Coinmint, LLC v. Katena Computing Technologies, Inc.

Background

Coinmint and Katena disputed a $150 million Sales and Purchase Agreement for bitcoin-mining rigs. The agreement required Coinmint to pay Katena a $37.5 million down payment to begin construction. Each party alleged that the other had breached the agreement.

The parties later arbitrated their dispute under the American Arbitration Association’s 2013 Commercial Arbitration Rules. The arbitration lasted eight months and involved several hearings and 14 witnesses. The arbitration panel issued a final award in Katena’s favor, awarding Katena $23.4 million.

The parties had also entered a stipulated protective order limiting the use and disclosure of confidential information. During the arbitration, Coinmint used confidential documents in related litigation. The panel imposed sanctions on Coinmint and took other measures concerning the confidentiality of arbitration proceedings and documents.

Coinmint’s motion to vacate

Coinmint moved to vacate the award under Section 10 of the Federal Arbitration Act. That provision permits a court to vacate an arbitration award in limited circumstances, including corruption or fraud, arbitrator partiality, serious misconduct affecting a party’s rights, or an arbitrator’s exceeding of authority.

Coinmint challenged the panel’s decision not to allow court reporters to record or transcribe the testimony of four witnesses: Michael Maloney, Jim Denaut, Robert Bleck, and Sagar Reddy. Coinmint argued that the absence of transcripts impaired its ability to cross-examine witnesses, prepare proposed findings and conclusions, and challenge the panel’s factual findings.

The court rejected those arguments. It explained that the applicable arbitration rule did not create an absolute right to a transcript. The panel had allowed Coinmint to cross-examine the witnesses and had explained that its confidentiality measures were intended to let the witnesses testify freely without fear that their statements would be used in other proceedings. The court also concluded that Coinmint had not tied the transcript issue to a specific statutory ground for vacatur or shown that the hearing was fundamentally unfair.

Coinmint also challenged the panel’s refusal to provide certain documents from Katena’s virtual data room. The panel had conditioned access on the parties’ entering another protective order covering confidential and attorneys’-eyes-only information. That protective order was never entered.

The court found that the panel had given Coinmint an opportunity to receive and use the documents if it agreed to appropriate confidentiality protections. The court further found that Coinmint had not shown that the panel later faulted it for failing to produce evidence that the panel had denied it. Instead, the panel stated that Coinmint had changed its fraudulent-inducement theory in its closing brief by relying on alleged misrepresentations in specific marketing documents.

Ruling

The court held that Coinmint had not identified a valid ground under Section 10 of the Federal Arbitration Act for vacating the award. It denied Coinmint’s motion to vacate. Because no basis for vacatur had been shown, the court granted Katena’s petition to confirm the arbitration award under Section 9 of the Act.

The court also lifted the stay that had been imposed when the court compelled arbitration, finding that the arbitration had been conducted according to the parties’ agreement.