As a practical matter, one of the first things an arbitrator should do when a party seeks a prehearing subpoena for the production of documents from a third party is to see if there is an objection to the issuance of the subpoena. If there is, the arbitrator should evaluate the arguments by both sides and resolve the matter. If the arbitrator determines that the subpoena should be issued, guidance to determine if a hearing is necessary and if it can be held by videoconference can be determined from the law in the jurisdiction where the arbitration is located.
An arbitrator’s power to subpoena non-parties is derived from the Federal Arbitration Act (FAA), 9 U.S.C. §7 (section 7). That code section states in applicable part:
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.
Section 7 grants an arbitrator the authority to subpoena a witness “to attend before them or any of them as a witness” and, “in a proper case,” to produce documents. More than two dozen decisions from various jurisdictions across the country have held that an arbitrator can issue a subpoena requiring a non-party to produce documents at a hearing before the arbitrator and, those decisions do not preclude the arbitrator from holding such hearing, that is not required to be the actual evidentiary hearing, through the use of remote videoconferencing.
Recently, however, the Eleventh Circuit has held that a videoconference is not sufficient and that an in-person hearing is required. That decision presents a dilemma for arbitrators participating in remote videoconference hearings in that circuit due to COVID-19. Because Managed Care Advisory Group, LLC was decided before the COVID-19 pandemic and the widespread use of videoconferencing for court as well as arbitral hearings, there is some hope that the Eleventh Circuit may reverse direction and enforce arbitral subpoenas that call for the production of documents at virtual hearings.
For the Second, Third, Fourth, and Ninth Circuits, if the arbitrator and all parties are present at the remote videoconference prehearing, the more stringent requirements of an appearance by the subpoenaed party and the holding “a proceeding” as required by the most restrictive decision on the issue, Managed Care Advisory Group, LLC, v. Cigna Healthcare, Inc, 939 F.3d 1145 (11th Cir. 2019), would seem to be satisfied. If the third party produces the documents in advance of the appearance date, the hearing can easily be cancelled with no inconvenience to anyone. Even if, after the pandemic, most arbitrations resort back to being held in person, the use of a remote video conference for subpoena compliance makes practical sense to save time and money and does not appear to be prohibited by decisions in other circuits.
Prior to Managed Care Advisory Group, LLC, the most recent decision enforcing an arbitral subpoena issued to a non-party was from the Ninth Circuit. CVS Health Corporation v. Vividus, LLC, 878 F. 3d 703 (9th Cir. 2017). That decision, like those from other circuits, does not preclude an arbitrator from holding a hearing by videoconference for subpoena compliance as the court merely held that “Section 7 does not grant arbitrators the power to order third parties to produce documents prior to an arbitration hearing.”
The only jurisdiction where a hearing by videoconference cannot be used to enforce an arbitral subpoena is the Eleventh Circuit based upon the decision in Managed Care Advisory Group, LLC v. Cigna Healthcare. In the Managed Care case, the main issue was whether an arbitrator located in Miami had the authority under section 7 to issue subpoenas to non-parties, who were located in various parts of the country, to appear and bring documents to a hearing held by videoconference. In ruling that no such authority could be found in section 7, the court determined that an arbitrator’s subpoena power was limited to compelling a third party to appear at an in-person hearing and produce the documents at that time. That decision was based upon several factors which the court found dispositive.
The Eleventh Circuit stated that although the language in section 7 was explicit in granting an arbitrator authority to subpoena a party to appear as a witness and produce documents at a hearing, it was silent as to any authority to issue a subpoena for discovery purposes. This led the court to conclude that Congress did not intend arbitrators to have any such power. Disagreeing with the Eighth Circuit, the Eleventh Circuit determined that the policy of promoting arbitration efficiency by permitting discovery from non-parties could not override a plain reading of the statute.
In analyzing what the FAA meant when it referred to a “hearing,” the Eleventh Circuit used a 1926 version of the Oxford Dictionary to determine the meaning of the words “attendance” “before” and “presence” as used in section 7 when the FAA was enacted in 1925. Because the dictionary indicated that “presence” was defined as being in the place where the person is located, the Eleventh Circuit held that section 7 required the subpoenaed party to be in the physical presence of the arbitrator and could not appear via videoconference. That led to the conclusion that the court could not enforce a subpoena against a non-party who was not in the physical presence of the arbitrator.
The court also questioned how the arbitrator could effectively review the documents and rule upon the required production if the subpoena compliance hearing was held by videoconference. The district court, which upheld the issuance of the subpoena, determined that the solution to that problem was to allow the third party to produce the documents to the arbitrator and parties in advance of the hearing and to have the arbitrator make any required rulings during the videoconference. The Eleventh Circuit rejected the district court’s solution as tantamount to requiring prehearing discovery which it ruled is prohibited by section 7. However, with document sharing capabilities now a part of most remote video platforms, the Eleventh Circuit’s concern may be alleviated, because the arbitrator can view the documents during the videoconference. Despite the decision in Managed Care Advisory Group, LLC, there is an ability by the parties to an arbitration which is being held in the Eleventh Circuit to appear at the subpoena compliance by remote videoconference as only the third party is required to appear before the arbitrator in-person to produce the requested documents.
Perhaps, because of these improvements in technology, the hundreds of thousands of individuals in the United States who have died from COVID-19, the millions more across the country who have been infected with the virus, and the unknown number who may be asymptomatic carriers, the in-person requirement for subpoena compliance merits reconsideration by the Eleventh Circuit. Even once the pandemic is over, parties and arbitrators may continue to rely upon the use of videoconferencing for some arbitration hearings based upon convenience and cost savings.