Arbitrator’s Right to Issue a Subpoena to a Non-Party, Out-of-State Witness

By on October 12th, 2006

Posted in New Jersey

Section 7 of the Federal Arbitration Act (“FAA”) provides that “[t]he arbitrators … 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 ….” 9 U.S.C. §7. Section 7 further provides:

[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.

Id.

F.R.C.P. 45 governs the issuance and service of subpoenas in federal district court. Thus, under the FAA, F.R.C.P. 45 also governs the service of arbitration subpoenas. F.R.C.P. 45(a)(2) provides that “a subpoena for production or inspection shall issue from the court for the district in which the production or inspection is to be made.” F.R.C.P. 45(b)(2) imposes territorial limits upon the area in which a subpoena may be served providing that:

a subpoena may be served at any place within the district of the court by which it is issued, or at any place without the district that is within 100 miles of the place of the deposition, hearing, trial, production, or inspection specified in the subpoena or at any place within the state where a state statute or rule of court permits service of a subpoena issued by a state court of general jurisdiction sitting in the place of the deposition, hearing, trial, production, or inspection specified in the subpoena.

Under the above rules, it is necessary to apply a two-step analysis in order to determine the geographic limitation of the enforcement of an arbitration subpoena. First, it is necessary to identify the proper district court in which to file a petition to enforce the arbitrator’s subpoena. As noted above, the FAA requires the petition to be filed in the “district in which such arbitrators, or a majority of them, are sitting.” This is the only Federal Court that can legally enforce the arbitrator’s subpoena, no matter where the witness works or resides.

The next step is to identify the jurisdictional limitations of the particular court. F.R.C.P. 45(b)(2)restricts the District Courts’ ability to enforce a subpoena to the area within 100 miles of the courthouse or within the state in which the trial or the hearing is being held. Because Section 7 invokes F.R.C.P. 45, this limitation applies to the Court’s authority to compel a witness to attend an arbitration hearing. Thus, if a third party receives an arbitration subpoena to appear at the hearing but fails to show up, the remedy the FAA provides is to petition the District Court in the District in which the panel is sitting for an order to compel compliance with the subpoena. In the alternative, Section 7 authorizes the District Court to punish the non?complying party for contempt.

The Federal case law regarding non-party subpoenas is somewhat scarce, in most cases not on point, and has led to varying results. In Amgen, Inc. v. Kidney Center of Delaware County, 879 F. Supp. 878 (N.D. Ill.1995), the arbitration was pending in Illinois and the arbitrator issued a subpoena to the non-party out of state kidney center, which was based in Pennsylvania, to produce documents and a representative for a deposition in Illinois. The kidney center refused to honor the subpoena and the plaintiff sought to enforce the subpoena in Federal Court in Pennsylvania, which held that it lacked authority to entertain the petition. Plaintiff filed a new petition with the federal court in Illinois, where the kidney center was based. The Illinois federal court ruled that it had no power to enforce the arbitrator’s subpoena under the FAA and F.R.C.P. 45, but held that the parties had expressly agreed to arbitrate their dispute under the Federal Rules. Thus, they inherently agreed to liberal discovery and to the arbitrator acting “with the power of a judge applying those rules.” Accordingly, the Court held that the plaintiff could follow the procedure in F.R.C.P. 45(a)(3)(B), and have its attorney issue a subpoena on behalf of the district court in Pennsylvania where the kidney center was located.

Thereafter, the U.S. District Court for the Southern District of New York, decided to strictly apply Section 7 of the FAA in Integrity Insurance Co. v. American Centennial Insurance Co., 885 F. Supp. 69 (S.D.N.Y. 1995), holding that it does not authorize an arbitrator to subpoena non-party witnesses for pre?hearing depositions. In Integrity, two non-party witnesses moved to quash an arbitrator’s subpoenas for a deposition and documents. Though the non-parties were in the same jurisdiction, the Court granted the motion to quash as to the depositions, holding that the arbitrator only had the power to compel a witness to attend the hearing. The Court modified the subpoenas to provide for the non-party witnesses to appear at the hearing. It also enforced the subpoena for documents, but modified it to require production in advance of the hearing.

Most recently, in Legion Insurance Co. v. John Hancock Mutual Life Insurance Co., 2002 WL 537652 (3d Cir. 2002), the U.S. Court of Appeals for the 3rd Circuit refused to enforce an arbitration subpoena for a deposition of a non-party who resided outside the court’s jurisdiction and refused to enforce the portion of the subpoena requesting document production. There, the arbitration was to take place in Pennsylvania, and the third party resided in Florida. The 3rd Circuit based its refusal to enforce the arbitrator’s non-party subpoena on the ground that the witness resided beyond the Court’s territorial jurisdiction under F.R.C.P. 45.

Though there is a paucity of cases addressing an appearance at an arbitration hearing, as opposed to depositions and the production of documents, it is clear that the rules regarding arbitration subpoenas for non-party out-of-state witnesses are strictly construed by the Federal Courts. It is also clear that Federal Courts have held that there is a direct relationship between Section 7 of the FAA and F.R.C.P. 45, such that arbitration subpoenas for non-party out-of-state witnesses are restricted in that they must be issued in the same jurisdiction or within 100 miles of the location of the arbitration hearing.

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