Filed: Mar. 12, 2004
Latest Update: Mar. 02, 2020
Summary: Opinions of the United 2004 Decisions States Court of Appeals for the Third Circuit 3-12-2004 Hay Grp Inc v. EBS Acquisition Corp Precedential or Non-Precedential: Precedential Docket No. 03-1161P Follow this and additional works at: http://digitalcommons.law.villanova.edu/thirdcircuit_2004 Recommended Citation "Hay Grp Inc v. EBS Acquisition Corp" (2004). 2004 Decisions. Paper 891. http://digitalcommons.law.villanova.edu/thirdcircuit_2004/891 This decision is brought to you for free and open ac
Summary: Opinions of the United 2004 Decisions States Court of Appeals for the Third Circuit 3-12-2004 Hay Grp Inc v. EBS Acquisition Corp Precedential or Non-Precedential: Precedential Docket No. 03-1161P Follow this and additional works at: http://digitalcommons.law.villanova.edu/thirdcircuit_2004 Recommended Citation "Hay Grp Inc v. EBS Acquisition Corp" (2004). 2004 Decisions. Paper 891. http://digitalcommons.law.villanova.edu/thirdcircuit_2004/891 This decision is brought to you for free and open acc..
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Opinions of the United
2004 Decisions States Court of Appeals
for the Third Circuit
3-12-2004
Hay Grp Inc v. EBS Acquisition Corp
Precedential or Non-Precedential: Precedential
Docket No. 03-1161P
Follow this and additional works at: http://digitalcommons.law.villanova.edu/thirdcircuit_2004
Recommended Citation
"Hay Grp Inc v. EBS Acquisition Corp" (2004). 2004 Decisions. Paper 891.
http://digitalcommons.law.villanova.edu/thirdcircuit_2004/891
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PRECEDENTIAL KEVIN M. TOTH
Reed Smith L.L.P.
UNITED STATES COURT OF 2500 One Liberty Place
APPEALS 1650 Market Street
FOR THE THIRD CIRCUIT Philadelphia, PA 19103
____________
PETER C. WOODFORD (argued)
No. 03-1161/1162 CHRISTOPHER E. PAETSCH
____________ SEYFARTH SHAW
55 East Monroe Street
HAY GROUP, INC. Suite 4200
Chicago, Illinois 60603
v.
Counsel for Appellant,
E.B.S. ACQUISITION CORP. ET AL, PriceWaterhouseCoopers, L.L.P.
PRICEWATERHOUSECOOPERS
L.L.P. MARY J. HACKETT
Reed Smith, L.L.P.
Appellants 435 Sixth Avenue
Pittsburgh, PA 15230
____________________
KEVIN M. TOTH
ON APPEAL FROM THE UNITED Reed Smith L.L.P.
STATES DISTRICT COURT 2500 One Liberty Place
FOR THE EASTERN DISTRICT OF 1650 Market Street
PENNSYLVANIA Philadelphia, PA 19103
District Court Judge: Honorable Mary A. Counsel for Appellant,
McLaughlin E.B.S. Acquisition Corp.
(D.C. No. 02-MC-252, 253
(consolidated)) NICHOLAS SANSERVINO, Jr. (argued)
____________________ WILLIS J. GOLDSMITH
SARA B. McCLURE
Argued: September 15, 2003 Jones Day
51 Louisiana Avenue, N.W.
Before: ALITO, AMBRO, and Washington, D.C. 20001-2113
CHERTOFF, Circuit Judges
Counsel for Appellee
(Opinion Filed: March 12, 2004)
____________________
produced prior to the panel’s arbitration
OPINION OF THE COURT hearing. PwC and E.B.S. objected to these
____________________ subpoenas, but the arbitration panel
disagreed. When PwC and E.B.S. still
ALITO, Circuit Judge: refused to comply with the subpoenas, Hay
asked the United States District Court for
PriceWaterhouseCoopers (“PwC”) the Eastern District of Pennsylvania to
and E.B.S., non-parties to an arbitration, enforce the subpoenas. PwC and E.B.S.
seek to avoid compliance with an again objected, claiming, among other
arbitration panel’s subpoena requiring things, that the Federal Arbitration Act
them to turn over documents prior to the (“FAA”) did not authorize the panel to
panel’s hearing. The District Court issue subpoenas to non-parties for pre-
enforced the subpoena. We reverse. hearing document production and that the
Federal Rules of Civil Procedure
I. prohibited the District Court from
enforcing a subpoena on a non-party for
Hay Group (“H ay”) is a documents outside the Court’s territorial
management consulting firm. David A. jurisdiction.
Hoffrichter left Hay’s employment and
joined PwC in September 1999. In early In November 2002, the District
2002, PwC sold the division employing Court issued a decision enforcing the
Hoffrichter to E.B.S. subpoenas and ordering the parties to
resolve any remaining differences. In
Hoffrichter’s separation agreement doing so, the District Court accepted the
from Hay contained a clause that forbade view of the Eighth Circuit and several
him from soliciting any of Hay’s district courts that the FAA authorizes
employees or clients for one year. The arbitration panels to issue subpoenas on
agreement further provided for arbitration non-parties for pre-hearing document
to resolve any dispute arising under the production. The District Court also held
agreement. In February 2000, Hay that even under the view of the Fourth
commenced such an arbitration proceeding Circuit, which permits such production
in Philadelphia, Pennsylvania, against only when there is a “special need,” the
Hoffrichter, claiming that he had violated panel’s subpoenas would be valid. In
the non-solicitation clause. addition, the District Court held that it had
the power to enforce subpoenas on non-
In an attempt to obtain information parties for document production even if
for the arbitration, Hay served subpoenas the documents were located outside the
for documents on E.B.S. at its Pittsburgh territory within which the court’s
office and on PwC at its Philadelphia subpoenas could be served.
office. Hay sought to have the documents
2
PwC and E.B.S. then filed the may issue a subpoena requiring pre-
present appeal. The District Court denied hearing document production by a person
their motion to stay its order pending or entity that is not bound by the
appeal, but our Court granted their arbitration agreement (hereinafter a “non-
emergency motion for a stay. party”).
II. In interpreting a statute, we must, of
course, begin with the text. “The Supreme
A. Court has repeatedly explained that
recourse to legislative history or
On appeal, PwC and E.B.S. first underlying legislative intent is unnecessary
argue that, under Section 7 of the FAA, 9 when a statute’s text is clear and does not
U.S.C. § 7, a non-party witness may be lead to an absurd result.” United States ex
compelled to bring documents to an rel. Mistick PBT v. Housing Authority of
arbitration proceeding but may not simply City of Pittsburgh, 186 F.3d 376, 395 (3d
be subpoenaed to produce documents. We Cir. 1999). Furthermore, a court’s policy
agree. preferences cannot override the clear
meaning of a statute’s text. See Eaves v.
An arbitrator’s authority over County of Cape May, 239 F.3d 527, 531-
parties that are not contractually bound by 32 (3d Cir. 2000)(“We do not find the
the arbitration agreement is strictly limited reasoning of the courts adopting the
to that granted by the Federal Arbitration ‘majority view’ persuasive, because they
Act. See, e.g., Legion Insurance ignore a textual analysis of § 1961(a) and,
Company v. John Hancock Mutual Life instead, base their result on policies they
Ins. Co., No. 01-162,
2001 WL 1159852, find to underlie post-judgment interest and
2001 U.S. Dist. LEXIS 15911 at *3 (E.D. attorney's fee awards.”)
Pa. Sept. 5, 2001)(“It is clear, and
undisputed, that the cited statute is the only Section 7 of the FAA provides as
source of the authority for the validity and follows:
enforceability of the arbitrators’ subpoena
[over a nonparty]”); Integrity Ins. Co., in The arbitrators selected
Liquidation, v. Am. Centennial Ins. Co., either as prescribed in this
885 F. Supp. 6 9, 71 (S.D .N.Y . title [9 U.S.C. §§ 1 et seq.]
1995)(“Because the parties to a contract or otherwise, or a majority
cannot bind nonparties, they certainly of them, may summon in
cannot grant such authority to an writing any person to
arbitrator. Thus, an arbitrator’s power attend before them or any
over nonparties derives solely from the of them as a witness and in
FAA.”). Accordingly, we must look to the a proper case to bring with
FAA to determine whether an arbitrator him or them any book,
3
record, document or paper This language speaks
which may be deemed unambiguously to the issue before us. The
material as evidence in the only power conferred on arbitrators with
case. The fees for such respect to the production of documents by
attendance shall be the same a non-party is the power to summon a non-
as the fees of witnesses party “to attend before them or any of
before masters of the United them as a witness and in a proper case to
States courts. S a id bring with him or them any book, record,
summons shall issue in the document or paper which may be deemed
name of the arbitrator or material as evidence in the case.” 9 U.S.C.
arbitrators, or a majority of § 7(emphasis added). The power to
them, and shall be directed require a non-party “to bring” items “with
to the said person and shall him” clearly applies only to situations in
be served in the same which the non-party accompanies the items
manner as subpoenas to to the arbitration proceeding, not to
appear and testify before situations in which the items are simply
the court; if any person or sent or brought by a courier. In addition,
persons so summoned to the use of the word “and” makes it clear
testify shall refuse or that a non-party may be compelled “to
neg lect to obey said bring” items “with him” only when the
summons, upon petition to non-party is summoned “to attend before
the United States district [the arbitrator] as a witness.” Thus,
court for the district in Section 7's language unambiguously
which such arbitrators, or a restricts an arbitrator’s subpoena power to
majority of them, are sitting situations in which the non-party has been
may compel the attendance called to appear in the physical presence of
of such person or persons the arbitrator and to hand over the
before said arbitrator or documents at that time.1
arbitrators, or punish said
person or persons for
contempt in the same
1
manner as provided by law Some states have recently adopted
for securing the attendance versions of the Uniform Arbitration Act,
of witn esses o r their which differs from the Federal
punishment for neglect or Arbitration Act. Some of these state
refusal to attend in the statutes explicitly grant arbitrators the
courts of the United States. power to issue pre-hearing document
production subpoenas on third parties.
9 U.S.C.§ 7 (emphasis added). See, e.g., 10 Del. Code §5708(a)
(2003)(“The arbitrators may compel the
attendance of witnesses and the
4
This interpretation is supported by or a subpoena for the
the interpretation of similar language in a production of documentary
previous version of Federal Rule of Civil evidence, signed and sealed
Procedure 45. From its adoption in 1937 but otherwise in blank, to a
until its amendment in 1991, Rule 45 did party requesting it, who
not allow federal courts to issue pre- shall fill it in before service.
hearing document subpoenas on non- (b) For Production of
parties. This restriction was based on a Documentary Evidence. A
reading of the first two paragraphs of the subpoenamay alsocommand thepersontowhom it
rule, which provided as follows: is directed to produce th e
b o o k s ,
(a) For Attendance of p a p e r s ,
Witnesses; Form; documents, or
Issuance. Every subpoena tangible
shall be issued by the clerk t h i n g s
under the seal of the court, designated
shall state the name of the therein; but
court and the title of the the court,
action, and shall command upon motion
each person to whom it is m a d e
directed to attend and give promptly and
testimony at a time and in any event
place therein specified. The at or before
clerk shall issue a subpoena, the time
specified in
the subpoena
f o r
production of books, records, contracts,
c o m p l i a n ce
papers, accounts, and all other
th er ew ith,
documents and evidence, and shall have
may (1) quash
the power to administer oaths.”); 42
or modify the
Pa.C.S.A. § 7309 (“The arbitrators may
subpoena if it
issue subpoenas in the form prescribed
i s
by general rules for the attendance of
unreasonable
witnesses and for the production of
a n d
books, records, documents and other
oppressive or
evidence.”) The language of these state
(2) condition
statutes clearly shows how a law can give
denial of the
authority to an arbitrator to issue pre-
motion upon
hearing document-production orders on
t h e
third parties.
5
advancement to a deposition. Nowhere in the rule is it
by the person stated that documents can be subpoenaed
in whose alone, that is, without requesting their
behalf the production in conjunction with a
subpoena is deposition or trial”); 139 F.R.D. 197, 205-
issued of the 206 (“Under the new Rule 45, a subpoena
reasonable duces tecum seeking the production of
c o s t o f documents (or other materials) from a
producing the nonparty may be used independently of the
books, papers, regular testimonial subpoena; the two are
documents, or no longer wedded, as they were under the
ta n g ib le prior version of Rule 45.”).
things.
Some courts have argued that the
Fed. R. Civ. Proc. 45 (1990)(emphasis language of Section 7 implies the power to
added). issue such pre-hearing subpoenas. See In
re Security Life Insurance Co. of America,
Under this version of Rule 45(a), a 228 F.3d 865, 870-71 (8th Cir. 2000)(“We
subpoena was required to command the thus hold that implicit in an arbitration
person to whom it was directed “to attend panel’s power to subpoena relevant
and give testimony.” The court could then documents for production at a hearing is
add a requirement that the subpoenaed the power to order the production of
witness bring documents with him. See relevant documents for review by a party
Fed. R. Civ. Proc. 45(b). The accepted prior to the hearing.”); Meadows
view was that nothing in Rule 45 gave the Indemnity Co., Ltd. v. Nutmeg Insurance
court the power to issue documents-only Co.,
157 F.R.D. 42, 45 (M.D. Tenn.
subpoenas to non-parties. See Fed. R. Civ. 1994)(“The power of the panel to compel
P. 45, Committee Notes, 1991 Amendment production of documents from third-
Subdivision (a)(“Fourth, Paragraph (a)(1) parties for the purposes of a hearing
authorizes the issuance of a subpoena to implicitly authorizes the lesser power to
compel a nonparty to produce evidence compel such documents for arbitration
independent of any deposition. This purposes prior to a hearing.”).
revision spares the necessity of a
deposition of the custodian of evidentiary We disagree with this power-by-
material required to be produced.”); implication analysis. By conferring the
Turner v. Parsons,
596 F. Supp. 185, 186 power to compel a non-party witness to
(E.D. Pa. 1984)(“Certainly, this rule bring items to an arbitration proceeding
permits a non-party to be subpoenaed for a while saying nothing about the power
deposition. Additionally, this non-party simply to compel the production of items
can be required to bring certain documents without summoning the custodian to
6
testify, the FAA implicitly withholds the circumscribing an arbitration panel’s
latter power. If the FAA had been meant power to affect those who did not agree to
to confer the latter, broader power, we its jurisdiction. See Legion Ins. Co. 2001
believe that the drafters would have said U.S. Dist. LEXIS 15911 at *4 (“the
so, and they would have then had no need authority of arbitrators with respect to non-
to spell out the more limited power to parties who have never agreed to be
compel a non-party witness to bring items involved in arbitration is severely
with him to an arbitration proceeding. As limited”). The requirement that document
mentioned above, until its amendment in production be made at an actual hearing
1991, Rule 45 of the Federal Rules of may, in the long run, discourage the
Civil Procedure was framed in terms quite issuance of large-scale subpoenas upon
similar to Section 7 of the FAA, but courts non-parties. This is so because parties that
did not infer that, just because they could consider obtaining such a subpoena will be
compel a non-party witness to bring items forced to consider whether the documents
with him, they could also require a non- are important enough to justify the time,
party simply to produce items without money, and effort that the subpoenaing
being subpoenaed to testify. parties will be required to expend if an
actual appearance before an arbitrator is
Since the text of Section 7 of the needed. Under a system of pre-hearing
FAA is straightforward, we must see if the document production, by contrast, there is
result is absurd. See United States ex rel. less incentive to limit the scope of
Mistick PBT, 186 F.3d at 395. We discovery and more incentive to engage in
conclude that it is not. Indeed, we believe fishing expeditions that undermine some
that a reasonable argument can be made of the advantages of the supposedly
that a literal reading of Section 7 actually shorter and cheaper system of arbitration.
furthers arbitration’s goal of “resolving See COM SAT Corp. v. Natl. Science
disputes in a timely and cost efficient
Foundation, 190 F.3d at 269, 276 (4th Cir.
manner.” Painewebber Inc. v. Hofmann, 1999)(“The rationale for constraining an
984 F.2d 1372, 1380 (3d Cir. 1993). First, arbitrator’s subpoena power is clear.
as noted above, until 1991 the Federal Parties to a private arbitration agreement
Rules of Civil Procedure themselves did forego certain procedural rights attendant
not permit a federal court to compel pre- to formal litigation in return for a more
hearing document production by non- efficient and cost-effective resolution of
parties. That the federal courts were left their dispute. A hallmark of arbitration –
for decades to operate with this limitation and a necessary precursor to its efficient
of their subpoena power strongly suggests operation – is a limited discovery
that the result produced by interpreting process.”). Thus, contrary to Hay’s claim,
Section 7 of the FAA as embodying a heeding the clear language of Section 7
similar limitation is not absurd. Second, it does not lead to absurd or even
is not absurd to read the FAA as unreasonable results.
7
190 F.3d at 275. In dicta, however, the
Of course, one may well think that COMSAT court suggested that an
it would be preferable on policy grounds arbitration panel might be able to
for arbitrators to be able to require non- subpoena a non-party for pre-hearing
parties to produce documents without also discovery “under unusual circumstances”
subpoenaing them to appear in person and “upon a showing of special need or
before the panel. But if it is desirable for hardship.” Id. at 276 . While we agree
arbitrators to possess that power, the way with COMSAT’s holding, we cannot agree
to give it to them is by amending Section 7 with this dicta because there is simply no
of the FAA, just as Rule 45 of the Federal textual basis for allowing any “special
Rules of Civil Procedure was amended in need” exception. Again, while such a
1991 to confer such a power on district power might be desirable, we have no
courts. authority to confer it.
The Fourth Circuit has interpreted We have carefully considered but
Section 7 in a way that is largely consistent must respectfully disagree with the Eighth
with our reading. In COMSAT Corp. v. Circuit’s holding in Security Life that
Natl. Science Foundation, supra, the court Section 7 authorizes arbitrators to issue
held that the plain meaning of Section 7 p r e - h e a r in g d o c u m e n t - p r o d u ct i o n
did not empower an arbitrator to issue pre- subpoenas on non-parties. In Security
hearing discovery subpoenas to nonparties: Life, the Eighth Circuit reasoned that the
“the interest in efficiency is furthered by
Nowhere does the FAA permitting a party to review and digest
grant an arbitrator the relevant documentary evidence prior to the
authority to order non- arbitration hearing.” Security Life, 228
p a r t ie s to appear a t F.3d at 870. In our view, however, this
depositions, or the authority policy argument cannot supersede the
to demand that non-parties statutory text.2
provide the litigating parties
with documents during pre-
hearing discovery. By its 2
We have also considered the District
own terms, the FAA’s
Court decisions that have reached similar
su b poena au th or ity i s
results. See In re Arbiration between
defined as the power of the
Douglas Brazell and America Color
arbitration panel to compel
Graphics, Inc., 2000 U.S. Dist. Lexis
n o n-parties to a p p e ar
4482 (S.D.N.Y. April 6, 2000); Meadows
‘before them;’ that is, to
Indemnity Co., Ltd. v. Nutmeg Insurance
compel testimony by non-
Co., 157 F.R.D. 42, 45 (M.D. Tenn.
parties at the arbitration
1994); Stanton v. Paine Webber, 685
hearing.
F.Supp 1241, 1242 (S.D. Fla 1988).
8
Even if we were to look outside the pendent state claims that were covered by
statutory text to make our decision, any a mandatory arbitration agreement. The
argument in favor of ignoring the literal Supreme Court was presented with the
meaning of the FAA in the name of argument that the District Court had the
efficiency seems to cut against Supreme authority to refuse to compel arbitration of
Court precedent regarding the role of the pendent claims because this would
efficiency considerations in interpreting have resulted in wasteful bifurcated
the Act. Although efficiency is certainly proceedings and because the drafters of
an objective of parties who favor the FAA had not explicitly considered the
arbitration over litigation, see, e.g., prospect of such proceedings. See 470
Alexander v. Gardner-Denver Co., 415 U.S. at 219.
U.S. 36, 58 (1974); Painewebber Inc. v.
Hofmann,
984 F.2d 1372, 1380 (3d Cir. Rejecting this argument, the
1993), efficiency is not the principal goal Supreme Court noted that the terms of
of the FAA. Rather, the central purpose of Sections 3 and 4 of the FAA, 9 U.S.C. §§
the FAA is to give effect to private 3 and 4, required the District Court to
agreements. See Dean Witter Reynolds, compel arbitration of the pendent claims.
Inc. v. Byrd,
470 U.S. 213, 218-19
See 470 U.S. at 218. The Court then
(1985)(“Byrd”) (“The legislative history of examined the legislative history of the
the Act establishes that the purpose behind FAA and “reject[ed] the suggestion that
its passage was to ensure judicial the overriding goal of the Arbitration Act
enforcement of privately made agreements was to promote the expeditious resolution
to arbitrate. We therefore reject the of claims.”
Id. Instead, the Court
suggestion that the overriding goal of the concluded, “[t]he preeminent concern of
Arbitration Act was to promote the Congress in passing the Act was to
expeditious resolution of claims.”). enforce private agreements into which the
parties had entered.” Id. at 221. This
In Byrd, the Supreme Court concern, the Court held, required rigorous
a d d r e s s e d t h e a r g u me n t t h at enforcement of agreements to arbitrate.
considerations of efficiency should control Id. We take from Byrd the lesson that
the interpretation of the provisions of the Congress’s failure explicitly to consider an
FAA relating to the enforcement of inefficient byproduct of the Arbitration
arbitration agreements. The complaint in Act does not render the text ambiguous.
that case asserted a federal claim that was
not going to be arbitrated, as well as Under Byrd’s reasoning, efficiency
considerations clearly cannot override the
terms of Section 7. Indeed, since the
efficiency interest was far stronger in Byrd
None of these cases provides an adequate
than it is in this case, the result here
justification for disregarding the plain
follows a fortiori. In a case such as the
meaning of Section 7's text.
9
one before us, convening and adjourning We now turn to the PwC’s
an arbitration panel will hardly prove an argument3 that the subpoenas at issue in
insurmountable obstacle; the costs will be this case were improper for an additional
slight in comparison to amassing and reason, namely, because they sought the
transporting a huge volume of documents. production of documents that were located
Interpreting Section 7 as we do shifts the outside the territorial jurisdiction of the
balance of power slightly from the party District Court. Although it is not strictly
that seeks the documents to the non-party necessary for us to decide this issue at this
that is subpoenaed. Under our time, we believe that it is appropriate for
interpretation, the party seeking the us to do so because of the potential that
documents cannot simply obtain a Hay will obtain a new subpoena calling on
subpoena requiring the documents to be a PwC representative to appear at an
shipped from one warehouse to another; arbitration proceeding and to bring the
instead, the party will be forced to appear documents at issue to that proceeding. If
at a proceeding during which the that occurs, PwC may renew the argument
documents are produced. This slight in question, and the likely result would
redistribution of bargaining power is then be another appeal. In order to avoid
unlikely to have any substantial effect on unnecessary litigation, we address PwC’s
the efficiency of arbitration. Moreover, as argument now.
we noted in the previous section, the rule
we adopt in this case may in fact facilitate PwC contends that Fed. R. Civ.
efficiency by reducing overall discovery in Proc. 45(a)(2)4 prohibits subpoenas duces
arbitration. In any event, if patent
inefficiency, such as that resulting from 3
the bifurcated proceedings at issue in E.B.S. does not join in this argument.
Byrd, is insufficient to overcome a textual
command, an ambiguous efficiency effect 4
Fed. R. Civ. Proc. 54(b)(2) provides
certainly cannot do so.
in relevant part as follows:
[A] subpoena may be
In sum, we hold that the FAA did
served at any place within
not authorize the panel to issue a pre-
the district of the court by
hearing discovery subpoena to PwC and
which it is issued, or at any
E.B.S.. We further reject any “special
place without the district
needs exception” to this rule. If Hay wants
that is within 100 miles of
to access the documents, the panel must
the place of the deposition,
subpoena PwC and E.B.S. to appear before
hearing, trial, production,
it and bring the documents with them.
or inspection specified in
the subpoena or at any
B.
place without the state
where a state statute or rule
10
tecum for documents located outside the the attendance of a person.” We have
territory within which a subpoena may be held, however, that the FAA does not
served under Fed. R. Civ. Proc. 45(b)(2). permit such subpoenas. The portion of
PwC relies on the following language in Rule 45(a)(2) that applies when a witness
Rule 45(a)(2): is subpoenaed to appear contains no
similar language. Rather, that portion of
If separate from a subpoena the Rule states only that a subpoena for
commanding the attendance attendance at a trial, hearing, or deposition
of a person, a subpoena for shall issue from the court for the district
production or inspection “in which the hearing or trial or hearing is
shall issue from the court for to be held” or from “the court for the
the district in which the district designated in the notice of
production or inspection is deposition as the district in which the
to be made. deposition is to be taken.” Nothing in this
language suggests that a witness who is
As applied to the situation that we subpoenaed to testify may not also be
have postulated (the subsequent service on directed to bring documents that are not
PwC of a subpoena calling for both an located within the territorial limits set out
appearance before the arbitration panel and in Rule 45(b)(2).
the production of documents), PwC’s
argument has several flaws. We will Second, PwC misinterprets the
mention two. language in Rule 45 (a)(2) on which it
relies. As noted, that provision states that
First, the portion of Rule 45(a)(2) a subpoena calling only for the
on which PwC’s argument is based applies “production or inspection” of documents
only to a subpoena duces tecum that is “shall issue from the court for the district
“separate from a subpoena commanding in which the production or inspection is to
be made.” “Production” refers to the
delivery of documents, not their retrieval,
and therefore “the district in which the
1 of court permits
production . . . is to be made” is not the
2 service of a
district in which the documents are housed
3 subpoena issued by
but the district in which the subpoenaed
4 a state court of
party is required to turn them over.
5 general jurisdiction
6 sitting in the place
The Notes to the 1991 Amendment
7 of the deposition,
reflect the same understanding of this
8 hearing, trial,
language. The Notes state: “Paragraph
9 production, or
(a)(2) makes clear that the person subject
10 inspection specified
to the subpoena is required to produce
11 in the subpoena.
11
materials in that person’s control whether nonparty located in Florida, lies beyond
or not the materials are located within the the scope of the court’s subpoena
District or within the territory within enforcement powers.” Legion, 33 Fed.
which the subpoena can be served.” Fed. Appx. at 28, 2002 U.S. App. Lexis 6797 at
R. Civ. Proc. 45, Committee Notes, 1991 *7. PwC cites language in the opinion that
Amendment Subdivision (a)(emphasis it interprets as supporting its argument, but
added); see also 9 J AMES W M. M OORE ET PwC takes that language out of context.
AL., M OORE’ S F EDERAL P RACTICE para. The other cases on which and PwC relies
45.03 (3d ed. 2000)(“The subpoena should are either unpersuasive or inapposite.5
issue from the Court where the production
of documents is to occur, regardless of
where the documents are located.”); 9A 5
PwC relies on the statement in
C HARLES A LAN W RIGHT AND A RTHUR R.
Natural Gas Pipeline Co. of Am. v.
M I LL E R , F E D ERAL P RACTICE AND
Energy Gathering, Ltd., 2 F.3d 1397,
P ROCEDURE § 2456 at 31 (1995 & 2003
1406 (5th Cir. 1993), that “a federal
Supp.)(“Even records kept beyond the
court sitting in one district cannot issue a
territorial jurisdiction of the district court
subpoena duces tecum to a non-party for
issuing the subpoena may be covered if
the production of documents located in
they are controlled by someone subject to
another district.” However, this
the court’s jurisdiction.”).
statement was dictum; the basis for the
statement is unclear; and it appears that
PwC’s belief that a subpoena
both the subpoena recipient and the
cannot reach extraterritorial documents
documents in that case may have been
seems to arise out of a misreading of
located beyond the reach of Fed. R. Civ.
Legion Ins. Co. v. John Hancock Mutual
Proc. 45(b)(2)(the court was in Houston,
Life Ins. Co., 33 Fed. Appx. 26, 2002 WL
Texas, and the non-party and the records
537652, 2002 U.S. App. LEXIS 6797 (3d
were in Mississippi).
Cir. 2002). In Legion, the United States
District Court for the Eastern District of
In Cates v. LTV Aerospace Corp.,
Pennsylvania held that it lacked personal
480 F.2d 620 (5th Cir. 1973), Navy
jurisdiction over a party, CSIS, on whom
regulations specified that the documents
an arbitrator’s subpoena had been served,
in question could be obtained only from
and the Court therefore refused to enforce
the Secretary of the Navy in Washington,
the subpoena. Affirming, a panel of our
but a party attempted to obtain the
Court wrote that “in light of the territorial
documents by serving a subpoena on the
limits imposed by Rule 45 upon the service
commanding officer of a naval facility in
of subpoenas, we conclude that the District
Texas. The court held that the
Court did not commit error in denying
regulations could not be circumvented in
[the] motion to enforce the arbitration
this way. The critical factor in Cates was
subpoena against CSIS, which, as a
not the location of the documents but the
12
We have considered all of the arbitrators powerless to require advance
arguments made by PwC regarding the production of documents when necessary
location of the documents, but we find to allow fair and efficient proceedings.
them unconvincing.
Under section 7 of the
III. Federal Arbitration Act, arbitrators have
the power to compel a third-party witness
For the reasons set out above, the to appear with documents before a single
order of the District Court is reversed. arbitrator, who can then adjourn the
proceedings. This gives the arbitration
panel the effective ability to require
CHERTOFF, Circuit Judge, concurring: delivery of documents from a third-party
in advance, notwithstanding the
I join Judge Alito’s opinion limitations of section 7 of the FAA. In
in full. But I appreciate the reason that a many instances, of co urse, the
number of courts have been motivated to inconvenience of making such a personal
read a pre-hearing discovery power into appearance may well prompt the witness
the arbitration rules. I write separately to to deliver the documents and waive
observe that our opinion does not leave presence. See David M. Heilbron, The
Arbitration Clause, the Preliminary
Conference, and the Big Case, 45 Arb. J.
38, 43-44 (1990).
location of the officer from whom they
To be sure, this procedure
had to be sought.
requires the arbitrators to decide that they
are prepared to suffer some inconvenience
In Ariel v. Jones, 693 F.2d 1058
of their own in order to mandate what is,
(11th Cir. 1982), a district court in
in reality, an advance production of
Florida quashed a subpoena duces tecum
documents. But that is not necessarily a
for documents stored in Colorado on the
bad thing, since it will induce the
ground that the agent served in Florida
arbitrators and parties to weigh whether
did not have effective control of the
advance production is really needed. And
documents. In affirming, the court of
the availability of this procedure within
appeals did not endorse the principle
the existing statutory language should
advocated by PwC that a non-party may
satisfy the desire that there be some
not be subpoenaed to produce documents
mechanism “to compel pre-arbitration
located outside the district court’s
discovery upon a showing of special need
territorial jurisdiction. Rather, the court
or hardship.” Comsat Corp. v. Nat’l. Sci.
of appeals held that the trial court had
Found., 190 F.3d 269, 276 (4th Cir. 1999).
not abused its discretion in quashing the
subpoena as unreasonable and
oppressive.
13
14
