• Federal Circuits Split Over Arbitrator Power To Compel Pre-Hearing Discovery
  • May 19, 2004 | Author: Matthew H. Adler
  • Law Firm: Pepper Hamilton LLP - Philadelphia Office
  • On March 12, 2004, the Third Circuit held that an arbitrator has no power to compel the production of documents from non-parties before an arbitration hearing. An arbitrator can only compel non-parties to appear before the panel at the hearing, and to bring documents with them at that time. See Hay Group, Inc. v. E.B.S. Acquisition Corp., No. 03-1161/1162, 2004 U.S. Dist. LEXIS 4715, *2 (3d Cir. Mar. 12, 2004).

    The Third Circuit's ruling takes on an issue that has split the Fourth and Eighth Circuits. The Eighth Circuit held that the Federal Arbitration Act (FAA) grants an arbitration panel the power to order the production of documents for review by a non-party before a hearing. See In re Sec. Life Ins. Co. of Am., 228 F.3d 865 (8th Cir. 2000). In contrast, the Fourth Circuit held that the FAA does not grant an arbitrator that authority, unless a party can make a showing of "special need or hardship." See COMSAT Corp. v. Nat'l Sci. Found., 190 F.3d 269 (4th Cir. 1999).

    The Third Circuit's approach differs from the Fourth and Eighth Circuits by prohibiting parties from obtaining any pre-hearing discovery from non-parties. The court based its ruling on the language of Section 7 of the FAA and upon interpretations of Federal Rule of Civil Procedure 45, before and after its 1991 amendment. Given the importance of discovery in arbitration, litigants and their counsel need to know that pre-trial discovery may not be available in arbitration.