U.S. Court Upholds Pre-hearing Subpoena for Non-Party Documents Outside Jurisdiction

December 2000

Under the Security Life Insurance decision* parties to arbitrations can obtain arbitrator-issued subpoenas to obtain pre-hearing discovery of documents held by third parties outside the jurisdiction where the arbitration is taking place, and such subpoenas will be enforced by the federal courts.

The arbitration proceeding arose from a reinsurance contract which Security Life Insurance Company was attempting to enforce. For purposes of pre-hearing discovery, Security asked the arbitrators to issue a subpoena for documents to Transamerica Insurance Company, which was not a party to the arbitration. The arbitration proceeding was in Minnesota, but documents were located in Transamerica's Los Angeles office.

The arbitrators issued the subpoena, and Transamerica refused to comply. Security asked the U.S. District Court in Minnesota to enforce the subpoena. Transamerica argued, among other objections, that the arbitrators' authority to issue subpoenas was limited to hearing subpoenas, and did not extend to pre-hearing subpoenas for discovery purposes. Transamerica also argued that arbitrators sitting in Minnesota had no authority to subpoena documents located in California.

The district court ruled that the subpoena was properly issued by the arbitrators for pre-hearing discovery. In response to Transamerica's argument that the arbitrators could not subpoena documents in another jurisdiction, the court ruled that the subpoena could be enforced in California in the same manner as a judicial subpoena could be enforced for discovery outside the jurisdiction of a court proceeding. Thus, under the court's ruling, as provided in the Federal Rules of Civil Procedure for discovery in court cases, an attorney for Security could cause a subpoena to be issued under the name of the federal district court in California for use in a proceeding in Minnesota.

On appeal, the Eighth Circuit affirmed these rulings of the district court. The Eighth Circuit ruled that although the Federal Arbitration Act provides express authority for arbitrators only to issue hearing subpoenas, there is implicit authority for pre-hearing discovery subpoenas for documents. Similarly, the Eighth Circuit ruled that the fact that documents had to be shipped from the district in which they were located to the district where the arbitration was being held was not a basis for precluding the subpoena from being enforced as to California documents. The Eighth Circuit emphasized, however, that considerations pertaining to subpoenas for witness testimony could be different, and it did not decide that issue.

Source: Richards Butler

*Security Life Insurance Company and Duncanson & Holt, Inc., (8th Cir. Oct. 2, 2000), the U.S. Court of Appeals for the Eighth Circuit.