Construction disputes often involve voluminous amounts of discovery, including documents in the hand of third parties. And if the case is subject to arbitration, it is likely that there will be a dispute about whether the arbitrator has the authority to compel production of third-party documents or witnesses for deposition.
On September 18, 2019, in Managed Care Advisory Group, LLC v. Cigna Healthcare, Inc., the Court of Appeals for the Eleventh Circuit concluded that Section 7 of the Federal Arbitration Act (“FAA”) precludes all pre-hearing discovery from non-parties. Specifically, the court considered the enforcement of summonses sent to non-parties to appear by video conference and to produce documents. According to the court, any non-party discovery must take place in person at the arbitration hearing. Even if the arbitrator’s request is limited to document production, the non-party must appear at the hearing in person with the documents in hand. This appears to now be the rule in the Second, Third, Fourth, Ninth and Eleventh Circuits. The Eighth Circuit has held otherwise, suggesting that pre-hearing discovery is available under the FAA.
So what? As a practical matter, the majority of the circuits now hold that if a non-party receives an arbitral summons for pre-hearing discovery, this is outside the scope of the arbitrator’s power. However, an arbitral summons may require discovery at the hearing so long as the non-party physically appears.