Ninth Circuit Joins Majority Of Circuits On Issue That Divides The Circuits.
Based on a reading of the "plain meaning" of the Federal Arbitration Act, specifically, 9 U.S.C. section 7, the Ninth Circuit holds: "[T]he FAA does not grant arbitrators the power to order third parties to produce documents prior to an arbitration hearing."CVS Health Corporation, et al. v. Vividus, LLC, et al., No. 16-16187 (9th Cir. 12/21/17) (Gritzner,1 Gould, Murguia). In so holding, the 9th Circuit joins the 2nd, 3rd, and 4th Circuits.
The 9th Circuit focused on the language in section 9, providing arbitrators the power to "summon in writing any person to attend before them . . . as a witness," and to compel such person "to bring with him or them" relevant documents. Because the power to summon a person to bring documents is tied to a person who is summoned "to attend" before the arbitrator, the Court read the plain meaning to be that document production only can happen at the arbitrator's hearing. There is no explicit provision in the FAA for pre-hearing discovery, and the policy rationale is that this places less of a burden on third parties who have not agreed to the jurisdiction of the arbitrator.
COMMENT: The Eighth Circuit takes the position that the arbitrator has an implicit power to subpoena relevant documents for production pre-hearing, and that such power is implicit in the power to summon relevant documents for production at a hearing.
The Ninth Circuit holding in CVS Health Corporation highlights a limitation in arbitration that will burden the party to the arbitration most in need of discovery from third parties. Of course, as between the parties to the arbitration, the parties could contractually agree to more expansive discovery, and that would not affect the right of third parties to resist pre-hearing discovery.
1The Hon. James. E. Gritzner, USDC Judge for S. District of Iowa, sitting by designation.
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