National Litigation Hotline

Arbitrator's Subpoena Cannot Compel Document Production from Nonparties

The Third Circuit has held that nonparties in an arbitration concerning alleged violations of a nonsolicitation agreement cannot be compelled to produce documents pursuant to an arbitrator's subpoena. Hay Group v. E.B.S. Acquisition Corp., 360 F.3d 404 (3d Cir. March 12).

David Hoffrichter was employed by the Hay Group, a Philadelphia-based management consulting company. In 1999, Hoffrichter left the Hay Group to work for PricewaterhouseCoopers LLP (PwC). At the time Hoffrichter left for PwC, Hay required him to sign a separation agreement that included a clause requiring him to refrain from solicitation of Hay clients or employees for 1 year after his departure. The agreement also required the parties to submit any dispute to binding arbitration. One year later, Hay commenced an arbitration alleging that Hoffrichter had violated the nonsolicitation clause. In 2002, PwC sold the division in which Hoffrichter worked to E.B.S. During the arbitration proceedings, Hay issued subpoenas both to E.B.S. and PwC in an effort to obtain documents from both. E.B.S and PwC resisted the subpoenas. However, the arbitrator agreed that the production of the documents was necessary. Hay ultimately took the discovery dispute to a federal district court for resolution. E.B.S. and PwC did not convince the court, however, that the Federal Arbitration Act (FAA) did not authorize the subpoenas and that the Federal Rules of Civil Procedure prevented the trial court from enforcing a subpoena on a nonparty for documents outside the court's territorial jurisdiction. Thus, the district court enforced the subpoenas, and both PwC and E.B.S. appealed.

The Third Circuit overruled the district court, finding that nothing in the FAA authorizes an arbitrator to issue subpoenas for prehearing document production from nonparties to an arbitration. In fact, the Third Circuit wrote, E.B.S. and PwC could be required to submit documents only if the subpoena required individuals to produce documents when they testify as a witness. To be enforceable, therefore, the subpoena request has to contain a summons for the person being requested to bring the documents. The court emphasized both the federal rules and the language of the FAA reinforce its holding that because the rules specifically permitted a party to compel a witness to bring documents at the time of testimony but were silent on the issue of merely producing documents, it was clear that a subpoena to deliver documents was prohibited under the rules.

Employees' Notes Not Protected Free Speech

Notes taken by two Illinois Department of Transportation (IDOT) employees who were tracking co-workers' and supervisors' movements were not entitled to constitutional protection under the First Amendment, the Seventh Circuit has held. In so finding, the Seventh Circuit reversed a district court's denial of a motion for summary judgment in a lawsuit filed by the employees after they were disciplined. Sullivan v. Ramirez, 360 F.3d 692 (7th Cir. March 3).

In January 1999, the court said, an anonymous letter was sent to the state governor's chief of staff, claiming “abuse of time” by a member of management at the bureau. Robert Ramirez, the head of IDOT's Bureau of Employee Services, met with employees to discuss the note and the ensuing investigation by state police. Ramirez told his employees to cooperate with the police, but advised them that the IDOT had an official timekeeper and that no one else was to keep time. However, during the pendency of the investigation, investigators commented that allegations of time abuse were not helpful unless backed up by documentation. Accordingly, Connie Sullivan and Mary Blanco began taking notes concerning their co-workers' office time in their personal calendars. Both women also reported their co-workers' tardiness to supervisors. Co-workers began to complain that Sullivan and Blanco's note-taking was creating a hostile work environment. Eventually, Ramirez told Blanco to stop recording her co-workers' time, but she refused to comply. Ramirez obtained the calendars kept by both employees and confirmed that both had, despite his instructions, recorded employees' time. As a result, Sullivan was charged with insubordination, misuse of state time, and disrupting the workplace and was suspended with pay for a week. Further, Ramirez suspended Blanco with pay for 1.5 days. Sullivan and Blanco sued. The district court refused to find that Ramirez had a qualified immunity from their First Amendment claims, and it rejected Ramirez's motion for summary judgment.

The Seventh Circuit disagreed, holding that Ramirez is protected by a qualified immunity. Specifically, the court found that the state's interest in preventing the disruption caused by the employees' note-taking outweighed their First-Amendment rights.

Arbitrator's Subpoena Cannot Compel Document Production from Nonparties

The Third Circuit has held that nonparties in an arbitration concerning alleged violations of a nonsolicitation agreement cannot be compelled to produce documents pursuant to an arbitrator's subpoena. Hay Group v. E.B.S. Acquisition Corp. , 360 F.3d 404 (3d Cir. March 12).

David Hoffrichter was employed by the Hay Group, a Philadelphia-based management consulting company. In 1999, Hoffrichter left the Hay Group to work for PricewaterhouseCoopers LLP (PwC). At the time Hoffrichter left for PwC, Hay required him to sign a separation agreement that included a clause requiring him to refrain from solicitation of Hay clients or employees for 1 year after his departure. The agreement also required the parties to submit any dispute to binding arbitration. One year later, Hay commenced an arbitration alleging that Hoffrichter had violated the nonsolicitation clause. In 2002, PwC sold the division in which Hoffrichter worked to E.B.S. During the arbitration proceedings, Hay issued subpoenas both to E.B.S. and PwC in an effort to obtain documents from both. E.B.S and PwC resisted the subpoenas. However, the arbitrator agreed that the production of the documents was necessary. Hay ultimately took the discovery dispute to a federal district court for resolution. E.B.S. and PwC did not convince the court, however, that the Federal Arbitration Act (FAA) did not authorize the subpoenas and that the Federal Rules of Civil Procedure prevented the trial court from enforcing a subpoena on a nonparty for documents outside the court's territorial jurisdiction. Thus, the district court enforced the subpoenas, and both PwC and E.B.S. appealed.

The Third Circuit overruled the district court, finding that nothing in the FAA authorizes an arbitrator to issue subpoenas for prehearing document production from nonparties to an arbitration. In fact, the Third Circuit wrote, E.B.S. and PwC could be required to submit documents only if the subpoena required individuals to produce documents when they testify as a witness. To be enforceable, therefore, the subpoena request has to contain a summons for the person being requested to bring the documents. The court emphasized both the federal rules and the language of the FAA reinforce its holding that because the rules specifically permitted a party to compel a witness to bring documents at the time of testimony but were silent on the issue of merely producing documents, it was clear that a subpoena to deliver documents was prohibited under the rules.

Employees' Notes Not Protected Free Speech

Notes taken by two Illinois Department of Transportation (IDOT) employees who were tracking co-workers' and supervisors' movements were not entitled to constitutional protection under the First Amendment, the Seventh Circuit has held. In so finding, the Seventh Circuit reversed a district court's denial of a motion for summary judgment in a lawsuit filed by the employees after they were disciplined. Sullivan v. Ramirez , 360 F.3d 692 (7th Cir. March 3).

In January 1999, the court said, an anonymous letter was sent to the state governor's chief of staff, claiming “abuse of time” by a member of management at the bureau. Robert Ramirez, the head of IDOT's Bureau of Employee Services, met with employees to discuss the note and the ensuing investigation by state police. Ramirez told his employees to cooperate with the police, but advised them that the IDOT had an official timekeeper and that no one else was to keep time. However, during the pendency of the investigation, investigators commented that allegations of time abuse were not helpful unless backed up by documentation. Accordingly, Connie Sullivan and Mary Blanco began taking notes concerning their co-workers' office time in their personal calendars. Both women also reported their co-workers' tardiness to supervisors. Co-workers began to complain that Sullivan and Blanco's note-taking was creating a hostile work environment. Eventually, Ramirez told Blanco to stop recording her co-workers' time, but she refused to comply. Ramirez obtained the calendars kept by both employees and confirmed that both had, despite his instructions, recorded employees' time. As a result, Sullivan was charged with insubordination, misuse of state time, and disrupting the workplace and was suspended with pay for a week. Further, Ramirez suspended Blanco with pay for 1.5 days. Sullivan and Blanco sued. The district court refused to find that Ramirez had a qualified immunity from their First Amendment claims, and it rejected Ramirez's motion for summary judgment.

The Seventh Circuit disagreed, holding that Ramirez is protected by a qualified immunity. Specifically, the court found that the state's interest in preventing the disruption caused by the employees' note-taking outweighed their First-Amendment rights.