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Wash. Nat'l Ins. Co. v. OBEX Grp. LLC

Wash. Nat'l Ins. Co. v. OBEX Grp. LLC

United States Court of Appeals for the Second Circuit

November 5, 2019, Argued; May 1, 2020, Decided

Docket No. 19-225-cv

Opinion

 [*128]  Sack, Circuit Judge:

This case concerns section 7 of the Federal Arbitration Act (the "FAA"). Section 7 provides that in an arbitration, the 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. If a person so summoned refuses to obey the summons,

upon petition the United States district court for the district in which such arbitrators, or a majority of them, are sitting  [*129]  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 [**3]  or refusal to attend in the courts of the United States.

In an arbitration to which the petitioner-appellee Washington National Insurance Company was a party, the arbitration panel summoned the respondents-appellants OBEX Group LLC and Randall Katzenstein to testify at a hearing and to bring with them specified documents. The respondents did not appear. The petitioner, invoking the court's diversity jurisdiction, then petitioned the United States District Court for the Southern District of New York to enforce the summonses under section 7.

The respondents moved to dismiss the petition. They argued that the court lacked subject matter jurisdiction because it was required to "look through" the section 7 petition to the parties to the underlying arbitration, which were not diverse. They further argued that even if the court were to look only to the parties to the petition, the court lacked jurisdiction because the petitioner had failed to join a necessary and indispensable party whose joinder would destroy diversity and the petition failed to meet the amount in controversy requirement. The district court disagreed and denied the motion.

The respondents next moved to quash the summonses. They argued that [**4]  the summonses were invalid under section 7 because they required impermissible pre-hearing discovery and privileged information, and were duplicative, overbroad, and burdensome. The district court again disagreed and denied the motion.

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958 F.3d 126 *; 2020 U.S. App. LEXIS 14062 **; 106 Fed. R. Serv. 3d (Callaghan) 1386; 2020 WL 2092597

WASHINGTON NATIONAL INSURANCE COMPANY, Petitioner-Appellee, v. OBEX GROUP LLC, AND RANDALL KATZENSTEIN, Respondents-Appellants.

Prior History: The petitioner-appellee Washington National Insurance Company petitioned the United States District Court for the Southern District of New York under section 7 of the Federal Arbitration Act to enforce two arbitration summonses requiring two non-parties to the arbitration, the respondents-appellants OBEX Group LLC and Randall Katzenstein, to testify at a hearing and to produce certain documents. The respondents moved to dismiss the petition, alleging lack of subject matter jurisdiction under 28 U.S.C. § 1332, and to quash the summonses. They asserted that the district court was obliged to "look through" the section 7 [**1]  petition to the parties to the underlying arbitration, which were not diverse, to determine diversity jurisdiction, and that it was required to quash the summonses because, inter alia, they were overbroad, unduly burdensome, and required production of privileged documents. The district court (Vincent L. Briccetti, Judge) denied both motions. The respondents challenge these rulings on appeal. We conclude that the district court had subject matter jurisdiction based on the diversity of citizenship of the parties to the petition. We conclude also that the district court was not required to consider the respondents' [**2]  challenges to the petition in the first instance. Accordingly, the judgment of the district court is AFFIRMED.

Wash. Nat'l Ins. Co. v. Obex Grp. LLC, 2019 U.S. Dist. LEXIS 9300 (S.D.N.Y., Jan. 18, 2019)

CORE TERMS

arbitration, summonses, district court, documents, claimants, parties, respondents', subpoenas, diversity, arbitration panel, summons, sitting, attendance, subject matter jurisdiction, amount in controversy, diversity jurisdiction, motion to dismiss, necessary party, citizenship, pre-hearing, reinsurance, join, indispensable party, instructions, obligations, appearing, discovery, courts, deny a motion, email

Business & Corporate Compliance, Alternative Dispute Resolution, Arbitration, Federal Arbitration Act, Civil Procedure, Appeals, Standards of Review, Clearly Erroneous Review, Preliminary Considerations, Jurisdiction, Subject Matter Jurisdiction, De Novo Review, Federal Arbitration Act, Scope, Diversity Jurisdiction, Citizenship, Individuals, Orders to Compel Arbitration, Joinder of Parties, Compulsory Joinder, Indispensable Parties, Necessary Parties, Amount in Controversy, Determination, Governments, Legislation, Interpretation, Service of Process, Service of Summons, Issuance of Summons