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Bitstamp Ltd. v. Ripple Labs Inc.

United States District Court, N.D. California

August 6, 2015

BITSTAMP LTD., Plaintiff,
v.
RIPPLE LABS INC., et al., Defendants.

ORDER GRANTING MOTION TO COMPEL ARBITRATION AND STAY PROCEEDINGS Re: Dkt. No. 40

WILLIAM H. ORRICK, District Judge.

INTRODUCTION

Cross-plaintiff Ripple Labs, Inc. filed a cross-complaint against cross-defendants Jed McCaleb and Jacob Stephenson for allegedly breaching a settlement agreement between Ripple Labs and McCaleb.[1] The agreement contains an arbitration provision, and McCaleb and Stephenson now move to compel arbitration. Because the arbitration clause clearly and unmistakably assigns the question of arbitrability to the arbitrator and Stephenson is equitably entitled to enforce the arbitration clause, I GRANT the motion and STAY this matter pending arbitration.

BACKGROUND

Ripple Labs is an open source software developer that operates a decentralized ledger payment standard known as the Ripple "protocol." XRP is a digital currency used exclusively by Ripple Labs within that protocol. McCaleb is a founder and former Chief Technology Officer of Ripple Labs. On August 13, 2014, after McCaleb's departure from Ripple Labs, McCaleb and Ripple Labs executed a settlement agreement limiting McCaleb's sales of the XRP he owned and controlled. The agreement also contains three provisions which are relevant to McCaleb's and Stephenson's motion to compel arbitration. The first, section 9, is entitled "Governing Law, " and states:

This Agreement shall be governed by, construed and interpreted in accordance with, the laws of the State of California, without reference to choice of law principles.

Settlement Agreement § 9. Next, section 10, entitled, "Specific Performance, " provides that:

Each party acknowledges and agrees that each party hereto will be irreparably damaged in the event any of the provisions of this Agreement are not performed by the Parties in accordance with their specific terms or are otherwise breached. Accordingly, it is agreed that the Parties shall be entitled to an injunction to prevent breaches of this Agreement, and to specific enforcement of this Agreement and its terms and provisions in any action instituted in any court of the United States or any state having subject matter jurisdiction. Each of the parties to this Agreement consents to venue and personal jurisdiction for any such equitable action arising from or relating to enforcement of this Agreement sought in the U.S. District Court for the Northern District of California or any court of the State of California having subject matter jurisdiction.

Id. § 10. Finally, section 11, entitled "Dispute Resolution, " states that:

Any dispute, claim or controversy arising out of or relating to this Agreement or the breach, termination, enforcement, interpretation or validity thereof, including the determination of the scope or applicability of this agreement to arbitrate, shall be determined by arbitration in San Francisco, California before one arbitrator. The arbitration shall be administered by JAMS pursuant to its Comprehensive Arbitration Rules and Procedures and in accordance with the Expedited Procedures in those Rules. Judgment on the Award may be entered in any court having jurisdiction. This clause shall not preclude parties from seeking provisional remedies in aid of arbitration from a court of appropriate jurisdiction, as provided in Paragraph 10 herein.

Id. § 11.

Ripple Labs alleges that McCaleb breached the settlement agreement when he directed Stephenson, who is his cousin, to sell XRP in amounts exceeding the agreed-upon limits and without notifying it. In Ripple Labs's cross-complaint, it contends that Stephenson and McCaleb co-owned and controlled an account containing XRP. Dkt. No. 9. It also asserts that Stephenson tortiously interfered with the agreement by selling XRP in violation of the agreement at McCaleb's direction. It seeks injunctive relief and specific performance against McCaleb and damages against Stephenson.

McCaleb and Stephenson moved to compel arbitration pursuant to an arbitration clause in the agreement. Dkt. No. 40. I ...


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