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September 11, 2018 Articles

Arbitrator Authority to Compel Production of Documents from Third Parties

By Sunu M. Pillai

Does an arbitrator possess the authority under Federal Arbitration Act (FAA) to compel production of documents from a third party prior to a hearing? The U.S. Court of Appeals for the Ninth Circuit has agreed with the Second and Third Circuits in holding that an arbitrator’s power to compel production of documents from a third party is limited to production at an arbitration hearing. CVS Health Corp. v. Vividus, LLC, 878 F.3d 703 (9th Cir. 2017). On the other hand, the Eighth Circuit has allowed arbitrators to order production of documents prior to the hearing, and the Sixth Circuit has indicated agreement with this position. The Fourth Circuit has stated that it may allow prehearing document production only under unusual circumstances.

Section 7 of the FAA
Section 7 of the FAA, 9 U.S.C. § 7, titled “Witnesses before arbitrators; fees; compelling attendance,” states:

The arbitrators selected either as prescribed in this title or otherwise, or a majority of them, may summon in writing any person to attend before them or any of them as a witness and in a proper case to bring with him or them any book, record, document, or paper which may be deemed material as evidence in the case. . . . [I]f any person or persons so summoned to testify shall refuse or neglect to obey said summons, upon petition the United States district court for the district in which such arbitrators, or a majority of them, are sitting may compel the attendance of such person or persons before said arbitrator or arbitrators, or punish said person or persons for contempt in the same manner provided by law for securing the attendance of witnesses or their punishment for neglect or refusal to attend in the courts of the United States.

Courts that have limited the arbitrator’s power to production at an arbitration hearing have relied on the plain language of section 7 of the FAA. These courts have noted that this section of the FAA only allows arbitrators to compel third parties to “attend before them . . . as a witness” and to “bring with him or them” any documents “which may be deemed material as evidence in the case.” Thus, any document production by third parties can occur only before the arbitrator by a testifying witness.

Note that rules of arbitral associations (like the American Arbitration Association) may allow for arbitrators to issue subpoenas to third parties for documents. But if the third party refuses to comply with the subpoena, the party seeking discovery is limited to section 7 of the FAA to enforce the subpoena.

Similarity with the Prior Version of Rule 45
Courts have noted that the FAA was enacted at a time when prehearing discovery was generally not permitted. Rule 45 of the Federal Rules of Civil Procedure contained similar language from its adoption in 1937 until its amendment in 1991. Hay Grp., Inc. v. E.B.S. Acquisition Corp., 360 F.3d 404 (3d Cir. 2004). Rule 45 stated:

(a) For Attendance of Witnesses; Form; Issuance. Every subpoena shall be issued by the clerk under the seal of the court, shall state the name of the court and the title of the action, and shall command each person to whom it is directed to attend and give testimony at a time and place therein specified. The clerk shall issue a subpoena, or a subpoena for the production of documentary evidence, signed and sealed but otherwise in blank, to a party requesting it, who shall fill it in before service.
(b) For Production of Documentary Evidence. A subpoena may also command the person to whom it is directed to produce the books, papers, documents, or tangible things designated therein.

Fed. R. Civ. P. 45 (1990).

This was interpreted to mean that Rule 45 did not give the courts the power to issue subpoenas only for documents to third parties. The 1991 amendments authorized courts to issue a subpoena to compel document production by a nonparty, independent of a deposition. Courts have cited this amendment for the proposition that if Congress wants to expand the subpoena authority of arbitrators, it has the option to do so, similar to the amendment to Rule 45. Life Receivables Tr. v. Syndicate 102 at Lloyd’s of London, 549 F.3d 210 (2d Cir. 2008).

An Alternative View—Implicit Power and Efficiency
The Eighth Circuit has reached the opposite conclusion on policy grounds. In re Sec. Life Ins. Co. of Am., 228 F.3d 865 (8th Cir. 2000). Similar to other courts, it noted that section 7 of the FAA does not explicitly authorize the arbitration panel to subpoena documents from a third party. However, it held that the power to subpoena documents prior to a hearing is implicit in the arbitrator’s power to subpoena documents at a hearing. It stated that the interest in efficiency in arbitration is furthered by permitting a party to review documentary evidence prior to a hearing. The Sixth Circuit has also favorably cited district court decisions holding that the authority to compel the production of documents from third parties at an arbitration hearing implicitly includes the authority to compel the production of documents prior to the hearing. Am. Fed’n of Television & Radio Artists, AFL-CIO v. WJBK-TV (New World Commc’ns of Detroit, Inc.), 164 F.3d 1004, 1009 (6th Cir. 1999).

The Fourth Circuit has indicated that a party might, under unusual circumstances, compel prehearing discovery upon a showing of special need or hardship. COMSAT Corp. v. Nat’l Sci. Found., 190 F.3d 269 (4th Cir. 1999). It did not define “special need” but observed that at a minimum, a party must show that the information it seeks is otherwise unavailable.

Other courts have stated that the policy arguments cannot supersede the statutory text. Courts have noted that the principal goal of the FAA is to ensure judicial enforcement of private agreements, not efficiency. Third parties who have to produce documents pursuant to the subpoenas did not agree to the arbitrator’s jurisdiction. Further, having to appear at a hearing to receive documents may facilitate efficiency by reducing overall discovery in arbitration. Courts have also disputed the reasoning that the power to order prehearing document production is something lesser than the power to compel document production at a hearing and thus implicit.

As multiple courts have indicated, arbitrators can always compel any person to produce documents as long as that person is called as a witness at a hearing. Under section 7 of the FAA, arbitrators can compel a third-party witness to appear, with documents, before a single arbitrator, who can then adjourn the proceedings. Hay Grp., Inc. v. E.B.S. Acquisition Corp., 360 F.3d 404, 413 (3d Cir. 2004). This gives the arbitrators the practical ability to require third parties to produce documents in advance of a hearing. While this process may lead to additional discussions between the party requesting discovery and the arbitrators as to whether the document production is needed, it may also prompt the third-party witness to deliver the documents and waive appearance.

In instances where the third party from whom documents are being requested is not a party to the arbitration but is party to the arbitration agreement, formal joinder is another option that may enable the arbitrators to extend their contractual jurisdiction over the third party.

While a circuit split exists on the question of arbitrators’ authority to compel prehearing document production from third parties, all of the recent decisions have held that arbitrators do not have such authority under section 7 of the FAA. This may not be a real constraint as there are workarounds to compel document production that comply with FAA. At the same time, the additional effort required for these procedures may prompt the parties to reexamine the need for discovery, leading to a more efficient process.

Sunu M. Pillai is an associate with Saul Ewing Arnstein & Lehr LLP in Pittsburgh, Pennsylvania.

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