Factual Background
Mike Lindell is a Minnesota businessman, commonly known as the “My Pillow Guy.” Lindell repeatedly claimed to possess data showing that China interfered with the 2020 presidential elections. Lindell created Respondent Lindell Management LLC (“LMC”) to host a “Cyber Symposium” in South Dakota in August 2021, during which LMC would provide cyber data and packet captures from the
2020 election that would prove election interference. LMC advertised a “Prove Mike Wrong Challenge” in which contestants would attempt to “[f]ind proof that this cyber data is not valid data from the November Election. For the people who find the evidence, 5 million [dollars] is their reward.”
Petitioner Robert Zeidman is a software developer who participated in the challenge. Zeidman reviewed the data files LMC provided, submitted a fifteen-page report that concluded that the data “unequivocally does not contain packet data of any kind and do[es] not contain any information related to the November 2020 election.” The challenge judges denied his claim for the reward after determining that he failed to provide unequivocal proof that the data was not election data.
The Arbitration Proceedings
Zeidman filed an arbitration demand and the arbitration panel unanimously concluded that he won the challenge and was entitled to the reward. The panel reasoned that the contest requirement that participants “unequivocally” prove that the cyber data was not “related to” the November 2020 election was unambiguous and Zeidman unequivocally proved that the cyber data was not from the election itself. LMC contended that the election data need only be connected to the election in some way. Zeidman argued that LMC’s definition was too broad. The panel agreed and determined that the challenge rules directing data “from the election” meant “election data” from the November 2020 election.
The Court Proceedings
Zeidman then moved in Minnesota district court to confirm the arbitration panel’s award. Applying the “very limited” judicial review of arbitration awards under Sections 9 and 10 of the Federal Arbitration Act (the “FAA”), the district court confirmed the panel’s decision awarding Zeidman the contest prize. The district court inferred that the panel resorted to extrinsic evidence to impute a requirement in the contest that data LMC provided be “packet capture data” from the 2020 presidential election. The district court further noted that Minnesota law prohibited the panel’s use of extrinsic evidence since the challenge agreement was unambiguous. The district court nevertheless determined that even the potentially serious legal error of using extrinsic evidence to interpret an unambiguous contract term was not enough to vacate an arbitration award because the panel “was arguably interpreting and applying the contract.”
On appeal, LMC argued that the arbitration panel committed reversible error by imposing a new obligation in the contest that the data the LMC provided be “packet capture data” from the election process itself and not merely data that was about the election. The fact that a court is convinced an arbitrator committed serious error does not suffice to overturn his decision. However, an arbitrator may not ignore the plain language of the contract or impose his own notions of “industrial justice.”
Under Eight Circuit precedent, a district court can overturn an arbitration panel decision based on manifest disregard of the law where the arbitrator clearly identifies applicable, governing law and then proceeds to ignore it. The appellate court noted that the arbitration panel agreed with the parties that the rules of the Prove Mike Wrong challenge were unambiguous, and that Minnesota law provides that, in interpreting unambiguous contracts, the intent of the parties must be determined from the language of the contract alone, without resorting to extrinsic evidence.
The arbitration panel concluded that Zeidman won the challenge because the data LMC provided contestants was not packet capture data from the November 2020 election. According to the Eighth Circuit, from the four corners of the challenge agreement, there was no way to read information “related to” the November 2020 election as meaning only information that is packet capture data from the election, and the arbitration panel therefore effectively amended the agreement by imposing a new requirement.
Thus, the arbitration panel exceeded its authority because it “clearly identif[ied] the applicable, governing law and then proceed[ed] to ignore it.” The Eighth Circuit therefore reversed the district court’s judgment denying LMC’s motion to vacate the arbitration award.
This article was originally published in the North America Newsletter.
