Hay Grp., Inc. v. E.B.S. Acquisition Corp. - 360 F.3d 404 (3d Cir. 2004)

Rule:

The plain meaning of 9 U.S.C.S. § 7 does not empower an arbitrator to issue prehearing discovery subpoenas to nonparties: Nowhere does the Federal Arbitration Act (FAA) grant an arbitrator the authority to order non-parties to appear at depositions, or the authority to demand that non-parties provide the litigating parties with documents during pre-hearing discovery. By its own terms, the FAA's subpoena authority is defined as the power of the arbitration panel to compel non-parties to appear "before them"; that is, to compel testimony by non-parties at the arbitration hearing.

Facts:

Hay Group ("Hay"), a management consulting firm, commenced an arbitration proceeding in Philadelphia, Pennsylvania, against David A. Hoffrichter, Hay’s former employee, alleging that the latter violation the non-solicitation clause. In an attempt to obtain information for the arbitration, Hay served subpoenas for documents on PriceWaterhouseCoopers ("PwC") and E.B.S., Hoffrichter new employer’s which were non-parties to the arbitration. Hay sought to have the documents produced prior to the panel's arbitration hearing. PwC and E.B.S. objected to the subpoenas, but the arbitration panel disagreed. When PwC and E.B.S. still refused to comply with the subpoenas, Hay asked the United States District Court for the Eastern District of Pennsylvania to enforce the subpoenas. PwC and E.B.S. again objected, claiming, among other things, that the Federal Arbitration Act ("FAA") did not authorize the panel to issue subpoenas to non-parties for pre-hearing document production and that the Federal Rules of Civil Procedure prohibited the District Court from enforcing a subpoena on a non-party for documents outside the Court's territorial jurisdiction. The district court issued a decision enforcing the subpoenas, holding that the FAA authorized arbitration panels to issue subpoenas on non-parties for pre-hearing document production. PwC and E.B.S. appealed.

Issue:

Did the Federal Arbitration Act authorize the arbitration panels to issue subpoenas on non-parties for pre-hearing document production?

Answer:

No.

Conclusion:

The appellate court determined that, under 9 U.S.C.S. § 7 of the Federal Arbitration Act, the non-party new employers could be compelled to bring documents to the arbitration proceeding but could not simply be subpoenaed to produce documents. The court noted that section 7's language unambiguously restricted the arbitrator's subpoena power to situations in which the non-party had been called to appear in the physical presence of the arbitrator and to hand over the documents at that time. Accordingly, the appellate court reversed the order of the district court.