Beck's Superior Hybrids, Inc. v. Monsanto Co. & Monsanto Technology LLC

940 N.E.2d 352, 2011 Ind. App. LEXIS 13, 2011 WL 96481
CourtIndiana Court of Appeals
DecidedJanuary 12, 2011
Docket29A05-1008-MI-489
StatusPublished
Cited by7 cases

This text of 940 N.E.2d 352 (Beck's Superior Hybrids, Inc. v. Monsanto Co. & Monsanto Technology LLC) is published on Counsel Stack Legal Research, covering Indiana Court of Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Beck's Superior Hybrids, Inc. v. Monsanto Co. & Monsanto Technology LLC, 940 N.E.2d 352, 2011 Ind. App. LEXIS 13, 2011 WL 96481 (Ind. Ct. App. 2011).

Opinions

[354]*354OPINION

NAJAM, Judge.

STATEMENT OF THE CASE

In 2002, Monsanto Company and Monsanto Technology, LLC (collectively, "Monsanto") entered into a corn license agreement and a soybean license agreement with Pioneer Hi-Bred International and its parent company, E.I. DuPont de Nemours & Company (collectively, "DuPont"). Pursuant to those agreements, any disputes between the parties were to be resolved by arbitration in New York City. On May 4, 2009, Monsanto filed a demand for arbitration against DuPont, alleging that DuPont had engaged in a sublicensing scheme involving numerous third parties throughout the United States, including Beck's Superior Hybrids, Inc. ("Beek's") in Indiana. Thereafter, at Monsanto's request the arbitration panel issued a subpoena duces tecum to Beck's, ordering Beck's to appear at a preliminary hearing, in Indiana, before one of the panel members and to produce business records relating to Monsanto's arbitration claim.

Beck's refused to comply with the subpoena on the grounds that the Federal Arbitration Act, 9 U.S.C. §§ 1 to 16 (2010) ("the Act"), required Monsanto to seek enforcement of its nonparty subpoena in "the United States district court for the district" in which the arbitration panel was sitting, the Southern District of New York. See 9 U.S.C. § 7 (2010). Cognizant of the fact that it lacked subject matter jurisdiction to file a petition in the New York federal court, and that that court lacked personal jurisdiction over Beck's, Monsanto instead filed a petition to assist in the Hamilton Superior Court, pursuant to Indiana Trial Rule 28(E), to compel Beck's to comply with the subpoena. The trial court agreed with Monsanto and ordered Beck's to comply with the arbitration panel's subpoena.

Beck's now appeals, asserting that Section 7 of the Act preempts Indiana Trial Rule 28(E). We agree and hold that Section 7 is unambiguous: to enforce an arbitration panel's subpoena against a nonparty, the party seeking enforcement must file its petition "in the United States district court for the district" where the arbitration panel, or a majority of its members, is sitting. See id. That district court is in the Southern District of New York. We also hold that Monsanto's lack of federal subject matter jurisdiction to enforce its subpoena does not justify ignoring the plain text of Section 7. To the contrary, the statutory gap in enforceability reflects a clear policy choice by Congress that we may not reconsider. Therefore, we reverse the trial court's order and remand with instructions that the court dismiss Monsanto's petition to assist.

FACTS AND PROCEDURAL HISTORY1

In 2002, Monsanto entered into two seed license agreements with DuPont. Pursuant to those agreements, any dispute between the parties is to be resolved by "arbitration proceedings[, which] shall be held in New York, New York." Appellant's App. at 145. On May 4, 2009, Monsanto filed a demand for arbitration and statement of claim against DuPont in New York, alleging that DuPont was engaged in a sublicensing scheme whereby DuPont distributed Monsanto's "Roundup Ready technology" to unaffiliated third parties throughout the United States, including Beck's, an Indiana corporation. See Ap-pellees' Br. at 5. This scheme, according to Monsanto, allows DuPont to charge a [355]*355lower price to third parties for Monsanto's licensed seed than Monsanto charges for them, and it is allegedly in direct violation of the Monsanto DuPont agreements.

On November 12, 2009, Monsanto requested the arbitration panel to issue eight nonparty subpoenas duces tecum to the third parties that had allegedly purchased Monsanto's products through DuPont. DuPont objected to the subpoena requests on several grounds. On December 11, the arbitration panel narrowed the scope of the requested subpoenas and then agreed to issue them.

On February 1, 2010, Monsanto served Beck's with a subpoena issued by the New York arbitration panel. On March 2, Beck's counsel informed Monsanto of Beck's legal position on whether it had to comply with that subpoena:

in light of the location of the arbitration, the provisions in your license agreement{[s] with [DuPont] ..., and the domicile[ ] of our non-party client| ], we have concluded that this New [] York-based arbitration panel [] has no power to issue subpoenas to non-parties and has no jurisdiction over our client []. In addition to these deficiencies in authority and process, the requests are over-broad, unduly burdensome and seek our client['s] confidential and proprietary information. Our client[ ] will not be providing the documents requested in the subpoenal.]

Appellant's App. at 60 (emphasis added).

In response to Beck's objections, and similar objections from the other alleged customers of DuPont, on March 18 Monsanto asked the arbitration panel to issue revised subpoenas. In particular, Monsanto stated:

rather than proceed with a very expensive and time-consuming process of opening up miscellaneous matters in each jurisdiction to litigate all the objections raised[,] ... Monsanto proposes a compromise favored by courts construing [the Act]. Consistent with precedent from the Second Circuit, Monsanto requests that the Tribunal issue revised subpoenas that require each of the [customers] to appear at a preliminary hearing in front of one member of the Panel and produce relevant documents (with no deposition).

Id. at 149. In other words, Monsanto asked the arbitration panel to apply Section 7 of the Act to compel Beck's and others

to appear at a preliminary proceeding before a single member of the Panel at a location in close proximity to [Beck's] principal place of business; ... to produce relevant documents at the preliminary proceeding ...; and ... to be prepared to testify at the preliminary hearing to establish that the documents produced are authentic....

Id. at 151. On March 31, the arbitration panel issued the revised subpoenas but did not state whether the subpoenas could be enforced under the Act or state procedural law.

On April 22, Monsanto served Beck's with the revised subpoenas. That same day, counsel for Beck's informed Monsanto that Beck's would not comply with the revised subpoena. On June 11, Monsanto filed a petition to assist in the Hamilton Superior Court pursuant to Indiana Trial Rule 28(E). After a hearing, on August 4 the trial court granted Monsanto's petition and ordered Beck's to comply with the arbitration panel's revised subpoena by attending a preliminary hearing before a single arbitrator in Atlanta, Indiana.2 On [356]*356August 10, the court issued an amended order, in which the court clarified that any testimony provided by Beck's was to be limited to authentication of business ree-ords.3 This appeal ensued.

DISCUSSION AND DECISION

Standard of Review

Beck's contends that the trial court's order that it comply with the arbitration panel's revised subpoena is erroneous because Section 7 of the Act preempts Indiana Trial Rule 28(B). As this court recently stated:

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940 N.E.2d 352, 2011 Ind. App. LEXIS 13, 2011 WL 96481, Counsel Stack Legal Research, https://law.counselstack.com/opinion/becks-superior-hybrids-inc-v-monsanto-co-monsanto-technology-llc-indctapp-2011.