11th Circ. Should Reconsider Remote Arbitration Subpoenas

By Suzanne Wynn Ockleberry
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Law360 (February 23, 2021, 5:31 PM EST) --
Suzanne Wynn Ockleberry
Suzanne Wynn Ockleberry
In March 2020, in-person arbitration hearings came to almost a complete halt due to the COVID-19 pandemic. But, as the backlog of disputes increased, arbitrators and the parties quickly discovered that remote videoconferencing was a vehicle that could be used to hold hearings.

What was once an anomaly has now been widely embraced as the safest and most effective way to ensure that arbitrations proceed in a timely manner. While the underlying platform may differ from hearing to hearing, the advances in technology have made it easier and seamless to share documents on screen, examine witnesses and have private breakout conference rooms for the parties.

In an odd twist, has the COVID-19 experience also made it easier for parties to get document discovery from nonparties without the necessity of an in-person hearing?

This article will explore that question and examine the U.S. Court of Appeals for the Eleventh Circuit's ruling in Managed Care Advisory Group LLC v. Cigna Healthcare Inc.,[1] which is the only circuit court decision which mandates in-person hearings for subpoena compliance by third parties.

As a practical matter, one of the first things an arbitrator should do when a party seeks a prehearing subpoena for the production of documents from a third party is to see if there is an objection to the issuance of the subpoena. If there is, the arbitrator should evaluate the arguments by both sides and resolve the matter.

If the arbitrator determines that the subpoena should be issued, guidance to determine if a hearing is necessary and if it can be held by videoconference can be determined from the law in the jurisdiction where the arbitration is located.

 An arbitrator's power to subpoena nonparties is derived from the Federal Arbitration Act, or Title 9 of the U.S. Code, Section 7. That code section states in applicable part:

The arbitrators selected either as prescribed in this title or otherwise, or a majority of them, may summon in writing any person to attend before them or any of them as a witness and in a proper case to bring with him or them any book, record, document, or paper which may be deemed material as evidence in the case.

Section 7 grants an arbitrator the authority to subpoena a witness "to attend before them or any of them as a witness" and, "in a proper case," to produce documents.

More than two dozen decisions from various jurisdictions across the country have held that an arbitrator can issue a subpoena requiring a nonparty to produce documents at a hearing before the arbitrator and, those decisions do not preclude the arbitrator from holding such hearing, that is not required to be the actual evidentiary hearing, through the use of remote videoconferencing.

In 2019, however, the Eleventh Circuit held in Managed Care Advisory Group that a videoconference is not sufficient and that an in-person hearing is required.[2] That decision presents a dilemma for arbitrators participating in remote videoconference hearings in that circuit due to COVID-19.

Because Managed Care Advisory Group was decided before the COVID-19 pandemic and the widespread use of videoconferencing for court as well as arbitral hearings, there is some hope that the Eleventh Circuit may reverse direction and enforce arbitral subpoenas that call for the production of documents at virtual hearings.

For the U.S. Courts of Appeal for the Second, Third, Fourth and Ninth Circuits, if the arbitrator and all parties are present at the remote videoconference prehearing, the more stringent requirements of an appearance by the subpoenaed party and the holding of a proceeding as required by the most restrictive decision on the issue, Hay Group Inc. v. E.B.S. Acquisition Corp.[3] in 2019, are satisfied.

If the third party produces the documents in advance of the appearance date, the hearing can easily be cancelled without the time of and expense to the parties or the necessity of having all of parties and the subpoenaed third party participate in a proceeding.

Even if the majority of arbitrations resume to being held in person, the use of a remote video conference for subpoena compliance makes practical sense to save time and money and does not appear to be prohibited by decisions in other circuits, including the U.S. Courts of Appeal for the Sixth and Eighth Circuits, prior to Managed Care Advisory Group.

The most recent decision on the issue prior to Managed Care Advisory Group LLC was from the U.S. Court of Appeals for the Ninth Circuit in CVS Health Corp. v. Vividus LLC in 2019.[4]

That decision, like those from other circuits, does not preclude an arbitrator from convening a hearing via a remote video conference for subpoena compliance by a third party because the court determined that while documents must be produced in the context of a hearing, the court did not specify that the production had to be done at a final hearing on the merits of the arbitral dispute or that the subpoena compliance hearing had to be an in-person hearing.

The only jurisdiction where use of a remote videoconference hearing to enforce a prehearing subpoena is prohibited is in the Eleventh Circuit based upon the holding in Managed Care Advisory Group.

One of the issues before the Eleventh Circuit in Managed Care Advisory Group was whether an arbitrator, who was located in Miami, had the authority under Section 7 to issue prehearing subpoenas to nonparties, who were located in various parts of the country, to appear and bring documents to a remote videoconference prehearing.

In ruling that no such authority could be found in Section 7, the court determined that an arbitrator's subpoena power was limited to compelling a third party to appear at an in-person hearing and produce the documents at that time. That decision was based upon several factors which the court found dispositive

The Eleventh Circuit determined that while the language in Section 7 was explicit in granting an arbitrator authority to subpoena a party to appear as a witness and produce documents at a hearing, it was silent as to any prehearing authority to issue a subpoena.

This led the court to conclude that Congress did not intend arbitrators to have any such power. Disagreeing with the U.S. Court of Appeals for the Eighth Circuit, the Eleventh Circuit determined that the policy of promoting arbitration efficiency could not override a plain reading of the statute.

The court used a 1926 version of the Oxford Dictionary to determine the meaning of the words "attendance," "before" and "presence" as used in Section 7 when it was enacted in 1925.

Because the dictionary indicated that "presence" was defined as being in the place where the person is located, the Eleventh Circuit held that Section 7 required the subpoenaed party to be in the physical presence of the arbitrator and could not appear via remote videoconference. That led the court to conclude that it would be problematic under Section 7 for a lower court to enforce a subpoena against a nonparty who was not in the physical presence of the arbitrator.

Interestingly, that while the court found Section 7 to be unambiguous in not allowing the production of documents outside the presence of the arbitrator, it looked to an outside source — a dictionary — to interpret the same statute.

Third, the court took issue with how the arbitrator would be able to view the documents and rule upon the required production if the subpoena compliance hearing was held by remote videoconference.

The U.S. District Court for the Southern District of Florida, which upheld the issuance of the subpoena, had determined that the solution to that problem was to allow the third party to produce the documents to the arbitrator and parties in advance of the remote videoconference hearing and to have the arbitrator make any required rulings at the prehearing.

The Eleventh Circuit dismissed the district court's solution as tantamount to requiring the prehearing discovery which it contends is prohibited by Section 7. However, with document sharing capabilities now a part of most remote video platforms, that concern is alleviated because the third party can produce the documents at the time of the prehearing by uploading them to the remote site.

The decision in Managed Care Advisory Group is much more sweeping than those from the Second, Third, Fourth and Ninth Circuits regarding the limitations on an arbitrator's prehearing subpoena power under Section 7.

Due to the restrictions in many states of in-person gatherings due to COVID-19 and increased reliance on remote videoconference services that allow for screen-sharing of documents, the problems the court found with using a remote videoconference hearing for subpoena compliance have been eliminated because a party can bring the documents and an arbitrator can now review the documents during the hearing.

There is a viable argument that the use of remote videoconference prehearings for subpoena compliance should be allowed even in the Eleventh Circuit. There remains some flexibility for the parties in spite of the decision in Managed Care Advisory Group because it does a not prevent anyone, other than the third party, from appearing via remote videoconference at the prehearing.

As the burden rests solely upon the third party, who may have to travel to attend the hearing, the reality is that the third party may simply opt to produce the documents and the hearing can be cancelled.

Based upon the hundreds of thousands of individuals in the U.S. who have died from COVID-19, the millions more across the country who have been infected with the virus, and the unknown number who may be asymptomatic carriers, the in-person requirement for subpoena compliance merits review by the Eleventh Circuit due to the very real health and safety concerns of any kind of face-to-face hearings with multiple parties in a room.

Even once the pandemic is finally over, parties and arbitrators may continue to rely upon the use of remote videoconferencing for some arbitration hearings based upon convenience and cost savings.

One option to obtain judicial review of the decision in Managed Care Advisory Group is for an arbitrator, who is holding a hearing in the Eleventh Circuit and is faced with a request to issue to a prehearing subpoena to a third party, is to ask the party seeking the subpoena to request it from the district court.

This would provide a basis for the subpoenaed third party to file a motion to quash which, depending upon the ruling, could ultimately be appealed to the Eleventh Circuit for it to revisit that decision.

In light of the adjustments that arbitrators and parties have had to make to hold arbitration hearings due to COVID-19, it is likely that the Eleventh Circuit would allow a third party to attend before and in the presence of the arbitrator through a remote videoconference prehearing and produce the documents at that time.

Suzanne Wynn Ockleberry is an arbitrator at Wynn Arbitration. 

The opinions expressed are those of the author(s) and do not necessarily reflect the views of the firm, its clients or Portfolio Media Inc., or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.

[1] Managed Care Advisory Group LLC v , v. Cigna Healthcare Inc. , 939 F.3d 1145 (11th Cir. 2019).

[2] Id.

[3] Hay Group Inc., v. E.B.S. Acquisition Corp , 939 F.3d 1145 (11th Cir. 2019).

[4] CVS Health Corporation v. Vividus, LLC , 878 F. 3d 703 (9th Cir. 2017).

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