                                                                                                                           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Precedential or Non-Precedential: Precedential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


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                       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.

                                               13
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