Kahn v. Coinbase, Inc.

Summary

The California Court of Appeal affirmed the denial of Coinbase’s petition to compel arbitration in Haamid Khan’s action alleging deceptive practices involving cryptocurrency transaction fees under California’s Unfair Competition Law and False Advertising Law. Applying McGill v. Citibank, the court held that Khan’s requested injunction sought public injunctive relief and that the arbitration agreement’s waiver of that relief was unenforceable. The court also concluded that Coinbase’s online platform and alleged fee practices could affect the general public, including potential and future customers.

Holdings

1. Khan's complaint seeks public injunctive relief because it alleges ongoing violations of California consumer-protection statutes and requests an injunction prohibiting Coinbase from continuing practices that allegedly deceive or confuse the general public.
2. The arbitration agreement's waiver of Khan's statutory right to seek public injunctive relief is invalid and unenforceable under California law.
3. Coinbase may not compel arbitration of Khan's claims for public injunctive relief because the parties did not agree to arbitrate such claims, or any agreement to do so is unenforceable under McGill.
4. The FAA does not preempt the court's application of McGill in this case.

Questions Presented

1. Whether Khan's complaint seeks public rather than private injunctive relief under McGill v. Citibank, N.A.
2. Whether the arbitration agreement's waiver of the right to seek public injunctive relief is invalid and unenforceable under California law.
3. Whether the Federal Arbitration Act requires arbitration or preempts application of McGill to Khan's claims.
4. Whether the trial court correctly denied Coinbase's petition to compel arbitration.

Disposition

affirmed