United States District Court, S.D. Florida
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,
COINBASE, INC., a Delaware corporation d/b/a GLOBAL DIGITAL ASSET EXCHANGE GDAX, Defendant.
OPINION AND ORDER
KENNETH A. MARRA United States District Judge.
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.
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.)
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.
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.)
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
(Ex. E, DE 16-1.)
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
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).