Arbitrators Lack Power to Compel Pre-Hearing Third Party Document Production Under the FAA

in Civil Litigation by

Stephen L. RaucherIn a decision that falls in line with the majority of other circuits to have considered the question, the Ninth Circuit recently held that the Federal Arbitration Act (FAA) does not grant arbitrators the power to compel the production of documents from third parties prior to a hearing as part of pre-hearing discovery. Vividus v. Express Scripts, 2017 U.S. App. LEXIS 26233, *2 (9th Cir. 2017).

In Vividus, an arbitration panel issued a subpoena to Express Scripts, which was not a party to the arbitration in question. The subpoena directed Express Scripts to produce certain documents before an arbitration hearing. Express Scripts did not respond to the subpoena, and Vividus attempted to enforce it in federal court in Arizona. Based on 9 U.S.C. Section 7, the Arizona federal district court held that the FAA does not give arbitrators the power to compel the production of documents from third parties outside of a hearing, and Vividus appealed.

The Ninth Circuit began by evaluating the plain language of the statute in order to determine whether Section 7 of the FAA allows an arbitrator to order a third party to produce documents as part of pre-hearing discovery. Section 7 is entitled “Witnesses before arbitrators; fees; compelling attendance” and, in relevant part, 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 . . . if 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.

(Emphasis added). The court reasoned that, based on the plain language of the statute, the FAA gives arbitrators two powers: (1) the power to compel the attendance of a person as a witness, and (2) the power to compel the person to bring relevant documents. If the person does not comply, however, the district court can compel attendance. The court concluded that Section 7 only permits an arbitrator to order third parties to produce documents at a hearing.

The Third, Second, and Fourth Circuits have similarly interpreted Section 7. The Eighth Circuit, however, reached a different result. The Eighth Circuit held that “implicit in an arbitration panel’s power to subpoena relevant documents for production at a hearing is the power to order the production of relevant documents for review by a party prior to the hearing.” In re Security Life Ins. Co. of America, 228 F.3d 865, 870-71 (8th Cir. 2000). The Eighth Circuit reasoned that this approach facilitates the efficient resolution of disputes by allowing parties to “review and digest” documents before hearings. Id. at 870. The Ninth Circuit disagreed, stating that third parties should not be subjected to pre-hearing document production because they did not agree to the arbitrator’s jurisdiction. Therefore, the court argued that restricting third party disclosures to a hearing would lessen the burden on non-parties, as well as discourage fishing expeditions. This circuit split, however, makes the issue ripe for Supreme Court review.

What about under California state law? California Code of Civil Procedure Section 1282.6 is analogous to 9 U.S.C. Section 7. Section 1282.6 is entitled “Attendance of witnesses and production of evidence; Subpoenas” and, in relevant part, reads:

(a) A subpoena requiring the attendance of witnesses, and a subpoena duces tecum for the production of books, records, documents and other evidence, at an arbitration proceeding or a deposition under Section 1283, and if Section 1283.05 is applicable, for the purposes of discovery, shall be issued as provided in this section…

Unlike Section 7, Section 1282.6 specifically contemplates pre-hearing document production by third parties, at least in certain circumstances. But how are such subpoenas enforced?

The California Supreme Court honed in on a third party’s lack of consent to an arbitration agreement in Berglund v. Arthroscopic & Laser Center of San Diego, L.P. The question in this case was whether arbitration discovery orders to nonparties should be subject to full judicial review under the California Arbitration Act. Berglund v. Arthroscopic & Laser Center of San Diego, L.P., 44 Cal.4th 528, 532 (2008). The court held that while the dispute must first be submitted to the arbitrator for resolution, the nonparty is entitled to full judicial review of the order. The reasoning in this case relied heavily on the fact that third parties never consented to the jurisdiction of the arbitrator, who is free to not follow the law if he or she chooses and is only subjected to judicial review in narrow circumstances. Id. at 538. Thus, unlike federal law, an arbitrator’s subpoena can be judicially enforced under the California Arbitration Act.

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