Summary
granting in part petitioner's motion to enforce arbitration subpoena over objection that documents and information sought were confidential, noting that opposing party's "concerns about the confidentiality of the information sought can be addressed by the panel"
Summary of this case from Odfjell ASA v. Celanese AGOpinion
Civ. File No. 02-4304 (PAM/JSM)
January 9, 2004
ORDER
This matter is before the Court on Defendant's Petition for an Order Enforcing Arbitration Panel's Deposition Subpoena Duces Tecum to Third-Party Schlumberger Limited.
BACKGROUND
The underlying dispute between SchlumbergerSema and Xcel Energy is currently pending before an arbitration panel in Minneapolis, Minnesota. In November 2003, Xcel sought a deposition subpoena duces tecum from the panel. That subpoena compelled documents and deposition testimony from non-party Schlumberger Limited. Schlumberger Limited opposed the entry of the subpoena to no avail, and the panel issued the subpoena Xcel sought on November 20, 2003. Schlumberger Limited failed to appear or to produce documents.
Xcel now seeks to enforce the subpoena. Schlumberger Limited opposes enforcement of the subpoena on several grounds. First, Schlumberger Limited argues that, pursuant to Fed.R.Civ.P. 37(a)(1), only the court in which the discovery is pending may order a non-party to comply with a subpoena. Because the place of the deposition and document discovery sought by Xcel is New York, Schlumberger Limited contends that only a New York court can order Schlumberger Limited to comply with the subpoena. Next, Schlumberger Limited contends that this Court lacks personal jurisdiction over it and therefore cannot enforce the subpoena. Alternatively, Schlumberger Limited argues that the documents and information sought by Xcel are not material to the arbitration and that this Court should overturn the panel's decision that such documents and information are material. Finally, Schlumberger Limited asserts that Xcel's petition should be denied because the documents and information sought are confidential.
DISCUSSION
This case involves the interplay between the Federal Arbitration Act ("FAA"), 9 U.S.C.
§ 1 et seq., and the Federal Rules of Civil Procedure. In pertinent part, the FAA provides:
The arbitrators . . . 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 . . . [I]f any person or persons so summoned to testify shall refuse or neglect to obey said summons, upon petition to the United States district court for the district in which such arbitrators . . . are sitting may compel the attendance of such person or persons before said arbitrator [s].9 U.S.C. § 7. Although on its face this section appears only to authorize an arbitration panel to issue a subpoena for testimony and document production at a hearing, the Eighth Circuit has held that implicit in this section is "the power to order the production of relevant documents for review by a party prior to the hearing." In the Matter of Arbitration Between Sec. Life Ins. Co. of Am. Duncanson Holt, 228 F.3d 865. 870-71 (8th Cir. 2000). However, the panel's authority to compel production of non-party witnesses for deposition testimony is unsettled. Id. at 872; see also In the Matter of the Arbitration Between Integrity Ins. Co. Am. Centennial Ins. Co., 885 F. Supp. 69, 71 (S.D.N.Y.) (finding that § 7 does not authorize arbitrator to subpoena non-party witnesses for pre-hearing depositions); see generally Timothy C. Krsul, The Limits on Enforcement of Arbitral Third-Party Subpoenas, 57 Disp. Resol. J. 30 (Nov. 2002-Jan. 2003).
In Sec. Life Ins. Co., the Eighth Circuit confronted the conflict between § 7 and Fed.R.Civ.P. 45(b)(2). Rule 45(b)(2) limits a federal district court's subpoena power to within 100 miles of the district. The district court in Sec. Life Ins. Co. compelled a non-party to comply with an arbitrator's subpoena issued in Minnesota to the non-party in California, much more than 100 miles from Minnesota. The court of appeals did not reach the issue of whether the deposition subpoena was proper, but upheld the district court's decision as to the document subpoena. According to the court, a subpoena for production of documents need not comply with Rule 45(b)(2)'s territorial limit "because the burden of producing documents need not increase appreciably with an increase in the distance those documents must travel."
In this case, Schlumberger Limited contends that this Court does not have the authority to compel compliance with the subpoena issued by the panel. Section 7 provides for enforcement of panel subpoenas by the "United States district court for the district in which the [the panel is] sitting." 9 U.S.C. § 7. Rule 37, however, requires that an order seeking enforcement of a subpoena to a non-party "shall be made to the court in the district where the discovery is being, or is to be, taken." Fed.R.Civ.P. 37(a)(1). Thus this Court, as the court for the district in which the arbitration panel is sitting, has the exclusive authority to enforce that panel's subpoenas, but Rule 37 requires that a party seeking to enforce the subpoena against Schlumberger may do so only in the United States District Court for the Eastern District of New York.
Xcel urges the Court to ignore Rule 37's requirements in light of the strong federal policy favoring arbitration. Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24 (1983). However, the Eighth Circuit, while noting the "Weil-recognized federal policy favoring arbitration," Sec. Life Ins. Co., 228 F.3d at 871, also implicitly recognized that the FAA cannot override the provisions of the Federal Rules of Civil Procedure. Id. at 872.
Thus, this Court is faced with another "thorny question" posed by a conflict between the FAA and the Rules. Id. If, as Schlumberger Limited asserts, Rule 37 constitutes a limited grant of jurisdiction in favor of the court for the district where discovery is sought, then an Order compelling compliance with the panel's subpoena would be unconstitutional. On the other hand, if Xcel cannot secure an Order from this Court, Xcel is left without a remedy because § 7 allows only this Court to enter such an Order.
The solution lies in the distinction between the pre-hearing production of documents and the pre-hearing production of witnesses. As the Eighth Circuit and other courts have found, the production of documents is less onerous and imposes a lesser burden than does a witness deposition.Sec. Life Ins. Co., 228 F.3d at 872; Integrity Ins. Co., 885 F. Supp. at 73. To facilitate the purposes of the FAA, the Court holds that it has the power to compel compliance with the arbitration panel's document subpoena, despite the apparent conflict with the provisions of Rule 37. However, the Court does not have the power to enforce the panel's subpoena purporting to compel the pre-hearing deposition of a non-party witness. Indeed, the Court has doubts about whether such a subpoena is proper in the first instance.
The remainder of Schlumberger Limited's arguments about the enforcement of the document subpoena are without merit. In particular, personal jurisdiction is not relevant to the enforcement of a subpoena. Further, the Eighth Circuit has held that a district court should not revisit an arbitration panel's determination that information is material. Sec. Life. Ins. Co., 228 F.3d at 871. Finally, Schlumberger Limited's concerns about the confidentiality of the information sought can be addressed by the panel.
CONCLUSION
The Court determines that § 7 of the Federal Arbitration Act allows this Court to enforce the panel's subpoena as to documents, but not as to deposition testimony. Accordingly, IT IS HEREBY ORDERED that
1. Xcel Energy's Petition to Enforce Subpoena (Clerk Doc. No. 28) is GRANTED in part and DENIED in part; and
2. Schlumberger Limited must immediately produce the documents required by the arbitration panel's November 26, 2003, Corrected Subpoena Duces Tecum.