May 02, 2018 Practice Points

Arbitrators Not Authorized to Subpoena Non-Parties for Document Discovery

By Mark Kantor

In Vividus LLC v. Express Scripts, Inc., Civ. No. 16-16187, Dec. 21, 2017, the Ninth Circuit aligned itself with the majority of other courts of appeal in holding that the Federal Arbitration Act (FAA) does not authorize arbitrators to issue document-only subpoenas to third parties outside of a hearing.
The Ninth Circuit relied on a textual reading of the FAA to reach this result.

The FAA gives arbitrators two powers that are relevant here. First, arbitrators may compel the attendance of a person "to attend before them . . . as a witness," and second, arbitrators may compel such person "to bring with him or them" relevant documents. Id. If a person summoned as a witness does not comply, the statute gives the district court in the district in which the arbitrator sits the power to compel the person's attendance before the arbitrator. Id. A plain reading of the text of section 7 reveals that an arbitrator's power to compel the production of documents is limited to production at an arbitration hearing. The phrase "bring with them," referring to documents or other information, is used in conjunction with language granting an arbitrator the power to "summon . . . any person to attend before them." Id. Under this framework, any document productions ordered against third parties can happen only "before" the arbitrator. The text of section 7 grants an arbitrator no freestanding power to order third parties to produce documents other than in the context of a hearing.

A footnote in the opinion states that parties may expand the discovery powers of arbitrators by contract, but only "with respect to the parties bound by such agreements." Since third parties are only rarely bound by arbitration agreements that they did not sign, that footnote will offer little comfort to most requesting parties.

The Ninth Circuit quoted its sister circuit, the Second Circuit in 2008, to the effect that this is an "emerging rule." The Eight Circuit held to the contrary in 2000. We shall see what happens the next time the question arises in the latter circuit.

The question of third-party document subpoena power is particularly significant in international cases involving corruption allegations, where a party accused of corruption has little incentive to come forward with previously undisclosed incriminating documents in its possession when ordered to do so by an arbitrator. If third-party subpoenas are not available to the arbitrators, then requesting parties may very well explore whether Section 1782 judicial proceedings, or analogous proceedings in other national courts, are available to compel such production under applicable national law.

Mark Kantor is a member of the College of Commercial Arbitrators in Washington, D.C.


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