This segment of the Businessperson’s Federal Arbitration Act FAQ Guide concerns the enforcement of arbitral subpoenas under Section 7 of the FAA.
Arbitrators can require the parties before them to produce documents, appear for depositions, and testify at hearings. That power is not self-executing but is derived from Federal Arbitration Act-authorized judicial enforcement of arbitration agreements and awards. If, for example, parties do not comply, the arbitrators may, absent contract language to the contrary, impose sanctions, including attorney fee awards or adverse inferences on merits issues.
But resolving disputes often requires testimony and documentary evidence from persons who are not parties to the dispute. Courts have subpoena power and can compel third-party witnesses within their jurisdiction to testify, produce documents, or both. They can enforce that power through contempt sanctions.
Arbitrators have no such inherent power over third parties and FAA-authorized judicial power to confirm (i.e., reduce to judgment) arbitration awards does nothing to impose legally enforceable obligations on persons not lawfully parties to, or otherwise bound by, those arbitration awards.
Section 7 addresses, to some extent, the challenges associated with obtaining evidence from third parties for use in an arbitration proceeding. It authorizes arbitrators to issue subpoenas or “summonses” that require third parties to appear, testify, and produce documents at a hearing:
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.
9 U.S.C. § 7.
Section 7 provides that “[t]he fees for such attendance shall be the same as the fees of witnesses before masters of the United States courts.” 9 U.S.C. § 7. The “summons,” the statute continues, “shall issue in the name of the arbitrator or arbitrators, or a majority of them, and shall be signed by the arbitrators, or a majority of them, and shall be directed to the said person and shall be served in the same manner as subpoenas to appear and testify before the court. . . .” 9 U.S.C. § 7.
Section 7 authorizes judicial enforcement of arbitral summonses or subpoenas:
[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.
9 U.S.C. § 7.
The majority of federal circuit courts that have addressed the question have held that Section 7 authorizes only subpoenas that require a witness to appear before arbitrators for questioning at a hearing, although the subpoena may direct the witness to produce documents at the hearing. See Hay Group, Inc. v. E.B.S. Acquisition Corp., 360 F.3d 404, 407 (3d Cir. 2004) (Alito, J.); Managed Care Advisory Grp. v. CIGNA Healthcare, 939 F.3d 1145, 1161 (11th Cir. 2019); CVS Health Corp. v. Vividus, LLC, 878 F.3d 703, 708 (9th Cir. 2017); Life Receivables Trust v. Syndicate 102, 549 F.3d 210, 216 (2d Cir. 2008). Subpoenas for depositions or the production of documents are not authorized under Section 7, even though the Federal Rules of Civil Procedure authorize them in federal-court civil litigation. See Fed. R. Civ. P. 45(a)(1).
But that doesn’t mean that Section 7 plays no role with respect to document or even deposition discovery. Courts have recognized that arbitrators may issue arbitral subpoenas that require non-parties to appear before one or more arbitrators, give testimony, and produce documents, even if the hearing is not a final, merits hearing. See, e.g., Wash. Nat’l Ins. Co. v. Obex Grp., __ F.3d ___, No. 19-225-cv, slip op. at 22-24 (2d Cir. May 1, 2020). While that power is considerably less expansive than courts have in litigation under Rule 45 of the Federal Rules of Civil Procedure, it provides at least some meaningful assistance to parties in arbitration as respects obtaining evidence from third-parties.
One Court, the Eighth Circuit, has ruled that arbitral power to issue document or deposition subpoenas, which do not require an appearance before the arbitrators, can be implied from Section 7’s text. See In re Security Life Ins. of America, 228 F.3d 865, 870-71 (8th Cir. 2000). The Fourth Circuit has ruled that Section 7 does not authorize such subpoenas unless there is a “special need or hardship[]” warranting that third-party discovery. See Comsat Corp. v. National Science Foundation, 190 F. 3d 269, 271, 275-276 (4th Cir. 1999) (not defining special need or hardship, “except to observe that at a minimum, a party must demonstrate that the information it seeks is otherwise unavailable”).
Section 7, construed in conjunction with Fed. R. Civ. P. 45, may authorize nationwide service of process, but the arbitral subpoenas authorized by Section 7 are, on account of Fed. R. Civ. P. 45(c), subject to certain geographic limitations discussed below. Because of those limitations, because arbitral subpoenas must command persons to appear before the arbitrators, and because Section 7 requires parties to file petitions to enforce arbitral subpoenas only in the district in which the arbitrators are sitting, arbitral subpoenas may “command a person to attend a trial” or “hearing” but “only” if: (a) “the person resides, is employed, or regularly transacts business in person[]” “within 100 miles” of the hearing. . . ; or (b) the. . . trial or hearing is “within the state where the person resides, is employed, or regularly transacts business in person,” and then only if the person “is a party or a party’s officer[,]” or “is commanded to attend a trial and would not incur substantial expense.” Fed. R. Civ. P. 45(c); see 9 U.S.C. § 7.
Section 7 provides that arbitral subpoenas or “summonses” “shall be served in the same manner as subpoenas to appear and testify before the court.” 9 U.S.C. § 7. It says the “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.” 9 U.S.C. § 7.
To enforce an arbitral subpoena or “summons,” one must “petition the United States district court for the district in which such arbitrators, or a majority of them, are sitting. . . .” 9 U.S.C. § 7.
In Dynegy Midstream Services v. Trammochem, 451 F.3d 89, 94-95 (2d Cir. 2006), the U.S. Court of Appeals for the Second Circuit ruled that Section 7, construed in conjunction with provisions the the then-in-effect version of Fed. R. Civ. P. 45, did not authorize nationwide service of process, and that, accordingly, the United States District Court for the Southern District of New York, the district in which the arbitrators were sitting, did not have personal jurisdiction over a non-party entity served with the arbitral subpoena in Houston, Texas, that is, outside of the then-in-effect territorial limitations of service contained in Fed. R. Civ. P. 45(b)(2). See 451 F.3d at 96.
Effective in 2013, the provisions of Rule 45 on which Trammochem relied were amended in significant respects. But even taking in account of those changes, the result in Trammochem would likely be the same, albeit for different reasons.
The version of Rule 45(b)(2) in effect when Trammochem was decided provided that a subpoena could “‘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 depsotion, hearing, trial, production, or inspection specified in the subpoena.’” Trammochem, 451 F.3d at 94-95 (quoting version of Fed. R. Civ. P. 45(b)(2) then in effect).
This earlier version of Rule 45(b)(2) also provided that, “‘[w]hen a statute of the United States provides therefor, the court upon proper application and cause shown may authorize the service of a subpoena at any other place.’” 451 F.3d at 95 (quoting Fed. R. Civ. P. 45(b)(2) version then in effect).
The version of Rule 45 then in effect imposed geographical limits not only on service but also on the venue of enforcement proceedings. A failure to comply with a subpoena could “‘be deemed contempt of the court from which the subpoena issued.’” 451 F.3d at 95 (quoting version of Rule 45(e) then in effect). And the issuing court would be the court sitting in the district where the deposition, document production, hearing, or trial would take place. See id.
Effective in 2013, Rule 45 was amended substantially. Federal Rule of Civil Procedure 45(a)(2) was amended to state that “[a] subpoena must issue from the court where the action is pending.” Fed. R. Civ. P. 45(a)(2).
Rule 45(b)(2) was amended to authorize nationwide service of a subpoena: “[a] subpoena may be served at any place within the United States.” That enabled the federal court where the action is pending to exercise personal jurisdiction over persons anywhere in the United States and empowered them to require those persons to attend hearings, produce documents, or appear at depositions.
But Rule 45(c) was also amended in a way that restored Rule 45’s pre-2013 geographical limitations on the issuing court’s power to require attendance at trials and hearings, and to compel production of documents and witnesses for deposition. The amended Rule 45(c) provides that “[a] subpoena may command a person to attend a trial, hearing, or deposition only as follows:”
(A) within 100 miles of where the person resides, is employed, or regularly transacts business in person; or
(B) within the state where the person resides, is employed, or regularly transacts business in person, if the person
(i) is a party or a party’s officer; or
(ii) is commanded to attend a trial and would not incur substantial expense.
Fed. R. Civ. P. 45(c)(1).
Under the pre-2013 Rule 45 regime, parties could obtain deposition and document discovery by way of a subpoena issued by a district court that had the requisite personal jurisdiction to compel the person to attend a deposition or produce documents in the district, even if that was not the district court where the action was pending. That district court would enforce the subpoena.
Under the now-in-effect, post-2013 Rule 45 regime, subpoenas are always issued in the name of the court where the action is pending and can be served anywhere in the U.S. But Rule 45(c) imposes territorial limitations on the place where the subpoena can require compliance.
As respects the place of compliance for attending hearings or a trial—which would have to be held in the district where the district court is sitting—those territorial limitations are effectively absolute, for the hearings or trial have one or more fixed locations, the courthouse or courthouses of the district court where the action is pending. That was also true under the pre-2013 Rule 45 regime, because of the territorial limitations on service.
As respects the place of compliance for deposition and document subpoenas, under Fed. R. Civ. P. 45(d), (f) and (g), the district court sitting in the place where compliance is required adjudicates issues concerning compliance. If the place of compliance is outside the district of the court issuing the subpoena, then the district court sitting in the place where compliance is required either adjudicates compliance issues, or, “if the person subject to the subpoena consents or if the courts finds exceptional circumstances[,]” then that court may transfer the matter to the district that issued the subpoena. Fed. R. Civ. P. 45(f).
Consistent with this revised procedure, the amended Rule 45(g) states that “[t]he court for the district where compliance is required—and also, after a motion is transferred, the issuing court—may hold in contempt a person who, having been served, fails without adequate excuse to obey the subpoena or an order related to it.” Fed. R. Civ. P. 45(g).
The geographic limitations imposed by the amended Rule 45(c), construed in conjunction with the previously discussed amendments to Rule 45, have two consequences.
First, a subpoena issued by a district court outside of Fed. R. Civ. P. 45(c)’s territorial limits may require production of documents or attendance at depositions, provided that the production or deposition takes place within the territorial scope of Fed. R. Civ. P. 45(c)(1). For example, a district court in the Southern District of New York may issue a deposition subpoena that can be served on a non-party who resides in Dallas, Texas and requires that person to appear for deposition in Dallas. If the person does not appear, then, under Fed. R. Civ. P. 45(d), (f) and (g), the district court sitting in the Northern District of Texas, the place where compliance is required, can either adjudicate the motion to enforce the subpoena or, in appropriate circumstances, transfer it to the issuing court, the U.S. District Court for the Southern District of New York. See Fed. R. Civ. P. 45(f), 45(g).
Second, a subpoena to attend a trial or hearing in the district court where the action is pending is valid only if it commands a witness to attend a trial or hearing at a place “within 100 miles of where the person resides, is employed, or regularly transacts business in person,” or, provided the requirements of Fed. R. Civ. P. 45(c)(1)(B)(i) or (ii) are met, within the state in which the district court sits. Fed. R. Civ. P. 45(c)(1).
Thus, for example, our hypothetical Southern District of New York district court cannot compel our hypothetical witness in Dallas to attend a trial or hearing in the Southern District of New York.
The 2013 amendments would not, we think, change the outcome in Trammochem, even though the Trammochem district court sitting in the Southern District of New York would appear to have, under those amendments, personal jurisdiction over the non-party witness, who was served in Texas.
Expanding on our earlier hypothetical, suppose an arbitration panel sitting in Manhattan, which is within the Southern District of New York, issues a subpoena to a witness, who resides and transacts business in Dallas, Texas. The subpoena, which is served on the witness in Dallas, directs the witness to attend a hearing before the arbitrators in New York City, and to produce documents at that hearing. The witness refuses to appear and one of the parties to the arbitration seeks to enforce the subpoena under Federal Arbitration Act Section 7. Service of the Section 7 petition is made in Dallas, and the court has subject matter jurisdiction over the petition based on diversity of jurisdiction. See, e.g., Obex, slip op. at 15-22.
A court faced with those facts would likely conclude that even though it had personal jurisdiction over our Dallas-based witness, the subpoena was no more enforceable as an arbitration subpoena than it would have been had it been originally issued by the court. For it would not be enforceable under Fed. R. Civ. P. 45(c).
Because the majority of circuit courts, including the Second Circuit, hold that Section 7 does not authorize depositions, or document discovery without a witness appearing before the arbitrators, the territorial limitations on a party’s ability to obtain evidence from third parties can be a significant impediment to parties in arbitration who require wide ranging discovery to make or defend their case. They may benefit parties whose positions in arbitration will not be advanced, or may be undermined, by the availability of such evidence.
There may be work-arounds that might legitimately facilitate the enforcement of arbitral subpoenas that would not be enforceable if the arbitration panel is deemed to sit only in the forum specified in the arbitration agreement. Suppose, for example, that in our New York City/Dallas example, a party is able to convince the arbitrators to rule that it shall sit in Dallas, issue its subpoena from Dallas, and hear the witnesses’ testimony in Dallas. In those circumstances, a federal court sitting in the Northern District of Texas might be persuaded to enforce that subpoena under Section 7.
There is certainly no guarantee that strategy would succeed in the Northern District of Texas or in any other district court in the United States, but it might in appropriate circumstances.
This guide, including the installments that will follow in later posts, and prior installments, does not purport to be a comprehensive recitation of the rules and principles of arbitration law pertinent or potentially pertinent to the issues discussed. It is designed simply to give clients, prospective clients, and other readers general information that will help educate them about the legal challenges they may face in arbitration-related litigation and how engaging a skilled, trustworthy, and experienced arbitration attorney can help them confront those challenges more effectively.
This guide is not intended to be legal advice and it should not be relied upon as such. Nor is it a “do-it-yourself” guide for persons who represent themselves pro se, whether they are forced to do so by financial circumstances or whether they elect voluntarily to do so.
If you want or require arbitration-related legal advice, or representation by an attorney in an arbitration or in litigation about arbitration, then you should request legal advice from an experienced and skilled attorney or law firm with a solid background in arbitration law.
If you have any questions about arbitration, arbitration-law, arbitration-related litigation, this article, or any other legal-related matter, please contact the author, Phil Loree Jr., at (516) 941-6094 or at PJL1@LoreeLawFirm.com.
Philip J. Loree Jr. is a partner and founding member of Loree & Loree. He has 30 years of experience handling matters arising under the Federal Arbitration Act and in representing a wide variety of clients in arbitration, litigation, and arbitration-related litigation. He is a former partner of the litigation departments of the New York City firms of Cadwalader, Wickersham & Taft LLP and Rosenman & Colin LLP (now known as Katten Munchin Rosenman LLP).
Loree & Loree represents private and government-owned-or-controlled business organizations, and persons acting in their individual or representative capacities, and often serves as co-counsel, local counsel or legal adviser to other domestic, and international, law firms requiring assistance or support.
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