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The Ninth Circuit Refuses to Pinion the Wings of Arbitral Subpoenas

In 2021, the Northern District of California attempted to pinion the wings of arbitral subpoenas by declaring that they were only enforceable in the district in which the arbitration was seated.  The Ninth Circuit reversed and allowed arbitral subpoenas to fly again across the full expanse of the federal general venue statute.  Jones Day v. Orrick, Herrington & Sutcliffe, LLP, No. 21-16642, 2022 U.S. App. LEXIS 21149 (9th Cir. August 1, 2022).   

Background Facts

The dispute arose out of the departure of a partner in the Jones Day Paris office to join Orrick.  In the subsequent international arbitration in Washington D.C., the arbitrator issued a document subpoena to nonparty Orrick in California.  Since §7 of the Federal Arbitration Act (“FAA”) provides that the “district court for the district in which such arbitrators…are sitting may compel” compliance with the arbitrator’s subpoena, the arbitrator deployed the common workaround of convening a hearing where the recipient was located.  Orrick did not comply, and Jones Day moved to compel in California. 

The district court denied the motion to compel, determining that under §7 arbitrators are “sitting” only at the arbitral seat, not at other hearing locations.  Jones Day v. Orrick, No. 21-mc-80181-JST, 2021 U.S. Dist. LEXIS 172574, at *2-3 (N.D. Cal. Sept. 7, 2021).  Practically speaking, the district court’s ruling could limit arbitration subpoenas to the district containing the seat of arbitration.  Limiting subpoenas to documents and witnesses found in the district at the time of the subpoena would be totally unworkable in many disputes and would harm arbitration’s viability as a dispute resolution option.

Subject matter jurisdiction

The Ninth Circuit first considered whether it had subject matter jurisdiction. Jones Day, 2022 U.S. App. LEXIS 21149, at *7.  The court noted that this case is governed by Chapter 2 of the FAA—the implementing legislation for the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the “Convention”).  Section 203 of the FAA provides federal subject matter jurisdiction over “[a]n action or proceeding falling under the Convention….”  9 U.S.C. §203.  The question before the court was whether the motion to compel “fall[s] under the Convention.” Jones Day, 2022 U.S. App. LEXIS 21149, at *7-8.  The Convention references only enforcement of arbitration agreements and awards.  Likewise, FAA Chapter 2 mentions only compelling arbitration, appointment of arbitrators, and confirming awards.  Id., at *8. (citing FAA §§ 206, 207).  Since enforcement of arbitral subpoenas is not mentioned, Orrick contended, such motions do not “fall[] under the Convention” and do not afford federal question jurisdiction. Id.

The court rejected this argument underscoring that “falling under” does not necessarily mean “listed by” the Convention.  “Falling under” essentially means “relating to.”  Id. at *8-9.  Not every judicial tool must be listed in the Convention or Chapter 2 of the FAA to qualify, proceedings necessary to complete the arbitral process are included. Id. at *9-11, 13-17 (citing as examples: equitable estoppel binding non-signatories, attachment, and vacating an award).  The only restriction relates to processes that conflict with FAA Chapter 2 or the Convention.  Subpoena enforcement actions aid the arbitration process.

The court also likened the scope of original jurisdiction under §203 to the scope of removal jurisdiction under §205.  Id. at *12.  Section 205 provides removal jurisdiction “[w]here the subject matter of an action or proceeding pending in a State court relates to an arbitration agreement or award falling under the Convention….”  (emphasis added).  Congress did not intend to provide “a narrower scope of original jurisdiction than removal jurisdiction” for international arbitration awards.  Id.  “It would make little sense for Congress to specifically authorize removal of cases over which the federal courts would lack subject-matter jurisdiction.” Id. at *17.

The court aligned itself with the Fifth and Eleventh Circuits holding that “a federal court has original jurisdiction over an action or proceeding if two requirements are met: (1) there is an underlying arbitration agreement or award that falls under the Convention, and (2) the action or proceeding relates to that arbitration agreement or award.” Id.  The phrase “relates to” includes proceedings that “could conceivably affect the outcome” of the case.  Id. at *18 (emphasis in original).  Motions to enforce arbitral subpoenas meet this standard, and the court had subject matter jurisdiction. 

Venue

Focusing on FAA §7, the district court determined that venue for a motion to compel was limited to the seat of arbitration.  Jones Day, No. 21-mc-80181-JST, 2021 U.S. Dist. LEXIS 172574, at *2-3.  The Ninth Circuit corrected this reasoning and noted that this proceeding was governed by FAA Chapter 2, including §204’s venue provision, which provides that proceedings “may be brought in any such [district] court in which…an action or proceeding with respect to the controversy between the parties could be brought, or in such court for the district and division which embraces the…[seat] of arbitration….” 9 U.S.C. §204. 

The court considered whether venue for such proceedings was limited to the district of the seat, or did the federal venue provisions in 28 USC §1391 also apply.  The court reasoned that—like the venue provisions in FAA §4 (actions to compel arbitration), §9 (actions to confirm awards), §10 (actions to vacate awards), and §11 (actions to modify awards)—the venue provision in §204 is permissive not exclusive, and it supplements not supplants the federal venue provisions in §1391.  Therefore, venue to enforce arbitral subpoenas is not limited to the seat of arbitration, it enjoys the full venue scope contained in the federal general venue statute. 

In sum, the Ninth Circuit confirmed the expansive scope of federal question jurisdiction for arbitration-related proceedings under the Convention, and it refused to pinion the wings of arbitral subpoenas, allowing them to fly again across the full territory of the federal venue statute. 

Please also refer to our previous post for additional background.

Tags

arbitration, nonparty witnesses, summons, subpoena, new york convention, international arbitration

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