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Compelling Video Conference Testimony | Arbitral Subpoenas |Section 7 of the Federal Arbitration Act Part II | Businessperson’s Federal Arbitration Act FAQ Guide

May 18th, 2020 Arbitral Subpoenas, Arbitration and Mediation FAQs, Arbitration Law, Arbitration Practice and Procedure, COVID-19 Considerations, FAA Chapter 1, Federal Arbitration Act Enforcement Litigation Procedure, Federal Arbitration Act Section 7, Federal Rules of Civil Procedure, Nuts & Bolts: Arbitration, Section 7, Small Business B-2-B Arbitration, Subpoenas, United States Court of Appeals for the Eleventh Circuit, Video Conference Hearings 3 Comments » By Philip J. Loree Jr.
video conference

Whether a Court can compel enforcement of an arbitral subpoena that commands a witness to appear at a hearing by video conference is a critical one, particularly in view of the ongoing COVID-19 pandemic.

The last instalment of this Businessperson’s Federal Arbitration Act FAQ Guide addressed a couple of key questions concerning Section 7 of the Federal Arbitration Act, which authorizes judicial enforcement of arbitral subpoenas that require non-party witnesses to attend and produce documents at arbitration  hearings. That instalment explained, among other things, how Section 7, construed together with Federal Rule of Civil Procedure 45(c), authorize court enforcement of an arbitral subpoena that “command[s] a person to attend” a “hearing,” but “only if”: (a) “the person resides, is employed, or regularly transacts business in person[]” “within 100 miles” of the hearing. . . ; or (b) the. . . hearing is “within the state where the person resides, is employed, or regularly transacts business in person,” and then only if the person “is a party or a party’s officer[,]” or “is commanded to attend a trial and would not incur substantial expense.” Fed. R. Civ. P. 45(c); see 9 U.S.C. § 7.

That means that courts cannot enforce arbitral subpoenas that purport to compel witnesses outside the territorial boundaries of Fed. R. Civ. P. 45(c) to testify and produce documents at a hearing. And the majority of courts have ruled that Section 7 does not authorize arbitrators to issue judicially-enforceable document or deposition subpoenas, something that federal district courts can do in federal court litigation. (See here.)

But these days—as the COVID-19 pandemic changes the way we interact on a day-to-day basis—whether arbitrators can issue subpoenas requiring persons to appear for a video- or teleconference in lieu of a hearing is an important question, irrespective of whether those witnesses could be compelled to appear in person before the arbitrators under Fed. R. Civ. P. 45(c). To that question we now turn.

Can Arbitrators Issue Enforceable Subpoenas Requiring Attendance at a Video Conference or Teleconference Hearing?

According to a recent, but pre-COVID-19, Eleventh Circuit decision, the answer is “no.” See Managed Care Advisory Grp. v. CIGNA Healthcare, 939 F.3d 1145, 1158-61  (11th Cir. 2019) (“MCA Group”).

In MCA Group the Eleventh Circuit considered whether certain arbitral subpoenas that required certain “non-parties. . . [to] attend a hearing before the arbitrator[,]” which was to take place in Miami, Florida. 939 F.3d at 1160. The non-parties’ “testimony. . . [was] to be taken in [the nonparties’] respective locations across the country and transmitted via video conference.” 939 F.3d at 1160. The subpoenas also “directed the nonparties to bring certain documents to the video conference.” 939 F.3d at 1160.

The Court explained that Section 7 “(1) requir[es] summonsed non-parties to appear in the physical presence of the arbitrator[,]” not simply to participate by “video conference or teleconference; and (2) prohibit[s] pre-hearing discovery.” Accordingly, the Court held that “[t]he district court abused its discretion in enforcing the arbitral [subpoenas] because the court lacked power under Section 7 to order the witnesses to appear at the video conference and provide pre-hearing discovery.” 939 F.3d at 1161. The Court did not address—and did not need to address—the question whether the subpoenas were also unenforceable to because they they purported to compel compliance by persons outside the territorial scope of the subpoena delineated by Fed. R. Civ. P. 45(c).

To be Enforceable under Section 7, Arbitral Subpoenas Must Require Witnesses to Appear Physically before the Arbitrators 

The Court first determined that Section 7’s text requires arbitral subpoenas to compel non-party witnesses to “be in the physical presence of the arbitrator. . . .” 939 F.3d at 1160. Compelling their “virtual” presence is not enough.

The Federal Arbitration Act (originally the United States Arbitration Act), including Section 7, was enacted in 1925. See United States Arbitration Act, Pub. L. No. 68-401, § 7, 43 Stat. 883, 884 (1925). Section 7 authorizes district courts to “compel the attendance of such person or persons before said arbitrator. . . in the same manner provided by law for securing the attendance of witnesses. . . in the courts of the United States.” 9 U.S.C. § 7.

Quoting New Prime v. Oliveira , 139 S. Ct. 532, 539-40 (2019) (blogged here and here), the Court explained that “‘[i]t’s a fundamental canon of statutory construction that words generally should be interpreted as taking their ordinary meaning at the time Congress enacted the statute.’” 939 F.3d at 1160 (quoting New Prime, 139 S. Ct. at 539-40).

The key question, said the Court, is what “attendance” and “before” were understood to mean in 1925, when the Federal Arbitration Act was enacted. Referring to “dictionaries from the time of Section 7’s enactment,” including H.W. Fowler & F.G. Fowler, The Concise Oxford Dictionary of Current English 52 (1926), the Court explained that “a court order compelling the ‘attendance’ of a witness ‘before’ the arbitrator meant compelling the witness to be in the physical presence of the arbitrator.” 939 F.3d at 1160.

“In 1925,” said the Court, ‘attendance’ meant the ‘[a]ct of attending,’ and ‘attend’ meant ‘be present at.’” 939 F.3d at 1160 (quoting H.W. Fowler & F.G. Fowler, at 52). “‘[B]efore’” was defined as “‘in [the] presence of[,]’” while  “‘presence’ meant ‘place where person is,’” and “‘present’ meant ‘[b]eing in the place in question.’” 939 F.3d at 1160 (quoting H.W. Fowler & F.G. Fowler, at 74 & 650).

“Section 7[,]” concluded the Court, “does not authorize district courts to compel witnesses to appear in locations outside the physical presence of the arbitrator, so the court may not enforce an arbitral summons for a witness to appear via video conference.” 939 F.3d at 1160.

Section 7 Prohibits Pre-Hearing Discovery

The Court said “[t]he second issue with the video conference concerns the production of documents[:]” “The summonses do not indicate how the arbitrator will view and consider the documents brought by the non-parties to the video conference.” 939 F.3d at 1160-61.

The Court explained that the district court “attempt[ed]. . . [to] resolv[e] the presentation of the documents” problem by going “beyond the directive of the summonses to indicate that a video conference is possible and permissible because documents can be provided in advance to the attorneys and arbitrator, allowing the arbitrator to make decisions as the evidence is presented.” 939 F.3d at 1161.

But “[t]he fundamental problem with the district court’s attempt to resolve” the document presentation problem “is that providing the necessary documents to the arbitrator and attorneys prior to the hearing constitutes prehearing discovery that is not authorized by the [Federal Arbitration Act].” 939 F.3d at 1161 (citation omitted).  “[T]he provision of documents prior to the hearing,” said the Court, “is not the same as appearing in the physical presence of an arbitrator and bringing documents at the time of the hearing[,]” and “[a]s a result, this requirement is not enforceable.” 939 F.3d at 1161. 

By determining that Section 7 does not authorize prehearing discovery, the Court signaled its agreement with the majority of courts that have, as discussed in the last instalment, held that Section 7 does not authorize such discovery. See Hay Group, Inc. v. E.B.S. Acquisition Corp., 360 F.3d 404, 407 (3d Cir. 2004) (Alito, J.); MCA Group, 939 F.3d at 1161; CVS Health Corp. v. Vividus, LLC, 878 F.3d 703, 708 (9th Cir. 2017); Life Receivables Trust v. Syndicate 102, 549 F.3d 210, 216 (2d Cir. 2008).  

In doing so it agreed with Hay Group’s analysis of why interpreting Section 7 not to authorize prehearing discovery does not yield an “absurd result.” MCA Group, 939 F.3d at 1161. “Enforcing Section 7’s prohibition on pre-hearing discovery,” explained the Court, “does not lead to an absurd result because it will force the parties ‘to consider whether the documents are important enough to justify the time, money, and effort that the subpoenaing parties will be required to expend if an actual appearance before an arbitrator is needed.’” MCA Group, 939 F.3d at 1161 (quoting Hay Group, 360 F.3d at 409).    

That tends to redistribute “bargaining power where ‘the party seeking the documents cannot simply obtain a subpoena requiring the documents to be shipped from one warehouse to another; instead, the party [seeking the documents] will be forced to appear at a proceeding during which the documents are produced.’” MCA Group, 939 F.3d at 1161 (quoting Hay Group, 360 F.3d at 411) (brackets in original). And “enforcing the bar on pre-hearing discovery is beneficial because it will impose some inconvenience on the arbitrator that will induce the arbitrator to weigh whether the production of the documents is necessary.” MCA Group, 939 F.3d at 1161 (citing Hay Group, 360 F.3d at 414 (Chertoff, J., concurring)).

Does MCA Group’s Reasoning Preclude Section 7 Judicial Enforcement of any Arbitral Subpoena that Purports to Permit Attendance at a Hearing by Video Conference?

The answer is “yes.” And, in light of the current COVID-19 crisis, that is a most unfortunate result from a practical matter.

One certainly can’t blame the Court, for at the time MCA Group was decided, nobody had any idea that a few months down the line, we’d be where we are now. And the Court’s holding was based on a sound, textual analysis of Section 7.

Today, courts and arbitrators are holding hearings, depositions, oral arguments, and conferences by video conference or teleconference, including arguments in the U.S. Supreme Court. It is far from clear how long this will continue, and the extent to which telephone or video conferences will be used once they are no longer necessary is also unknown.

For now at least, such adjustments in dispute resolution protocol and procedure are inconvenient, and (especially as respects depositions and evidentiary hearings) less effective and more cumbersome than in person proceedings.  But under MCA Group even these less than satisfactory alternatives are not available to obtain testimony or documents from third-party witnesses.

As the last instalment explained, the ability of parties in arbitration to compel the testimony of third-party witnesses, and to obtain documents from them, is already significantly limited by: (a) the requirement that a party obtain such testimony and documents only by way of a hearing, not through a third-party document or deposition subpoena; and (b) the scope of an arbitral hearing subpoena is significantly restricted by Fed. R. Civ. P. 45(c)’s territorial limitations and Section 7’s requirement that arbitral subpoenas be enforced in the district in which the arbitrators are sitting.  

But in the current situation, where in-person hearings are not practical (and possibly unlawful in certain jurisdictions), MCA Group effectively renders unenforceable any arbitral subpoena directed at a third party. Parties and non-parties may agree to comply with such subpoenas, but they cannot practicably be enforced under the reasoning of MCA Group.

And under MCA Group that is so even if the third-party witness is resides or transacts business within the territorial scope of the subpoena under Federal Rule of Civil Procedure 45(c).    

The next instalment will address the question whether other courts are likely to follow MCA Group, particularly in light of the COVID-19 pandemic, and the heightened importance of teleconferences and video conferences.

Please note. . .

This guide, including the instalments that will follow in later posts, and prior instalments, does not purport to be a comprehensive recitation of the rules and principles of arbitration law pertinent or potentially pertinent to the issues discussed. It is designed simply to give clients, prospective clients, and other readers general information that will help educate them about the legal challenges they may face in arbitration-related litigation and how engaging a skilled, trustworthy, and experienced arbitration attorney can help them confront those challenges more effectively.

This guide is not intended to be legal advice and it should not be relied upon as such. Nor is it a “do-it-yourself” guide for persons who represent themselves pro se, whether they are forced to do so by financial circumstances or whether they elect voluntarily to do so.

If you want or require arbitration-related legal advice, or representation by an attorney in an arbitration or in litigation about arbitration, then you should request legal advice from an experienced and skilled attorney or law firm with a solid background in arbitration law.

Contacting the Author

If you have any questions about arbitration, arbitration-law, arbitration-related litigation, this article, or any other legal-related matter, please contact the author, Phil Loree Jr., at (516) 941-6094 or at PJL1@LoreeLawFirm.com.

Philip J. Loree Jr. is a partner and founding member of Loree & Loree. He has 30 years of experience handling matters arising under the Federal Arbitration Act and in representing a wide variety of clients in arbitration, litigation, and arbitration-related litigation.

Loree & Loree represents private and government-owned-or-controlled business organizations, and persons acting in their individual or representative capacities, and often serves as co-counsel, local counsel or legal adviser to other domestic, and international, law firms requiring assistance or support.

Loree & Loree was recently selected by Expertise.com out of a group of 1,763 persons or firms reviewed as one of Expertise.com’s top 18 “Arbitrators & Mediators” in New York City for 2019, and now for 2020. (See here and here.)

ATTORNEY ADVERTISING NOTICE: Prior results do not guarantee a similar outcome.

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3 Responses to “Compelling Video Conference Testimony | Arbitral Subpoenas |Section 7 of the Federal Arbitration Act Part II | Businessperson’s Federal Arbitration Act FAQ Guide”

  1. Robert Bartkus says:

    Have you considered whether the choice of a state’s revised uniform arbitration act would limit the effect of Managed Care, at least for witnesses in state?

  2. Robert, thanks for your thoughtful comment.

    The availability of state law alternatives that may be more permissive than the FAA present a possible work around. In fact, state court interpretations of FAA Section 7 do not always accord with the federal circuit court interpretations, and the only binding federal precedent in state court is that of the U.S. Supreme Court.

    I’ll try to incorporate these issues into our next post on Section 7, including, perhaps, some of the potential procedural hurdles that can arise.

    All the best — Phil

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