The case law is fairly scant, but there is a well-written and imaginative law journal article which seeks to solve a real-world problem in obtaining testimony in international arbitrations.  Congratulations to the author; we need to recognize young talent.

Discovery for Use in Foreign Arbitrations

In 2022, SCOTUS resolved a Circuit split and held that 28 U.S.C. § 1782 does not authorize a District Court to issue subpoenas to obtain testimony for use in arbitrations outside the U.S. ZF Auto US, Inc. v. Luxshare, Ltd., 142 S. Ct. 2078 (2022).  But does that completely close the door on obtaining such testimony?  Caroline Bailey, a third-year student at the University of Georgia School of Law, has written an interesting article on the use of Section 7 of the Federal Arbitration Act to set up a deposition or document production in such cases, Article: Compelling Evidence in International Commercial Arbitration after the Section 1782 Shutdown: FAA Section 7 as an Alternative Approach, 58 Ga. L. Rev. 845 (2024), available on-line at https://georgialawreview.org/article/74202-compelling-evidence-in-international-commercial-arbitration-after-the-section-1782-shutdown-faa-section-7-as-an-alternative-approach

Based upon Jones Day v. Orrick, Herrington & Sutcliffe, LLP, 42 F. 4^th 1131 (9^th Cir. 2022), she argues that a District Court might be able to compel an arbitration deposition, in a case subject to the New York Convention, if the discovery will be conducted within the court’s federal district.  If so, she argues, a Section 7 subpoena could effectively substitute for a discovery subpoena under Section 1782.  Ms. Bailey acknowledges the potential difficulties in relying upon Section 7 for this purpose.  Although one of the parties in Jones Day was a German national, bringing the agreement within the New York Convention, the parties’ agreement sited the arbitration in the District of Columbia, i.e. within the U.S.  Perhaps more importantly, except in the Eighth Circuit, Courts of Appeals have held that subpoenas under Section 7 of the FAA may not be used for pre-arbitration discovery; they only permit arbitrators to issue subpoenas to cause witnesses “to attend before them.”   Therefore, a non-U.S. based arbitral panel must be willing and able to travel around the world to take the requested testimony, with the significant delay involved and the attendant cost to the party issuing the subpoena.  However, in this post-pandemic, Zoom-cognizant era, what does “attend before” the panel mean? How about video testimony with the witness located within the appropriate federal district, while the panel is either online or attending from wherever the arbitration is seated?  Georgia Law Review editors – is this your next article?

The Supreme Court’s decision in ZF Auto foreclosed the easy route to discovery in international arbitrations.  But good counsel are imaginative.  The Section 7 route has many challenges, but, “You could call it a Hail Mary.  You throw it up and pray,” Staubach, Roger, December 28, 2075 (after a successful desperation pass to Drew Pearson).

Petition to Vacate; Personal Jurisdiction

Tilary Brands, Inc. v. Dickson, 2024 U. S. Dist. LEXIS 33563 (W.D. Wash. February 27, 2024)(Whitehead, J.), is a reminder that the FAA does not give the court personal jurisdiction over the respondent in an action to vacate (or, presumably, confirm) an award.  Here, the court finds that Dickson, a Minnesota resident, did not have sufficient contacts with the State of Washington to confer either general or specific jurisdiction over her under the state’s long arm statute. Accordingly, it dismisses Tilray’s petition to vacate for lack of personal jurisdiction.

Compelling Arbitration under an Unsigned Agreement

When Timothy Graham went to work for Leisure Pools, he signed an employment agreement which included an arbitration clause.  In his action against Leisure Pools, the defendant sought to invoke that provision and moved to compel arbitration.  However, although Graham signed the agreement, Leisure Pools did not.  In Graham v. Leisure Pools USA Trading, Inc., 2024 U. S. Dist. LEXIS 33521 (W.D. Tex. February 26, 2024), Magistrate Judge Lane holds that the absence of that signature is fatal to Leisure Pool’s efforts.  Applying Texas law, the court opines that, even though a party’s intention to be bound by an agreement may be found where the signature block is blank, the contract language here specifically required “that the parties needed to sign the agreement to give it effect or to modify it.”  The Magistrate Judge recommends that the District Judge deny Defendant’s motion to dismiss the action in favor of arbitration.  Lesson – have someone in legal or elsewhere check to make sure that the staff “in the field” have completed the paperwork.

Enforcing a Confirmed Award

Brown v. Simons, 2024 U. S. Dist. LEXIS 33049 (E.D. Pa. February 27, 2024)(McHugh, J.), resolves cross-motions for contempt for the parties’ failure to comply with a court-confirmed arbitration award.   The case is fact-driven, but serves as a brief reminder that, once an arbitral award is confirmed, it becomes subject to the same obligations and remedies as would any court judgment.

The weather here is teasing us with Spring.  So, it is nice to pick up an extra day this Leap Year.  Happy Sadie Hawkins Day, everyone – and, if you’re old enough to remember what that means, don’t admit it.

David Reif, FCIArb
Reif ADR
Dreif@reifadr.com
Reifadr.com