Hay Grp Inc v. EBS Acquisition Corp

• Court: Court of Appeals for the Third Circuit
• Decided: March 12, 2004
• Docket: 03-1161P
• Status: Published

Opinion

Opinions of the United 2004 Decisions States Court of Appeals for the Third Circuit

3-12-2004

Hay Grp Inc v. EBS Acquisition Corp Precedential or Non-Precedential: Precedential

Docket No. 03-1161P

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Recommended Citation "Hay Grp Inc v. EBS Acquisition Corp" (2004). 2004 Decisions. Paper 891. http://digitalcommons.law.villanova.edu/thirdcircuit_2004/891

This decision is brought to you for free and open access by the Opinions of the United States Court of Appeals for the Third Circuit at Villanova University School of Law Digital Repository. It has been accepted for inclusion in 2004 Decisions by an authorized administrator of Villanova University School of Law Digital Repository. For more information, please contact Benjamin.Carlson@law.villanova.edu. PRECEDENTIAL KEVIN M. TOTH Reed Smith L.L.P. UNITED STATES COURT OF 2500 One Liberty Place APPEALS 1650 Market Street FOR THE THIRD CIRCUIT Philadelphia, PA 19103 ____________ PETER C. WOODFORD (argued) No. 03-1161/1162 CHRISTOPHER E. PAETSCH ____________ SEYFARTH SHAW 55 East Monroe Street HAY GROUP, INC. Suite 4200 Chicago, Illinois 60603 v. Counsel for Appellant, E.B.S. ACQUISITION CORP. ET AL, PriceWaterhouseCoopers, L.L.P. PRICEWATERHOUSECOOPERS L.L.P. MARY J. HACKETT Reed Smith, L.L.P. Appellants 435 Sixth Avenue Pittsburgh, PA 15230 ____________________ KEVIN M. TOTH ON APPEAL FROM THE UNITED Reed Smith L.L.P. STATES DISTRICT COURT 2500 One Liberty Place FOR THE EASTERN DISTRICT OF 1650 Market Street PENNSYLVANIA Philadelphia, PA 19103

District Court Judge: Honorable Mary A. Counsel for Appellant, McLaughlin E.B.S. Acquisition Corp. (D.C. No. 02-MC-252, 253 (consolidated)) NICHOLAS SANSERVINO, Jr. (argued) ____________________ WILLIS J. GOLDSMITH SARA B. McCLURE Argued: September 15, 2003 Jones Day 51 Louisiana Avenue, N.W. Before: ALITO, AMBRO, and Washington, D.C. 20001-2113 CHERTOFF, Circuit Judges Counsel for Appellee (Opinion Filed: March 12, 2004)

____________________ produced prior to the panel’s arbitration OPINION OF THE COURT hearing. PwC and E.B.S. objected to these ____________________ subpoenas, but the arbitration panel disagreed. When PwC and E.B.S. still ALITO, Circuit Judge: refused to comply with the subpoenas, Hay asked the United States District Court for PriceWaterhouseCoopers (“PwC”) the Eastern District of Pennsylvania to and E.B.S., non-parties to an arbitration, enforce the subpoenas. PwC and E.B.S. seek to avoid compliance with an again objected, claiming, among other arbitration panel’s subpoena requiring things, that the Federal Arbitration Act them to turn over documents prior to the (“FAA”) did not authorize the panel to panel’s hearing. The District Court issue subpoenas to non-parties for pre- enforced the subpoena. We reverse. hearing document production and that the Federal Rules of Civil Procedure I. prohibited the District Court from enforcing a subpoena on a non-party for Hay Group (“H ay”) is a documents outside the Court’s territorial management consulting firm. David A. jurisdiction. Hoffrichter left Hay’s employment and joined PwC in September 1999. In early In November 2002, the District 2002, PwC sold the division employing Court issued a decision enforcing the Hoffrichter to E.B.S. subpoenas and ordering the parties to resolve any remaining differences. In Hoffrichter’s separation agreement doing so, the District Court accepted the from Hay contained a clause that forbade view of the Eighth Circuit and several him from soliciting any of Hay’s district courts that the FAA authorizes employees or clients for one year. The arbitration panels to issue subpoenas on agreement further provided for arbitration non-parties for pre-hearing document to resolve any dispute arising under the production. The District Court also held agreement. In February 2000, Hay that even under the view of the Fourth commenced such an arbitration proceeding Circuit, which permits such production in Philadelphia, Pennsylvania, against only when there is a “special need,” the Hoffrichter, claiming that he had violated panel’s subpoenas would be valid. In the non-solicitation clause. addition, the District Court held that it had the power to enforce subpoenas on non- In an attempt to obtain information parties for document production even if for the arbitration, Hay served subpoenas the documents were located outside the for documents on E.B.S. at its Pittsburgh territory within which the court’s office and on PwC at its Philadelphia subpoenas could be served. office. Hay sought to have the documents

2 PwC and E.B.S. then filed the may issue a subpoena requiring pre- present appeal. The District Court denied hearing document production by a person their motion to stay its order pending or entity that is not bound by the appeal, but our Court granted their arbitration agreement (hereinafter a “non- emergency motion for a stay. party”).

II. In interpreting a statute, we must, of course, begin with the text. “The Supreme A. Court has repeatedly explained that recourse to legislative history or On appeal, PwC and E.B.S. first underlying legislative intent is unnecessary argue that, under Section 7 of the FAA, 9 when a statute’s text is clear and does not U.S.C. § 7, a non-party witness may be lead to an absurd result.” United States ex compelled to bring documents to an rel. Mistick PBT v. Housing Authority of arbitration proceeding but may not simply City of Pittsburgh, 186 F.3d 376, 395 (3d be subpoenaed to produce documents. We Cir. 1999). Furthermore, a court’s policy agree. preferences cannot override the clear meaning of a statute’s text. See Eaves v. An arbitrator’s authority over County of Cape May, 239 F.3d 527, 531- parties that are not contractually bound by 32 (3d Cir. 2000)(“We do not find the the arbitration agreement is strictly limited reasoning of the courts adopting the to that granted by the Federal Arbitration ‘majority view’ persuasive, because they Act. See, e.g., Legion Insurance ignore a textual analysis of § 1961(a) and, Company v. John Hancock Mutual Life instead, base their result on policies they Ins. Co., No. 01-162, 2001 WL 1159852, find to underlie post-judgment interest and 2001 U.S. Dist. LEXIS 15911 at *3 (E.D. attorney's fee awards.”) Pa. Sept. 5, 2001)(“It is clear, and undisputed, that the cited statute is the only Section 7 of the FAA provides as source of the authority for the validity and follows: enforceability of the arbitrators’ subpoena [over a nonparty]”); Integrity Ins. Co., in The arbitrators selected Liquidation, v. Am. Centennial Ins. Co., either as prescribed in this 885 F. Supp. 6 9, 71 (S.D .N.Y . title [9 U.S.C. §§ 1 et seq.] 1995)(“Because the parties to a contract or otherwise, or a majority cannot bind nonparties, they certainly of them, may summon in cannot grant such authority to an writing any person to arbitrator. Thus, an arbitrator’s power attend before them or any over nonparties derives solely from the of them as a witness and in FAA.”). Accordingly, we must look to the a proper case to bring with FAA to determine whether an arbitrator him or them any book,

3 record, document or paper This language speaks which may be deemed unambiguously to the issue before us. The material as evidence in the only power conferred on arbitrators with case. The fees for such respect to the production of documents by attendance shall be the same a non-party is the power to summon a non- as the fees of witnesses party “to attend before them or any of before masters of the United them as a witness and in a proper case to States courts. S a id bring with him or them any book, record, summons shall issue in the document or paper which may be deemed name of the arbitrator or material as evidence in the case.” 9 U.S.C. arbitrators, or a majority of § 7(emphasis added). The power to them, and shall be directed require a non-party “to bring” items “with to the said person and shall him” clearly applies only to situations in be served in the same which the non-party accompanies the items manner as subpoenas to to the arbitration proceeding, not to appear and testify before situations in which the items are simply the court; if any person or sent or brought by a courier. In addition, persons so summoned to the use of the word “and” makes it clear testify shall refuse or that a non-party may be compelled “to neg lect to obey said bring” items “with him” only when the summons, upon petition to non-party is summoned “to attend before the United States district [the arbitrator] as a witness.” Thus, court for the district in Section 7's language unambiguously which such arbitrators, or a restricts an arbitrator’s subpoena power to majority of them, are sitting situations in which the non-party has been may compel the attendance called to appear in the physical presence of of such person or persons the arbitrator and to hand over the before said arbitrator or documents at that time.1 arbitrators, or punish said person or persons for contempt in the same 1 manner as provided by law Some states have recently adopted for securing the attendance versions of the Uniform Arbitration Act, of witn esses o r their which differs from the Federal punishment for neglect or Arbitration Act. Some of these state refusal to attend in the statutes explicitly grant arbitrators the courts of the United States. power to issue pre-hearing document production subpoenas on third parties. 9 U.S.C.§ 7 (emphasis added). See, e.g., 10 Del. Code §5708(a) (2003)(“The arbitrators may compel the attendance of witnesses and the

4 This interpretation is supported by or a subpoena for the the interpretation of similar language in a production of documentary previous version of Federal Rule of Civil evidence, signed and sealed Procedure 45. From its adoption in 1937 but otherwise in blank, to a until its amendment in 1991, Rule 45 did party requesting it, who not allow federal courts to issue pre- shall fill it in before service. hearing document subpoenas on non- (b) For Production of parties. This restriction was based on a Documentary Evidence. A reading of the first two paragraphs of the subpoenamay alsocommand thepersontowhom it rule, which provided as follows: is directed to produce th e b o o k s , (a) For Attendance of p a p e r s , Witnesses; Form; documents, or Issuance. Every subpoena tangible shall be issued by the clerk t h i n g s under the seal of the court, designated shall state the name of the therein; but court and the title of the the court, action, and shall command upon motion each person to whom it is m a d e directed to attend and give promptly and testimony at a time and in any event place therein specified. The at or before clerk shall issue a subpoena, the time specified in the subpoena f o r production of books, records, contracts, c o m p l i a n ce papers, accounts, and all other th er ew ith, documents and evidence, and shall have may (1) quash the power to administer oaths.”); 42 or modify the Pa.C.S.A. § 7309 (“The arbitrators may subpoena if it issue subpoenas in the form prescribed i s by general rules for the attendance of unreasonable witnesses and for the production of a n d books, records, documents and other oppressive or evidence.”) The language of these state (2) condition statutes clearly shows how a law can give denial of the authority to an arbitrator to issue pre- motion upon hearing document-production orders on t h e third parties.

5 advancement to a deposition. Nowhere in the rule is it by the person stated that documents can be subpoenaed in whose alone, that is, without requesting their behalf the production in conjunction with a subpoena is deposition or trial”); 139 F.R.D. 197, 205- issued of the 206 (“Under the new Rule 45, a subpoena reasonable duces tecum seeking the production of c o s t o f documents (or other materials) from a producing the nonparty may be used independently of the books, papers, regular testimonial subpoena; the two are documents, or no longer wedded, as they were under the ta n g ib le prior version of Rule 45.”). things. Some courts have argued that the Fed. R. Civ. Proc. 45 (1990)(emphasis language of Section 7 implies the power to added). issue such pre-hearing subpoenas. See In re Security Life Insurance Co. of America, Under this version of Rule 45(a), a 228 F.3d 865, 870-71 (8th Cir. 2000)(“We subpoena was required to command the thus hold that implicit in an arbitration person to whom it was directed “to attend panel’s power to subpoena relevant and give testimony.” The court could then documents for production at a hearing is add a requirement that the subpoenaed the power to order the production of witness bring documents with him. See relevant documents for review by a party Fed. R. Civ. Proc. 45(b). The accepted prior to the hearing.”); Meadows view was that nothing in Rule 45 gave the Indemnity Co., Ltd. v. Nutmeg Insurance court the power to issue documents-only Co., 157 F.R.D. 42, 45 (M.D. Tenn. subpoenas to non-parties. See Fed. R. Civ. 1994)(“The power of the panel to compel P. 45, Committee Notes, 1991 Amendment production of documents from third- Subdivision (a)(“Fourth, Paragraph (a)(1) parties for the purposes of a hearing authorizes the issuance of a subpoena to implicitly authorizes the lesser power to compel a nonparty to produce evidence compel such documents for arbitration independent of any deposition. This purposes prior to a hearing.”). revision spares the necessity of a deposition of the custodian of evidentiary We disagree with this power-by- material required to be produced.”); implication analysis. By conferring the Turner v. Parsons, 596 F.Supp. 185, 186 power to compel a non-party witness to (E.D. Pa. 1984)(“Certainly, this rule bring items to an arbitration proceeding permits a non-party to be subpoenaed for a while saying nothing about the power deposition. Additionally, this non-party simply to compel the production of items can be required to bring certain documents without summoning the custodian to

6 testify, the FAA implicitly withholds the circumscribing an arbitration panel’s latter power. If the FAA had been meant power to affect those who did not agree to to confer the latter, broader power, we its jurisdiction. See Legion Ins. Co. 2001 believe that the drafters would have said U.S. Dist. LEXIS 15911 at *4 (“the so, and they would have then had no need authority of arbitrators with respect to non- to spell out the more limited power to parties who have never agreed to be compel a non-party witness to bring items involved in arbitration is severely with him to an arbitration proceeding. As limited”). The requirement that document mentioned above, until its amendment in production be made at an actual hearing 1991, Rule 45 of the Federal Rules of may, in the long run, discourage the Civil Procedure was framed in terms quite issuance of large-scale subpoenas upon similar to Section 7 of the FAA, but courts non-parties. This is so because parties that did not infer that, just because they could consider obtaining such a subpoena will be compel a non-party witness to bring items forced to consider whether the documents with him, they could also require a non- are important enough to justify the time, party simply to produce items without money, and effort that the subpoenaing being subpoenaed to testify. parties will be required to expend if an actual appearance before an arbitrator is Since the text of Section 7 of the needed. Under a system of pre-hearing FAA is straightforward, we must see if the document production, by contrast, there is result is absurd. See United States ex rel. less incentive to limit the scope of Mistick PBT, 186 F.3d at 395. We discovery and more incentive to engage in conclude that it is not. Indeed, we believe fishing expeditions that undermine some that a reasonable argument can be made of the advantages of the supposedly that a literal reading of Section 7 actually shorter and cheaper system of arbitration. furthers arbitration’s goal of “resolving See COM SAT Corp. v. Natl. Science disputes in a timely and cost efficient Foundation, 190 F.3d at 269, 276 (4th Cir. manner.” Painewebber Inc. v. Hofmann, 1999)(“The rationale for constraining an 984 F.2d 1372, 1380 (3d Cir. 1993). First, arbitrator’s subpoena power is clear. as noted above, until 1991 the Federal Parties to a private arbitration agreement Rules of Civil Procedure themselves did forego certain procedural rights attendant not permit a federal court to compel pre- to formal litigation in return for a more hearing document production by non- efficient and cost-effective resolution of parties. That the federal courts were left their dispute. A hallmark of arbitration – for decades to operate with this limitation and a necessary precursor to its efficient of their subpoena power strongly suggests operation – is a limited discovery that the result produced by interpreting process.”). Thus, contrary to Hay’s claim, Section 7 of the FAA as embodying a heeding the clear language of Section 7 similar limitation is not absurd. Second, it does not lead to absurd or even is not absurd to read the FAA as unreasonable results.

7 190 F.3d at 275. In dicta, however, the Of course, one may well think that COMSAT court suggested that an it would be preferable on policy grounds arbitration panel might be able to for arbitrators to be able to require non- subpoena a non-party for pre-hearing parties to produce documents without also discovery “under unusual circumstances” subpoenaing them to appear in person and “upon a showing of special need or before the panel. But if it is desirable for hardship.” Id. at 276 . While we agree arbitrators to possess that power, the way with COMSAT’s holding, we cannot agree to give it to them is by amending Section 7 with this dicta because there is simply no of the FAA, just as Rule 45 of the Federal textual basis for allowing any “special Rules of Civil Procedure was amended in need” exception. Again, while such a 1991 to confer such a power on district power might be desirable, we have no courts. authority to confer it.

The Fourth Circuit has interpreted We have carefully considered but Section 7 in a way that is largely consistent must respectfully disagree with the Eighth with our reading. In COMSAT Corp. v. Circuit’s holding in Security Life that Natl. Science Foundation, supra, the court Section 7 authorizes arbitrators to issue held that the plain meaning of Section 7 p r e - h e a r in g d o c u m e n t - p r o d u ct i o n did not empower an arbitrator to issue pre- subpoenas on non-parties. In Security hearing discovery subpoenas to nonparties: Life, the Eighth Circuit reasoned that the “the interest in efficiency is furthered by Nowhere does the FAA permitting a party to review and digest grant an arbitrator the relevant documentary evidence prior to the authority to order non- arbitration hearing.” Security Life, 228 p a r t ie s to appear a t F.3d at 870. In our view, however, this depositions, or the authority policy argument cannot supersede the to demand that non-parties statutory text.2 provide the litigating parties with documents during pre- hearing discovery. By its 2 We have also considered the District own terms, the FAA’s Court decisions that have reached similar su b poena au th or ity i s results. See In re Arbiration between defined as the power of the Douglas Brazell and America Color arbitration panel to compel Graphics, Inc., 2000 U.S. Dist. Lexis n o n-parties to a p p e ar 4482 (S.D.N.Y. April 6, 2000); Meadows ‘before them;’ that is, to Indemnity Co., Ltd. v. Nutmeg Insurance compel testimony by non- Co., 157 F.R.D. 42, 45 (M.D. Tenn. parties at the arbitration 1994); Stanton v. Paine Webber, 685 hearing. F.Supp 1241, 1242 (S.D. Fla 1988).

8 Even if we were to look outside the pendent state claims that were covered by statutory text to make our decision, any a mandatory arbitration agreement. The argument in favor of ignoring the literal Supreme Court was presented with the meaning of the FAA in the name of argument that the District Court had the efficiency seems to cut against Supreme authority to refuse to compel arbitration of Court precedent regarding the role of the pendent claims because this would efficiency considerations in interpreting have resulted in wasteful bifurcated the Act. Although efficiency is certainly proceedings and because the drafters of an objective of parties who favor the FAA had not explicitly considered the arbitration over litigation, see, e.g., prospect of such proceedings. See 470 Alexander v. Gardner-Denver Co., 415 U.S. at 219. U.S. 36, 58 (1974); Painewebber Inc. v. Hofmann, 984 F.2d 1372, 1380 (3d Cir. Rejecting this argument, the 1993), efficiency is not the principal goal Supreme Court noted that the terms of of the FAA. Rather, the central purpose of Sections 3 and 4 of the FAA, 9 U.S.C. §§ the FAA is to give effect to private 3 and 4, required the District Court to agreements. See Dean Witter Reynolds, compel arbitration of the pendent claims. Inc. v. Byrd, 470 U.S. 213, 218-19 See 470 U.S. at 218. The Court then (1985)(“Byrd”) (“The legislative history of examined the legislative history of the the Act establishes that the purpose behind FAA and “reject[ed] the suggestion that its passage was to ensure judicial the overriding goal of the Arbitration Act enforcement of privately made agreements was to promote the expeditious resolution to arbitrate. We therefore reject the of claims.” Id. Instead, the Court suggestion that the overriding goal of the concluded, “[t]he preeminent concern of Arbitration Act was to promote the Congress in passing the Act was to expeditious resolution of claims.”). enforce private agreements into which the parties had entered.” Id. at 221. This In Byrd, the Supreme Court concern, the Court held, required rigorous a d d r e s s e d t h e a r g u me n t t h at enforcement of agreements to arbitrate. considerations of efficiency should control Id. We take from Byrd the lesson that the interpretation of the provisions of the Congress’s failure explicitly to consider an FAA relating to the enforcement of inefficient byproduct of the Arbitration arbitration agreements. The complaint in Act does not render the text ambiguous. that case asserted a federal claim that was not going to be arbitrated, as well as Under Byrd’s reasoning, efficiency considerations clearly cannot override the terms of Section 7. Indeed, since the efficiency interest was far stronger in Byrd None of these cases provides an adequate than it is in this case, the result here justification for disregarding the plain follows a fortiori. In a case such as the meaning of Section 7's text.

9 one before us, convening and adjourning We now turn to the PwC’s an arbitration panel will hardly prove an argument3 that the subpoenas at issue in insurmountable obstacle; the costs will be this case were improper for an additional slight in comparison to amassing and reason, namely, because they sought the transporting a huge volume of documents. production of documents that were located Interpreting Section 7 as we do shifts the outside the territorial jurisdiction of the balance of power slightly from the party District Court. Although it is not strictly that seeks the documents to the non-party necessary for us to decide this issue at this that is subpoenaed. Under our time, we believe that it is appropriate for interpretation, the party seeking the us to do so because of the potential that documents cannot simply obtain a Hay will obtain a new subpoena calling on subpoena requiring the documents to be a PwC representative to appear at an shipped from one warehouse to another; arbitration proceeding and to bring the instead, the party will be forced to appear documents at issue to that proceeding. If at a proceeding during which the that occurs, PwC may renew the argument documents are produced. This slight in question, and the likely result would redistribution of bargaining power is then be another appeal. In order to avoid unlikely to have any substantial effect on unnecessary litigation, we address PwC’s the efficiency of arbitration. Moreover, as argument now. we noted in the previous section, the rule we adopt in this case may in fact facilitate PwC contends that Fed. R. Civ. efficiency by reducing overall discovery in Proc. 45(a)(2)4 prohibits subpoenas duces arbitration. In any event, if patent inefficiency, such as that resulting from 3 the bifurcated proceedings at issue in E.B.S. does not join in this argument. Byrd, is insufficient to overcome a textual command, an ambiguous efficiency effect 4 Fed. R. Civ. Proc. 54(b)(2) provides certainly cannot do so. in relevant part as follows: [A] subpoena may be In sum, we hold that the FAA did served at any place within not authorize the panel to issue a pre- the district of the court by hearing discovery subpoena to PwC and which it is issued, or at any E.B.S.. We further reject any “special place without the district needs exception” to this rule. If Hay wants that is within 100 miles of to access the documents, the panel must the place of the deposition, subpoena PwC and E.B.S. to appear before hearing, trial, production, it and bring the documents with them. or inspection specified in the subpoena or at any B. place without the state where a state statute or rule

10 tecum for documents located outside the the attendance of a person.” We have territory within which a subpoena may be held, however, that the FAA does not served under Fed. R. Civ. Proc. 45(b)(2). permit such subpoenas. The portion of PwC relies on the following language in Rule 45(a)(2) that applies when a witness Rule 45(a)(2): is subpoenaed to appear contains no similar language. Rather, that portion of If separate from a subpoena the Rule states only that a subpoena for commanding the attendance attendance at a trial, hearing, or deposition of a person, a subpoena for shall issue from the court for the district production or inspection “in which the hearing or trial or hearing is shall issue from the court for to be held” or from “the court for the the district in which the district designated in the notice of production or inspection is deposition as the district in which the to be made. deposition is to be taken.” Nothing in this language suggests that a witness who is As applied to the situation that we subpoenaed to testify may not also be have postulated (the subsequent service on directed to bring documents that are not PwC of a subpoena calling for both an located within the territorial limits set out appearance before the arbitration panel and in Rule 45(b)(2). the production of documents), PwC’s argument has several flaws. We will Second, PwC misinterprets the mention two. language in Rule 45 (a)(2) on which it relies. As noted, that provision states that First, the portion of Rule 45(a)(2) a subpoena calling only for the on which PwC’s argument is based applies “production or inspection” of documents only to a subpoena duces tecum that is “shall issue from the court for the district “separate from a subpoena commanding in which the production or inspection is to be made.” “Production” refers to the delivery of documents, not their retrieval, and therefore “the district in which the 1 of court permits production . . . is to be made” is not the 2 service of a district in which the documents are housed 3 subpoena issued by but the district in which the subpoenaed 4 a state court of party is required to turn them over. 5 general jurisdiction 6 sitting in the place The Notes to the 1991 Amendment 7 of the deposition, reflect the same understanding of this 8 hearing, trial, language. The Notes state: “Paragraph 9 production, or (a)(2) makes clear that the person subject 10 inspection specified to the subpoena is required to produce 11 in the subpoena.

11 materials in that person’s control whether nonparty located in Florida, lies beyond or not the materials are located within the the scope of the court’s subpoena District or within the territory within enforcement powers.” Legion, 33 Fed. which the subpoena can be served.” Fed. Appx. at 28, 2002 U.S. App. Lexis 6797 at R. Civ. Proc. 45, Committee Notes, 1991 *7. PwC cites language in the opinion that Amendment Subdivision (a)(emphasis it interprets as supporting its argument, but added); see also 9 J AMES W M. M OORE ET PwC takes that language out of context. AL., M OORE’ S F EDERAL P RACTICE para. The other cases on which and PwC relies 45.03 (3d ed. 2000)(“The subpoena should are either unpersuasive or inapposite.5 issue from the Court where the production of documents is to occur, regardless of where the documents are located.”); 9A 5 PwC relies on the statement in C HARLES A LAN W RIGHT AND A RTHUR R. Natural Gas Pipeline Co. of Am. v. M I LL E R , F E D ERAL P RACTICE AND Energy Gathering, Ltd., 2 F.3d 1397, P ROCEDURE § 2456 at 31 (1995 & 2003 1406 (5th Cir. 1993), that “a federal Supp.)(“Even records kept beyond the court sitting in one district cannot issue a territorial jurisdiction of the district court subpoena duces tecum to a non-party for issuing the subpoena may be covered if the production of documents located in they are controlled by someone subject to another district.” However, this the court’s jurisdiction.”). statement was dictum; the basis for the statement is unclear; and it appears that PwC’s belief that a subpoena both the subpoena recipient and the cannot reach extraterritorial documents documents in that case may have been seems to arise out of a misreading of located beyond the reach of Fed. R. Civ. Legion Ins. Co. v. John Hancock Mutual Proc. 45(b)(2)(the court was in Houston, Life Ins. Co., 33 Fed. Appx. 26, 2002 WL Texas, and the non-party and the records 537652, 2002 U.S. App. LEXIS 6797 (3d were in Mississippi). Cir. 2002). In Legion, the United States District Court for the Eastern District of In Cates v. LTV Aerospace Corp., Pennsylvania held that it lacked personal 480 F.2d 620 (5th Cir. 1973), Navy jurisdiction over a party, CSIS, on whom regulations specified that the documents an arbitrator’s subpoena had been served, in question could be obtained only from and the Court therefore refused to enforce the Secretary of the Navy in Washington, the subpoena. Affirming, a panel of our but a party attempted to obtain the Court wrote that “in light of the territorial documents by serving a subpoena on the limits imposed by Rule 45 upon the service commanding officer of a naval facility in of subpoenas, we conclude that the District Texas. The court held that the Court did not commit error in denying regulations could not be circumvented in [the] motion to enforce the arbitration this way. The critical factor in Cates was subpoena against CSIS, which, as a not the location of the documents but the

12 We have considered all of the arbitrators powerless to require advance arguments made by PwC regarding the production of documents when necessary location of the documents, but we find to allow fair and efficient proceedings. them unconvincing. Under section 7 of the III. Federal Arbitration Act, arbitrators have the power to compel a third-party witness For the reasons set out above, the to appear with documents before a single order of the District Court is reversed. arbitrator, who can then adjourn the proceedings. This gives the arbitration panel the effective ability to require CHERTOFF, Circuit Judge, concurring: delivery of documents from a third-party in advance, notwithstanding the I join Judge Alito’s opinion limitations of section 7 of the FAA. In in full. But I appreciate the reason that a many instances, of co urse, the number of courts have been motivated to inconvenience of making such a personal read a pre-hearing discovery power into appearance may well prompt the witness the arbitration rules. I write separately to to deliver the documents and waive observe that our opinion does not leave presence. See David M. Heilbron, The Arbitration Clause, the Preliminary Conference, and the Big Case, 45 Arb. J. 38, 43-44 (1990). location of the officer from whom they To be sure, this procedure had to be sought. requires the arbitrators to decide that they are prepared to suffer some inconvenience In Ariel v. Jones, 693 F.2d 1058 of their own in order to mandate what is, (11th Cir. 1982), a district court in in reality, an advance production of Florida quashed a subpoena duces tecum documents. But that is not necessarily a for documents stored in Colorado on the bad thing, since it will induce the ground that the agent served in Florida arbitrators and parties to weigh whether did not have effective control of the advance production is really needed. And documents. In affirming, the court of the availability of this procedure within appeals did not endorse the principle the existing statutory language should advocated by PwC that a non-party may satisfy the desire that there be some not be subpoenaed to produce documents mechanism “to compel pre-arbitration located outside the district court’s discovery upon a showing of special need territorial jurisdiction. Rather, the court or hardship.” Comsat Corp. v. Nat’l. Sci. of appeals held that the trial court had Found., 190 F.3d 269, 276 (4th Cir. 1999). not abused its discretion in quashing the subpoena as unreasonable and oppressive.

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