Business Litigation

Second Circuit Allows for Third Party Subpoenas

By Leslie A. Berkoff, Moritt Hock & Hamroff LLP

Over the years, courts have differed as to whether arbitration subpoenas issued under Section 7 of the Federal Arbitration Act (“FAA”) are enforceable against third-party witnesses. In Washington National Insurance Co. v. Obex Group LLC, No. 19-225-cv, 2020 U.S. App. LEXIS 14062 (2d Cir. May 1, 2020), the Second Circuit  found that the panel had the authority to issue the witness and document subpoenas. In this case, the third-parties had failed to appear or produce documents in response to the subpoenas.  The compelling party petitioned for enforcement of the subpoenas and the third-parties moved to dismiss the petition and to quash the subpoenas contending the panel had no authority to compel production of immaterial documents pre-hearing and that Rule 45 of the FRCP should govern the scope of production.

The court found that the only parties relevant for jurisdictional consideration were the parties to the petition and jurisdiction over them existed. The court further found that Section 7 contained no limit on the number of documents, but merely requires that they “be deemed material as evidence in the case.”  Finally, the court rejected the motion to quash finding that it was not required to analyze the demands under Rule 45 of the FRCP, as requiring a court to entertain a full bore review of the demands would undermine the strong federal policy in favor of embracing arbitration as an alternative means of resolving disputes. 



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