Court Finds Pre-Hearing Nonparty Deposition Subpoenas Permitted by FAA, and Rule 45 Territorial Limit Not a Bar for Virtual Deposition

Carlton Fields
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Carlton Fields

Nonparty Lawrence Satz received an arbitral subpoena in a proceeding between International Seaway Trading Corp. and Target Corp. Satz was a former owner of Seaway. The subpoena — the second issued to Satz during the proceeding — sought documents and virtual deposition testimony about certain issues he had refused to discuss at his first deposition. Before the second deposition, Satz moved to quash the subpoena on three grounds, each of which was rejected.

First, he claimed the arbitrator lacked the authority to issue a nonparty deposition subpoena before the arbitration hearing. In In re Security Life Insurance Company of America, 228 F.3d 865 (8th Cir. 2000), the Eighth Circuit held that section 7 of the Federal Arbitration Act implicitly authorizes arbitrators to issue pre-hearing document subpoenas, but did not reach the issue of pre-hearing deposition subpoenas. Despite decisions from various other circuit courts of appeal that section 7 does not authorize pre-hearing nonparty discovery, including cases expressly rejecting Security Life, the Minnesota district court declined to follow those other cases. Instead, it held that under Security Life, arbitrators are authorized to issue pre-hearing deposition subpoenas, finding no meaningful distinction between the reasoning for allowing such subpoenas for written discovery, but not depositions. Satz next argued the subpoena is unenforceable because it did not comply with the 100-mile territorial limit imposed by Federal Rule of Civil Procedure 45. But the court was unpersuaded, finding Rule 45 now allows service of subpoenas anywhere in the United States and, perhaps more importantly, that the distance limitation for holding the deposition does not bar enforcement of a subpoena for a virtual deposition that Satz could attend from home. Finally, the court rejected Satz’s relevance and burden arguments, noting both issues were already considered by the arbitrator and that the court would not second-guess the arbitrator’s conclusions. 

International Seaway Trading Corp. v. Target Corp., No. 0:20-mc-00086 (D. Minn. Feb. 22, 2021).

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