Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Leidel v. Coinbase, Inc.

United States District Court, S.D. Florida

June 1, 2017

BRANDON LEIDEL, individually and on behalf of all others similarly situated, and JAMES D. SALLAH, ESQ. as receiver/ corporate monitor of Project Investors, Inc., d/b/a Cryptsy, Plaintiff,
v.
COINBASE, INC., a Delaware corporation d/b/a GLOBAL DIGITAL ASSET EXCHANGE GDAX, Defendant.

          OPINION AND ORDER

          KENNETH A. MARRA United States District Judge.

         This cause is before the Court upon Defendant's Corrected Motion to Compel Arbitration (DE 16) and Defendant's Motion to Stay Discovery (DE 32). The Motion is fully briefed and ripe for review.

         I. Background

         Plaintiff Brandon Leidel (“Plaintiff” “Leidel”), individually and on behalf of all other persons similarly situated, brings this class action complaint against Defendant Coinbase, Inc. (“Defendant” “Coinbase”), a digital currency wallet and online platform where merchants and consumer can buy, sell, transfer and store their digital currency. (Compl. ¶ 10, DE 1.) According to the Complaint, Defendant holds itself out as a regulated and fully compliant entity, registered with the United States Department of Treasury's Financial Crimes Enforcement Network (“FinCEN”) as a money services business, as that term is defined by FinCEN. (Compl. ¶ 11.) Plaintiffs are a class of similarly situated users of Project Investors, Inc. d/b/a Cryptsy, a cryptocurrency and money service business that served clients in the United States and abroad. (Compl. ¶ 1.) Cryptsy was owned, operated and directed by Paul Vernon, the company's president and chief executive officer. (Compl. ¶ 24.)

         Cryptsy and Vernon each had an account at Coinbase. (Compl. ¶ 45.) Unbeknownst to the class Plaintiffs, Cryptsy and Vernon were stealing from user accounts and liquidating the currency through Crypsty and Vernon's accounts at Coinbase. (Compl. ¶ 50.) The Complaint alleges that Coinbase knew or should have known that Plaintiffs' assets were being liquidated through its exchange. (Compl. ¶ 73.) The class Plaintiffs bring claims for aiding and abetting breach of fiduciary duty (count one); aiding and abetting conversion (count two); negligence (count three) and unjust enrichment (count four) against Defendant.[1]

         Coinbase points to an arbitration clause contained in a 2013 User Agreement and agreed to by Cryptsy and Vernon which states:

Except for claims for injunctive or equitable relief or claims regarding intellectual property rights ... any dispute arising under this Agreement shall be finally settled on an individual basis in accordance with the American Arbitration Association's rules for arbitration of consumer-related disputes and you and Coinbase hereby expressly waive trial by jury. The arbitration shall take place in San Francisco, California, in the English language and the arbitral decision may be enforced in any court.

(Ex. B, DE 16-1.)

         Coinbase also relies upon the arbitration clause in the 2014 User Agreement, also agreed to by Crypsty and Vernon:

EXCEPT FOR CLAIMS FOR INJUNCTIVE OR EQUITABLE RELIEF OR CLAIMS REGARDING INTELLECTUAL PROPERTY RIGHTS … ANY DISPUTE ARISING UNDER THIS AGREEMENT SHALL BE FINALLY SETTLED ON AN INDIVIDUAL BASIS IN ACCORDANCE WITH THE AMERICAN ARBITRATION ASSOCIATION'S RULES FOR ARBITRATION OF CONSUMER-RELATED DISPUTES AND YOU AND COINBASE HEREBY EXPRESSLY WAIVE TRIAL BY JURY. THE ARBITRATION SHALL TAKE PLACE IN SAN FRANCISCO, CALIFORNIA, IN THE ENGLISH LANGUAGE AND THE ARBITRAL DECISION MAY BE ENFORCED IN ANY COURT. AT YOUR REQUEST, HEARINGS MAY BE CONDUCTED IN PERSON OR BY TELEPHONE AND THE ARBITRATOR MAY PROVIDE FOR SUBMITTING AND DETERMINING MOTIONS ON BRIEFS, WITHOUT ORAL HEARINGS. … ADDITIONALLY, YOU HEREBY WAIVE YOUR RIGHT TO PARTICIPATE IN A CLASS ACTION LAWSUIT OR CLASS-WIDE ARBITRATION.

(Ex. E, DE 16-1.)

         Based on these provisions, Defendant moves to compel Plaintiff to arbitrate, as a non-signatory under the doctrine of equitable estoppel. Alternatively, Defendant requests that the Court stays the litigation pending the resolution of the arbitration.

         II. Discussion

         The Supreme Court has articulated a strong federal policy favoring arbitration agreements. See Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24 (1983). One of the purposes of the Federal Arbitration Act (“FAA”), 9 U.S.C. §§ 1 et seq., is to “ensure judicial enforcement of privately made agreements to arbitrate.” Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213, 219 (1985). As such, arbitration agreements must be “rigorously enforce[d]” by the courts. Id. at 221. Because arbitration is a matter of contract, however, the FAA's strong pro-arbitration policy only applies to disputes that the parties have agreed to arbitrate. Mastrobuono v. Shearson Lehman Hutton, Inc., 514 U.S. 52, 57 (1995). ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.