Non-Party Evidence Under the U.S. Arbitration Act: The Trend Against “Discovery” Continues

A new federal district court decision from Dallas embraces the position of the U.S. Second and Third Circuit Courts of Appeals that the U.S. Federal Arbitration Act (“FAA”) does not permit non-party subpoenas for pre-hearing document discovery, but only permits such subpoenas if they require the non-party to appear at an arbitration hearing and to bring the documents to the hearing. In those earlier cases, the courts concluded that this result was required by the clear language of FAA Section 7. (The Second Circuit’s decision in the Life Receivables case was discussed in an Arbitration Commentaries posting on January 15, 2009, which may be found in the Archives section of this site.) Noveposting Here, the Court “declines to read greater powers in to the text of Section 7 despite policy preferences favoring arbitration efficiency, because the court’s policy preferences cannot override the clear text of the statute.” (Empire Financial Group, Inc. v. Penson Financial Services, Inc., 2010 U.S. Dist. LEXIS 18782 (N.D. Tex. Mar. 3, 2010))