United States District Court, D. Arizona
Honorable John J. Tuchi United States District Judge
issue is Vividus LLC and HMX Services LLC's petition seeking
enforcement of a Subpoena Duces Tecum issued in the
underlying arbitration matter between them and CVS Health
Corporation, Caremark LLC, and Caremark PCS LLC
("CVS/Caremark"). (Doc. 1, Pet.; see CVS Health
Corp., Caremark, LLC and Caremark PCS, LLC v. Vividus, LLC
f/k/a HM Compounding Services, LLC, and HMX Services, LLC
d/b/a HM Compounding, Case No.: 01-14-0002-0801 (the
"Arizona Arbitration").) The arbitration panel in
the Arizona Arbitration issued the Subpoena at issue to
Express Scripts, Inc. (Express Scripts), a non-party in the
Arizona Arbitration. In the matter now before the Court, HMC
are the Petitioners. Express Scripts, as the Respondent, has
submitted a Response in opposition to HMC's request
seeking enforcement of Subpoena (Doc. 18, Resp.), to which
HMC filed a Reply (Doc. 20).
2014, HMC filed an action against Express Scripts,
CVS/Caremark, and other pharmacy benefit managers in New York
state court, which Defendants removed to the United States
District Court for the Eastern District of New York. The
court ordered that HMC's claims against CVS/Caremark be
submitted to arbitration pursuant to HMC's contract with
CVS/Caremark, which became the Arizona Arbitration, and
HMC's claims against Express Scripts be severed and
transferred to the United States District Court for the
Eastern District of Missouri in accordance with HMC's
contract with Express Scripts.
HMC and Express Scripts action in the Eastern District of
Missouri, the parties stipulated to a protective order that
the court entered. Under the protective order, both parties
may designate materials as "Confidential" under
certain circumstances. Confidential information may only be
disclosed to the issuing court, the parties and their
attorneys, and other parties involved in that litigation.
Arizona Arbitration, the arbitration panel issued the
Subpoena at issue to Express Scripts on December 14, 2015.
The Subpoena requires that Express Scripts produce
"[a]ny and all documents produced or to be produced in
response to Plaintiffs HM Compounding Services, LLC and HMX
Services, LLC's First Request for Production of Documents
Directed to Defendant Express Scripts, Inc. [in the Eastern
District of Missouri litigation] dated September 4,
2015." (Pet. 1-4 at 1.) The Subpoena requires that the
documents be produced for inspection by HMC's counsel at
its offices in Miami, Florida.
petitions this Court to order Express Scripts to respond to
the Subpoena by "produc[ing] the documents or
assert[ing] whatever legal objections it may have"
before this Court. (Pet. at 4.) The Court has jurisdiction
over this matter because the arbitrators in the underlying
matter sit within the United States District Court for the
District of Arizona. See 9 U.S.C. §
Federal Arbitration Act (FAA) provides in 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.
9 U.S.C. § 7 (emphasis added).
Ninth Circuit Court of Appeals does not appear to have
addressed whether Section 7 of the FAA allows for an
arbitrator to order a third/non-party to appear to testify
and/or produce documents in conjunction with
pre-trial/pre-hearing discovery. See Golden State Bank v.
First-Citizens Bank & Trust Co., No. EDCV 10-526-GW
(OPX), 2011 WL 13047425, at *5 (C.D. Cal. July 7, 2011).
Other federal courts that have considered the issue disagree
as to whether arbitrators have such authority. The Second and
Third Circuits have held that the FAA does not grant an
arbitrator authority to order non-parties to appear at
depositions or provide the litigating parties with documents
during pre-hearing discovery. Life Receivables Trust v.
Syndicate 102 at Lloyd's of London, 549 F.3d 210,
216-17 (2d Cir. 2008); Hay Grp., Inc. v. E.B.S.
Acquisition Corp., 360 F.3d 404, 410 (3rd Cir. 2004).
The Fourth Circuit has noted that an arbitrator may be able
to subpoena a non-party for pre-hearing discovery "under
unusual circumstances" and "upon a showing of
special need or hardship." COMSAT Corp. v. Nat'l
Sci. Found., 190 F.3d 269, 275-76 (4th Cir. 1999).
Finally, the Sixth and Eighth Circuits have held that
implicit in the FAA's provision allowing an arbitrator to
compel the production of documents for purposes of the
hearing is the authority to compel such for inspection by a
party prior to the hearing. In re Sec. Life Inc.
Co., 228 F.3d 865, 870-71 (8th Cir. 2000); Am.
Fed'n of Television & Radio Artists, AFL-CIO v. WJBK-TV
(New World Commc'ns of Detroit, Inc.), 164 F.3d
1004, 1009 (6th Cir. 1999).
preeminent canon of statutory interpretation requires us to
presume that the legislature says in a statute what it means
and means in a statute what it says there." BedRoc
Ltd., LLC v. United States, 541 U.S. 176, 183 (2004)
(internal quotations omitted). "Thus, our inquiry begins
with the statutory text, and ends there as well if the text
is unambiguous." Id. .; see also U.S. ex
rel. Hartpence v. Kinetic Concepts, Inc., 792 F.3d 1121,
1128 (9th Cir. 2015). Section 7 of the FAA provides an
arbitrator authority to summon "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 material evidence in the
case. While the statute unambiguously gives an arbitrator
authority to compel a non-party to provide document discovery
during a hearing, it does not mention pre-hearing discovery.
It also does not state that an arbitrator may compel
discovery outside the presence of an arbitrator. The plain
terms of the statute restrict an arbitrator's subpoena
power to situations where the non-party has been called to
appear in the physical presence of the arbitrators and
provide the relevant documents at that time. Hay,
360 F.3d at 407. In the absence of Ninth Circuit case law
expanding the apparent scope of Section 7 of the FAA, the
Court follows the plain language of the statute and finds
that the arbitrator cannot compel a non-party to provide
pre-hearing document discovery outside the presence of an
arbitrator. See 9 U.S.C. § 7; Kinetic
Concepts, Inc., 792 F.3d at 1128. Accordingly, the
Subpoena at issue is at odds with Section 7 of the FAA, and
the Court will not enforce the Subpoena.
THEREFORE ORDERED denying Vividus LLC and HMX Services
LLC's petition seeking ...