), or “a final

decision with respect to an arbitration,” id. § 16(a)(3). But they usually cannot appeal

an order “granting a stay . . . under section 3,” id. § 16(b)(1), or “compelling

arbitration,” id. § 16(b)(3). So where, as here, “a district court dismisses a suit subject

to arbitration even when a party requests a stay, that dismissal triggers the right to

an immediate appeal where Congress sought to forbid such an appeal.” Spizzirri,

601 U.S. at 478. Reaching the substance of Plaintiffs’ challenge would contravene

the FAA’s structure and purpose. If Coinbase prevails at arbitration, and the district

court does not vacate the resulting award, nothing precludes Plaintiffs from

appealing at that time, as Congress intended. See 9 U.S.C. § 16(a)(1).

VACATED IN PART and REMANDED.

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