Lahti v. Consensys, Inc.
1:24-cv-00183
| S.D. Ohio | Aug 20, 2025Background
- Plaintiff Sarah Lahti, acting pro se, sued Consensys Software, Inc. (provider of MetaMask wallet) and Alphabet Inc. (Google's parent) for the loss of $275,000 in cryptocurrency allegedly due to breaches and deceptive practices tied to MetaMask and Google Chrome.
- Lahti claimed both breach of contract and violations of consumer protection, asking for $10 million compensatory and $2 billion punitive damages.
- Consensys moved to compel arbitration under its user agreement's arbitration clause; Alphabet moved to dismiss for failure to state a claim.
- Magistrate Judge Bowman recommended staying Consensys claims for arbitration, dismissing Alphabet, and denying Lahti's motion to amend.
- Plaintiff submitted filings with fictitious case citations, likely generated via AI, leading to additional motions and warnings from the court regarding sanctions.
- Judge Hopkins adopted most recommendations, compelling arbitration for Consensys, dismissing Alphabet but allowing Lahti to amend her complaint as to Alphabet, and denying preliminary injunctive relief.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Enforceability of Arbitration Clause | Arbitration agreement is unconscionable, fraudulent, invalid under Ohio law | Arbitration clause is valid, threshold questions for arbitrator | Compelled arbitration; enforceability challenges for arbitrator |
| Enforceability of Delegation Clause | Delegation ('arbitrability to arbitrator') is invalid, unconscionable | Delegation properly made, not properly challenged | Delegation clause enforced; court finds no clear error |
| Motion to Dismiss (Alphabet) | Complaint sufficiently pleads Alphabet's liability via Google Chrome's involvement | Claims are insubstantial; insufficient facts alleged | Dismissed without prejudice; amendment allowed for Alphabet |
| Motion to Amend Complaint | Sought to clarify/add claims, especially as to Alphabet | Futile as to Consensys (arbitration controls); moot re Alphabet | Denied as to Consensys, granted as to Alphabet |
| Preliminary Injunctive Relief | Sought orders to freeze assets and preserve evidence against Consensys | Arbitral stay mandates court abstain from such interim relief | Motions denied; arbitration must proceed first |
| Rule 11 (Fictitious Citations/AI Use) | Sought to amend/correct reply with improper/AI-generated case citations | Strike improper filings; use of fictitious citations is sanctionable | Motion to strike granted (procedurally unauthorized); warning of sanctions |
Key Cases Cited
- Swiger v. Rosette, 989 F.3d 501 (6th Cir. 2021) (a valid delegation clause requires courts to send threshold arbitrability questions to the arbitrator)
- Henry Schein, Inc. v. Archer & White Sales, Inc., 586 U.S. 63 (2019) (courts must enforce clear and unmistakable delegation of arbitrability even if disputes appear groundless)
- Marx v. General Revenue Corp., 568 U.S. 371 (2013) (American Rule on attorneys' fees in civil litigation)
- First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938 (1995) (clear and unmistakable evidence required to delegate arbitrability to arbitrator)