Crypto Asset Fund, LLC v. Medcredits, Inc.
- Proceeding
- district
- Area
- civil
- Panel
- Larry Alan Burns (author)
Analysis
Plaintiffs moved for leave to file a motion for reconsideration of an order compelling arbitration, arguing that defendants' inconsistent positions before the arbitrator constituted new evidence. The court denied the application, ruling that a change in litigation strategy is not new evidence, and clarified that the arbitration clause covers disputes over the joinder of claims.
| What the court decided | The model |
|---|---|
Denial of Plaintiff's Application for Leave to File a Motion for Reconsideration“The Court DENIES the Application for Leave to File a Motion for Reconsideration.” | agree with court The court correctly applied the local standard for reconsideration, which requires new evidence, a change in controlling law, or clear error. The court reasoned that a party's change in litigation strategy does not constitute 'new evidence' that affects the factual premises of the prior order. This is a sound legal distinction; 'new evidence' in the context of reconsideration typically refers to facts that were not previously available or known, not merely a party's subsequent inconsistent arguments. The court also correctly noted that inconsistent positions are addressed via judicial estoppel in the subsequent tribunal, not by vacating the prior order. |
Clarification that the arbitration clause covers disputes over the joinder of claims“Disputes over the joinder of claims fall within the scope of this arbitration provision.” | agree with court The court clarified its prior order to address a misunderstanding by the plaintiffs. It cited the language of the Seed Round Agreement granting the arbitrator 'exclusive authority and jurisdiction to make all procedural and substantive decisions regarding a dispute.' Since joinder is a procedural matter, the court's interpretation that it falls within the arbitrator's jurisdiction is consistent with the broad language of the arbitration clause cited. |
The order itself: sound — The order is concise and directly addresses the plaintiff's argument. It correctly distinguishes between 'new evidence' and 'changed litigation strategy' in the context of a motion for reconsideration. It appropriately cites the local standing order for the standard and uses New Hampshire v. Maine to explain why the remedy sought (reconsideration) is inappropriate for the issue raised (inconsistent positions), directing the parties to the proper forum (the arbitrator) for resolving estoppel issues. The clarification regarding the scope of arbitration is supported by the quoted contract language.
Opinion
7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 CRYPTO ASSET FUND, LLC, et Case No. 19-cv-1869-LAB-MDD al., 12 13 Plaintiff, ORDER DENYING PLAINTIFF’S vs. APPLICATION FOR LEAVE TO 14 FILE MOTION FOR MEDCREDITS, INC., et al., RECONSIDERATION [Dkt. 33] 15 16 Defendants. 17 18 The Court’s March 30, 2020 Order granted Defendants’ Motion to 19 Compel Arbitration and stayed the case. Dkt. 23. Plaintiffs Crypto Asset 20 Funds, LLC, Timothy Enneking, and Kyle Chaykowski filed an Application for 21 Leave to File a Motion for Reconsideration of that Order based on 22 purportedly new evidence. Dkt. 33. For the reasons stated below, the Court 23 DENIES the Motion. 24 Motions for reconsideration “are disfavored and will be summarily 25 denied” unless the moving party can point to new evidence, a change in 26 controlling law, or a clear error in the Court’s earlier ruling. Standing Order in 27 Civil Cases § 3(e). Plaintiffs’ Application contends reconsideration is 28 warranted by new evidence: Defendants, who previously argued that the 1 Court should compel arbitration, now take contrary positions before the 2 arbitrator. Dkt. 33 at 3-6. 3 Defendants’ change of position isn’t new evidence that warrants 4 reconsideration. New evidence may affect the factual premises of an order, 5 but the same can’t be said of a changed litigation strategy. Here, the Motion 6 to Compel was granted because the language of the Seed Round Agreement 7 binds the parties to arbitration in case of a dispute, even as to questions of 8 arbitrability. See Dkt. 23 at 7-11. This is still the case, even if Defendants are 9 singing a different tune than they were before. 10 Certainly, equitable concerns arise when a party successfully 11 persuades one tribunal to adopt a position and then reverses course before 12 a subsequent tribunal. See, e.g., New Hampshire v. Maine, 121 S. Ct. 1808, 13 1814 (2001) (describing doctrine of judicial estoppel). But when that 14 happens, the solution isn’t to set aside the prior order. Instead, the second 15 tribunal decides whether the positions are inconsistent and whether the 16 litigant should be held to its original position. See id. 17 The Court DENIES the Application for Leave to File a Motion for 18 Reconsideration. Nevertheless, the Court takes the opportunity to clarify its 19 Order in one respect. Plaintiffs misunderstand that the Order required the 20 Plaintiffs to commence a new arbitration proceeding, separate from the 21 proceeding that was underway when Plaintiffs initiated this litigation. The 22 Order recognized that the Seed Round Agreement gave the arbitrator the 23 / / / 24 / / / 25 / / / 26 / / / 27 / / / 28 / / / 1 || “exclusive authority and jurisdiction to make all procedural and substantive 2 || decisions regarding a dispute.” Dkt. 23 at 9. Disputes over the joinder of 3 || claims fall within the scope of this arbitration provision. 4 IT IS SO ORDERED. 5 6 Dated: October 13, 2020 bi : A. ‘B, WY 7 Hon. LARRY ALAN BURNS 3 United States District Judge 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 19cv1869