NAJAM, Judge.
In 2002, Monsanto Company and Monsanto Technology, LLC (collectively, "Monsanto") entered into a corn license agreement and a soybean license agreement with Pioneer Hi-Bred International and its parent company, E.I. DuPont de Nemours & Company (collectively, "DuPont"). Pursuant to those agreements, any disputes between the parties were to be resolved by arbitration in New York City. On May 4, 2009, Monsanto filed a demand for arbitration against DuPont, alleging that DuPont had engaged in a sublicensing scheme involving numerous third parties throughout the United States, including Beck's Superior Hybrids, Inc. ("Beck's") in Indiana. Thereafter, at Monsanto's request the arbitration panel issued a subpoena duces tecum to Beck's, ordering Beck's to appear at a preliminary hearing, in Indiana, before one of the panel members and to produce business records relating to Monsanto's arbitration claim.
Beck's refused to comply with the subpoena on the grounds that the Federal Arbitration Act, 9 U.S.C. §§ 1 to 16 (2010) ("the Act"), required Monsanto to seek enforcement of its nonparty subpoena in "the United States district court for the district" in which the arbitration panel was sitting, the Southern District of New York. See 9 U.S.C. § 7 (2010). Cognizant of the fact that it lacked subject matter jurisdiction to file a petition in the New York federal court, and that that court lacked personal jurisdiction over Beck's, Monsanto instead filed a petition to assist in the Hamilton Superior Court, pursuant to Indiana Trial Rule 28(E), to compel Beck's to comply with the subpoena. The trial court agreed with Monsanto and ordered Beck's to comply with the arbitration panel's subpoena.
Beck's now appeals, asserting that Section 7 of the Act preempts Indiana Trial Rule 28(E). We agree and hold that Section 7 is unambiguous: to enforce an arbitration panel's subpoena against a nonparty, the party seeking enforcement must file its petition "in the United States district court for the district" where the arbitration panel, or a majority of its members, is sitting. See id. That district court is in the Southern District of New York. We also hold that Monsanto's lack of federal subject matter jurisdiction to enforce its subpoena does not justify ignoring the plain text of Section 7. To the contrary, the statutory gap in enforceability reflects a clear policy choice by Congress that we may not reconsider. Therefore, we reverse the trial court's order and remand with instructions that the court dismiss Monsanto's petition to assist.
In 2002, Monsanto entered into two seed license agreements with DuPont. Pursuant to those agreements, any dispute between the parties is to be resolved by "arbitration proceedings[, which] shall be held in New York, New York." Appellant's App. at 145. On May 4, 2009, Monsanto filed a demand for arbitration and statement of claim against DuPont in New York, alleging that DuPont was engaged in a sublicensing scheme whereby DuPont distributed Monsanto's "Roundup Ready technology" to unaffiliated third parties throughout the United States, including Beck's, an Indiana corporation. See Appellees' Br. at 5. This scheme, according to Monsanto, allows DuPont to charge a
On November 12, 2009, Monsanto requested the arbitration panel to issue eight nonparty subpoenas duces tecum to the third parties that had allegedly purchased Monsanto's products through DuPont. DuPont objected to the subpoena requests on several grounds. On December 11, the arbitration panel narrowed the scope of the requested subpoenas and then agreed to issue them.
On February 1, 2010, Monsanto served Beck's with a subpoena issued by the New York arbitration panel. On March 2, Beck's counsel informed Monsanto of Beck's legal position on whether it had to comply with that subpoena:
Appellant's App. at 60 (emphasis added).
In response to Beck's objections, and similar objections from the other alleged customers of DuPont, on March 18 Monsanto asked the arbitration panel to issue revised subpoenas. In particular, Monsanto stated:
Id at 149. In other words, Monsanto asked the arbitration panel to apply Section 7 of the Act to compel Beck's and others
Id at 151. On March 31, the arbitration panel issued the revised subpoenas but did not state whether the subpoenas could be enforced under the Act or state procedural law.
On April 22, Monsanto served Beck's with the revised subpoena. That same day, counsel for Beck's informed Monsanto that Beck's would not comply with the revised subpoena. On June 11, Monsanto filed a petition to assist in the Hamilton Superior Court pursuant to Indiana Trial Rule 28(E). After a hearing, on August 4 the trial court granted Monsanto's petition and ordered Beck's to comply with the arbitration panel's revised subpoena by attending a preliminary hearing before a single arbitrator in Atlanta, Indiana.
Beck's contends that the trial court's order that it comply with the arbitration panel's revised subpoena is erroneous because Section 7 of the Act preempts Indiana Trial Rule 28(E). As this court recently stated:
Florian v. Gatx Rail Corp., 930 N.E.2d 1190, 1195-96 (Ind.Ct.App.2010) (alterations original), trans. denied. "The question, at bottom, is one of statutory intent, and we accordingly begin with the language employed by Congress and the assumption that the ordinary meaning of that language accurately expresses the legislative purpose." Morales v. Trans World Airlines, Inc., 504 U.S. 374, 383, 112 S.Ct. 2031, 119 L.Ed.2d 157 (1992) (quotations omitted). Determining statutory intent is a question of law we review de
It is not disputed that the New York arbitration proceeding is governed by the Act or that Section 7 applies to the subpoena.
A discussion of preemption begins with a review of the federal law at issue. E.g., Florian, 930 N.E.2d at 1196-97. The Supreme Court of the United States has discussed the history and policy of the Act:
Shearson/American Express, Inc. v. McMahon, 482 U.S. 220, 225-27, 107 S.Ct. 2332, 96 L.Ed.2d 185 (1987) (some citations omitted; alterations original). Indiana policy likewise favors arbitration and the enforcement of arbitration agreements. See, e.g., MPACT Constr. Group, LLC v. Superior Concrete Constructors, Inc., 802 N.E.2d 901, 905 (Ind.2004).
Here, the relevant provision of the Act is Section 7, which states as follows:
9 U.S.C. § 7 (emphasis added). As Judge Alito said for the United States Court of Appeals for the Third Circuit, "[a]n arbitrator's authority over parties that are not contractually bound by the arbitration agreement is strictly limited to that granted by the Federal Arbitration Act." Hay Group, Inc. v. E.B.S. Acquisition Corp., 360 F.3d 404, 406 (3d Cir.2004).
Case law from the federal courts of appeals makes clear that the type of subpoena issued by the arbitration panel against Beck's is authorized by Section 7. Specifically, in Hay Group, the Third Circuit held that an arbitrator may issue a Section 7 subpoena to a nonparty for the production of documents if the subpoena also requires the nonparty to appear. In a separate opinion concurring in Judge Alito's majority opinion, Judge Chertoff elaborated:
Id. at 413-14 (Chertoff, J., concurring) (citations omitted).
The Second Circuit, which has jurisdiction over New York, has agreed with both Judge Alito's analysis and Judge Chertoff's separate opinion, holding that Section 7 states that "[d]ocuments are only discoverable in arbitration when brought before arbitrators by a testifying witness." Life Receivables Trust v. Syndicate 102 at Lloyd's of London, 549 F.3d 210, 216 (2nd Cir.2008). However, the Second Circuit expressly qualified its opinion by noting that, "when a non-party refuses to comply voluntarily [with a subpoena,] . . . the party seeking discovery is limited to section 7 as a vehicle to enforce the subpoena. . . . [T]hose relying on section 7 . . . must do so according to its plain text." Id. at 218.
As suggested by that language, the authority of an arbitration panel to issue a nonparty subpoena is not equivalent to the authority to enforce that subpoena. For example, the weight of federal case law demonstrates that neither the Act generally nor Section 7 specifically confers on litigants independent federal subject matter jurisdiction. Rather, "parties invoking Section 7 must establish a basis for subject matter jurisdiction independent of the [Act]," such as diversity of parties or federal question jurisdiction. Stolt-Nielsen SA v. Celanese AG, 430 F.3d 567, 572 (2nd Cir.2005); see Amgen, Inc. v. Kidney Ctr. of Delaware County, Ltd., 95 F.3d 562, 567 (7th Cir.1996). Thus, if the party attempting to invoke Section 7 lacks federal jurisdiction to do so, then the arbitration panel's nonparty subpoena may not be enforced by "the United States district court." See 9 U.S.C. § 7; Stolt-Nielsen, 430 F.3d at 572; Amgen, 95 F.3d at 567.
Another example of such gaps in enforceability was on display in Dynegy Midstream Services, LP v. Trammochem, 451 F.3d 89 (2nd Cir.2006). In that case, the appellees obtained a documents-only subpoena from an arbitration panel sitting in New York City against DMS, a Houston-based entity. Avoiding the question of whether the documents-only subpoena was permissible under the Act (Life Receivables is a later decision of the Second Circuit), the court instead held that the New York district court lacked personal jurisdiction over DMS to enforce the subpoena:
Id. at 94-96 (some emphases added; footnote and some citations omitted; some alterations original). Thus, even if an independent basis for federal subject matter jurisdiction exists, a Section 7 district court's lack of personal jurisdiction over the subpoenaed nonparty may also bar enforcement of the arbitration panel's nonparty subpoena.
Once Monsanto obtained the revised subpoena from the New York arbitration panel, it filed in the Hamilton Superior Court a petition to assist pursuant to Indiana Trial Rule 28(E). That rule states as follows:
Ind. Trial Rule 28(E).
This court recently discussed the scope of that rule:
Dean v. Weaver, 928 N.E.2d 254, 257 (Ind. Ct.App.2010), trans. denied. In other words, Trial Rule 28(E) permits an out-of-state tribunal to obtain personal jurisdiction over an Indiana entity, where that tribunal otherwise would not have had jurisdiction over it, for the limited purpose of receiving assistance in discovery issues from the Indiana entity.
With that background, we turn to the merits of Beck's claim that Section 7 preempts the trial court's Rule 28(E) order. The central question in this appeal is whether Section 7's language that Monsanto must petition a federal district court for enforcement of the subpoena is a clear reflection of congressional intent and whether Monsanto's use of Trial Rule 28(E) frustrates that intent.
Indeed, the only reason why Monsanto petitioned an Indiana trial court in the first place is because Monsanto cannot avail itself of relief from a federal court. See Stolt-Nielsen, 430 F.3d at 572; Amgen, 95 F.3d at 567. Both Monsanto and DuPont are Delaware corporations—and therefore Monsanto lacks federal diversity jurisdiction—and the dispute between them does not arise under the laws of the United States. As Beck's states in its appellate brief:
Appellant's Br. at 19.
Applying the plain text of Section 7, and the federal case law interpreting it, to these facts is straightforward. Again, "[a]n arbitrator's authority over parties that are not contractually bound by the arbitration agreement is strictly limited to that granted by the Federal Arbitration Act." Hay Group, 360 F.3d at 406. That is, Section 7 defines and limits the manner in which an arbitration panel's nonparty subpoena can be enforced. As the Second Circuit has explained, Monsanto "is limited to section 7 as a vehicle to enforce the subpoena.... [T]hose relying on section 7... must do so according to its plain text." Life Receivables, 549 F.3d at 218. Thus, the entire basis for authority to enforce an arbitration panel's nonparty subpoena flows from Section 7.
Section 7 requires an arbitration panel's nonparty subpoena to be enforced by "the United States district court for the district in which such arbitrators, or a majority of them, are sitting." 9 U.S.C. § 7. The arbitration panel, or a majority of its members, is and will be sitting in New York City. Accordingly, if Monsanto needed to enforce the nonparty subpoena, then, by the plain text of Section 7, it needed to do so in the United States District Court for the Southern District of New York. Monsanto may not circumvent the express procedure outlined by Congress by ignoring Section 7 and instead applying for a Trial Rule 28(E) petition to assist in an Indiana trial court simply because Monsanto lacks federal jurisdiction under Section 7. See Dynegy, 451 F.3d at 94-96. That Monsanto lacked an independent basis for federal subject matter jurisdiction is not Beck's problem. Monsanto agreed to arbitration, and it is the party chargeable with any negative results associated with that choice. Monsanto's self-inflicted wounds do not give this court cause to ignore the plain text of Section 7.
First, Monsanto asserts that the single arbitrator will be sitting in Atlanta, Indiana, and, therefore, Section 7 defines the relevant federal district as the Southern District of Indiana. Section 7 refers to where the "arbitrators, or a majority of them, are sitting." 9 U.S.C. § 7 (emphasis added). As such, Monsanto equates "arbitrators" with "a single arbitrator." But elsewhere the statute states that "[t]he arbitrators ... may summon in writing any person to attend before them or any of them ...." Id. (emphasis added). If "arbitrators" means any one arbitrator, then Congress did not need to specify "or any of them." Likewise, the language "or a majority of them" is surplusage since the location of a majority necessarily includes the locations of the individuals.
We are bound to construe a statute in a manner that renders all of its language relevant and not surplusage. See Hillebrand v. Supervised Estate of Large, 914 N.E.2d 846, 848 (Ind.Ct.App.2009). As such, the language, "such arbitrators, or a majority of them," must mean "the arbitration panel, or a majority of its members." That interpretation renders the whole of the text relevant: you can have all of the arbitrators present, but you must have a majority of them. Here, "a majority of" the arbitrators will never leave New York City
Second, if Monsanto is correct in its interpretation of the statute, then the proper court to enforce the arbitration panel's nonparty subpoena is not the New York district court but the district court for the Southern District of Indiana, which has jurisdiction over Atlanta, Indiana. The suggestion that a district court in a district other than the district in which the arbitration panel is sitting could be the proper court under Section 7 was squarely rejected by the Second Circuit:
Dynegy, 451 F.3d at 95. And if the United States District Court for the Southern District of Indiana does not have jurisdiction, there is no sound rationale why the Hamilton Superior Court should have jurisdiction over the enforcement of the New York arbitration panel's subpoena.
Monsanto suggests that Dynegy is inapposite because that case involved a documents-only subpoena, not a subpoena for a nonparty's participation in a pre-merits evidentiary hearing before a single arbitrator. See Appellees' Br. at 19. But the Second Circuit's holding was that the New York district court lacked personal jurisdiction over a Texas entity. Dynegy, 451 F.3d at 94-96. It is unclear from Monsanto's purported distinction how the nature of the district court's order could matter to the court's jurisdiction—the New York district court cannot acquire personal jurisdiction over a Texas entity simply because a single arbitrator is willing to travel from New York to Texas. As such, we are not persuaded by Monsanto's suggestion that Dynegy is inapposite.
Third, and indulging Monsanto's analysis one step further to assume that the Southern District of Indiana is the proper federal district under Section 7, Monsanto still did not ask the district court to enforce the subpoena. Instead, Monsanto asked an Indiana trial court to do so. In defense of that decision, Monsanto states that "there is nothing in the statutory language [of Section 7] that supports the conclusion that federal courts are the exclusive forum to issue orders under [that] section[]." Appellees' Br. at 28. Monsanto also contends that "permitting state courts to enforce Section 7 ... is entirely consistent" with precedent that state courts are competent to enforce arbitration agreements and other provisions of the Act. Id. at 28-29.
It is true that, "where there is not exclusive federal jurisdiction ..., the state and federal courts have concurrent jurisdiction." Jaskolski v. Daniels, 905 N.E.2d 1, 12 (Ind.Ct.App.2009), trans. denied, cert. denied, ___ U.S. ___, 130 S.Ct. 2098, 176 L.Ed.2d 724 (2010). In Jaskolski, we considered the jurisdiction of the state and federal courts under the Westfall Act, 28 U.S.C. § 2679. In relevant part, we distinguished the Westfall Act's use of the generic phrase "the court" from the specific phrase "the district court." Jaskolski, 905 N.E.2d at 12. We concluded that the former phrase meant either state or federal court while the latter phrase unambiguously meant only the federal forum. Id.
In other words, Congress knows what a United States district court is, and we will not redefine that expression here to mean "any court." See Life Receivables, 549 F.3d at 218 ("those relying on section 7... must do so according to its plain text."); see also Dynegy, 451 F.3d at 95 ("Here, the arbitrators were sitting in the Southern District of New York, so [Section 7] required that any enforcement action be brought there."). Section 7 is unambiguous. It confers jurisdiction on only "the United States district court for the district in which such arbitrators, or a majority of them, are sitting." 9 U.S.C. § 7.
Neither are we persuaded by the fact that state courts are competent to enforce the substantive provisions of the Act. For example, Section 2 of the Act states that arbitration agreements "shall be valid, irrevocable, and enforceable, save upon such
Section 4 of the Act is also routinely applied by state courts. See Appellees' Br. at 26-27 (citing cases). Section 4 states:
9 U.S.C. § 4. Monsanto asserts that Section 4's language that a party "may petition any ... district court which ... would have jurisdiction under Title 28" is equivalent to Section 7's language that a party to arbitration, "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 a third-party. See 9 U.S.C. §§ 4, 7. But the language of Section 4 is not similar to the language of Section 7. Section 4 requires a court to interpret a contract, as a threshold matter, to determine if arbitration is required under the contract. 9 U.S.C. § 4. Such an interpretation is a substantive question of state law. MPACT, 802 N.E.2d at 904-05. As a substantive question, Southland acknowledges concurrent jurisdiction. 465 U.S. at 10-16, 104 S.Ct. 852. And since the question is one of state law in the first instance, of course the states have jurisdiction over those issues.
Section 7, on the other hand, requires no application of judicial power other than the mere enforcement of a subpoena. In exercising that authority, there is no risk that the federal judiciary will misapply the law of the states. Hence, it was quite sensible for Congress to expressly limit Section 7's authority to enforce an arbitration panel's nonparty subpoenas to "the United States district court[s]." 9 U.S.C. § 7. Section 7 reflects clear congressional intent to not burden the states with the enforcement of an arbitration panel's nonparty subpoena. It is no accident that in the sixty-three years since the enactment of Section 7 there has not been a single reported appellate case where a state court has been involved in an enforcement action under that law.
Finally, at oral argument counsel for Monsanto emphasized that the authority to issue the nonparty subpoena implies the power to enforce it somewhere. That is not so. As the Second Circuit stated:
Dynegy, 451 F.3d at 95-96 (emphasis added). Further, Judge Alito's opinion powerfully rejected a similar "power-by-implication" analysis under the Act:
Hay Group, 360 F.3d at 408-09.
The operation and effect of Monsanto's arguments is to confer nationwide jurisdiction on an arbitration panel, since parties to arbitration could ask any state court to enforce the panel's nonparty subpoenas to appear before a single, traveling arbitrator. This is a fatal flaw. Again, the Act "does not authorize nationwide service of process," and "the federal district courts do not generally have nationwide jurisdiction unless authorized by a federal statute." Dynegy, 451 F.3d at 90, 95. And the Act does not grant greater authority to arbitration panels than it does to the United States district courts. See id. at 96. Thus, it would violate and conflict with congressional intent to expand enforcement jurisdiction to include the state courts, wherever they may be located. Nothing in the text of Section 7 suggests that Congress meant to authorize the courts of the fifty states to enforce the arbitration subpoena provisions of that statute. And without congressional authorization, a state statute or rule can neither restrict nor expand the operation and effect of a federal statute. To hold otherwise would stand the Supremacy Clause on its head.
In sum, Monsanto's use of Trial Rule 28(E) conflicts with Section 7's purposes and objectives. See Florian, 930 N.E.2d at 1195-96. The plain language of Section 7 establishes a specific procedure for the enforcement of an arbitration panel's subpoena to a nonparty: the party seeking compliance must "petition the United States district court for the district in which such arbitrators, or a majority of them, are sitting," and that court then "may compel the attendance of such person or persons before said arbitrator or
We hold that, by its plain language and upon the facts before us, Section 7 of the Act preempts Trial Rule 28(E). Thus, the trial court erred in entering judgment for Monsanto on Monsanto's Trial Rule 28(E) petition to assist. We reverse that judgment and remand with instructions that the trial court dismiss Monsanto's petition.
Reversed and remanded with instructions.
MATHIAS, J., concurs.
BAKER, J., dissents with separate opinion.
BAKER, Judge, dissenting.
I respectfully dissent. I agree that if there were federal court jurisdiction over these parties, then Congress intended the federal district courts to be the exclusive venue in which an arbitrator's subpoena may be enforced. But I simply cannot conclude that where, as here, there is no federal court jurisdiction, Congress intended to tie the hands of the arbitrators and the States in this fashion. If there is no federal court jurisdiction, then this is simply an intra-state dispute.
Indiana has elected to pass a trial rule that enshrines the rule of comity as part of our body of law. Trial Rule 28(E) "allows Indiana courts to assist tribunals and litigants outside this state by providing a mechanism to pursue discovery within Indiana's jurisdiction in a cause initiated outside Indiana's jurisdiction." Dean v. Weaver, 928 N.E.2d 254, 257 (Ind.Ct.App. 2010), trans. denied. In other words, Indiana has made it a priority to cooperate with—and aid, when possible—the tribunals of our sister states and of the federal government in discovery disputes.
The majority opines that "[t]he operation and effect of Monsanto's arguments is to confer nationwide jurisdiction on an arbitration panel," op. p. 367, but I cannot agree. Only when there is no federal court jurisdiction over the arbitration such that federal courts cannot step in to aid the arbitrators, and only in those states that have enacted something analogous to Indiana's Trial Rule 28(E), would the arbitration panel have the ability to enforce its nonparty subpoenas. I simply cannot conclude that Congress intended to prevent states that have chosen to make the rule of comity a legislative priority from applying that policy when there is no federal court jurisdiction over the matter.
To put it another way, if there were ongoing litigation in a Minnesota state court and our sister tribunal needed help enforcing a subpoena over an Indiana resident, an Indiana trial court could and would step in, pursuant to Rule 28(E). But the result reached by the majority herein means that we could not offer that same help to a sister arbitration panel, notwithstanding the fact that there is no federal court jurisdiction. I simply cannot conclude that Congress intended such a result.
Indeed, this interpretation of Section 7 means, essentially, that only the largest corporations, which engage in business in all fifty states, are without recourse. Whereas an entity that does not have a presence in all fifty states would be able to achieve diversity jurisdiction, and the arbitrators in such a scenario would be able to enforce nonparty subpoenas in the federal
In other words, when there is federal court jurisdiction, the arbitrators are directed to a federal district court. But when there is no federal court jurisdiction, it obviously makes no sense to direct the arbitrators to a federal court, so the issue is left to the individual states to handle. As noted above, Indiana has decided to aid sister tribunals in matters of discovery enforcement. Consequently, I believe that the trial court herein had every right to order Beck's to comply with the subpoena, and I would affirm.
