In Re: Lindell Management LLC Litigation

Background

Lindell Management LLC hosted a “Prove Mike Wrong Challenge” concerning data that it represented as reflecting the November 2020 election. The challenge rules offered a $5 million reward to a participant who proved, to a 100% degree of certainty, that the data was not related to the November 2020 election. The rules required participants to submit their evidence to a three-member panel and included mandatory arbitration.

Robert Zeidman submitted a 15-page report addressing 11 files that Lindell Management provided. He concluded that each file lacked packet capture data, which is data extracted from internet traffic in real time. The challenge judges determined that Zeidman had not provided enough information to prove his position under the challenge rules, so Zeidman filed an arbitration demand.

Arbitration

The arbitration panel limited its review to whether Zeidman won the challenge, whether the challenge rules were unfairly one-sided, and whether Lindell Management violated the Minnesota Consumer Fraud Act. The panel applied Minnesota contract law. It interpreted the challenge rules to require proof that the data came from the election process itself, rather than merely being broadly related to the election. The panel also concluded that the data would have to be packet capture data to be election data, and found that Zeidman proved the 11 files were not packet capture data. It therefore awarded Zeidman the $5 million reward.

Court’s review

The court explained that judicial review of an arbitration award is very limited. Under the Federal Arbitration Act, a court may vacate, or cancel, an award on specified grounds, including corruption, arbitrator misconduct, or the arbitrators’ exceeding their authority. The court may not replace the arbitrators’ decision with its own merely because it disagrees with the arbitrators’ factual or legal conclusions.

Lindell Management argued that the panel exceeded its authority in two ways: by adding a packet-capture-data requirement and by shifting the burden of proof. The court found that the panel’s interpretation of the data language logically honored and harmonized the contract. Although the court thought the panel’s conclusion that packet capture data was the only possible election data was a substantial leap, it held that the panel was at least arguably interpreting and applying the contract. Even a serious legal error was not enough to vacate the award under the applicable standard.

The court also held that Lindell Management’s burden-shifting argument presented an alternative contract interpretation, but that the court could not retry the arbitration issues or choose between competing interpretations. The court found no evidence that the panel exceeded its authority.

Order

The court granted Zeidman’s motion to confirm the arbitration award. It denied Lindell Management’s motion to vacate the award. It awarded Zeidman $5 million plus post-judgment interest beginning April 19, 2023, to be paid within 30 days of the order’s issuance, and directed that judgment be entered accordingly.