Exploring the Implications of CVS Health Corp v. Vividus, LLC on Arbitrators’ Powers to Subpoena Documents

Lawrence Cock & Benjamin Byers | March 26, 2018

In the midst of the 2017 holiday season, the Ninth Circuit donned its Grinch mask and took the joy from Arbitratorville. The court, interpreting the Federal Arbitration Act, stripped arbitrators of significant subpoena power.[1] Non-parties now have a powerful objection to a subpoena for pre-arbitration document production.

The Case Itself

CVS Health Corporation v. Vividus, LLC began life as an antitrust case. Vividus, along with other parties, filed a law suit in New York state court against multiple pharmacy benefit managers, alleging they were violating antitrust laws. The case was removed to the U.S. District Court for the Eastern District of New York, and the court proceeded to sever the claims against various defendants, ordering those claims to be pursued in separate proceedings. One such claim, against Express Scripts, was transferred to the Eastern District of Missouri. Another, against CVS, was submitted to arbitration in Arizona.

In November of 2015, the arbitrators in the Arizona arbitration subpoenaed Express Scripts to produce documents as part of pre-arbitration discovery. The subpoena directed Express Scripts to produce these documents at Vividus’ counsel’s place of business in Miami, Florida. Express Scripts did not respond to the subpoena, and Vividus filed a petition to enforce the subpoena pursuant to Section 7 of the Federal Arbitration Act, 9 U.S.C. § 7 (“Section 7”). The district court rejected Vividus’ request, concluding Section 7 only allows an arbitrator to summon testimony and documents from a non-party during a hearing, and does not permit an arbitrator to compel pre-hearing document discovery from a non-party. Vividus appealed, arguing the district court erred in its interpretation of an arbitrator’s power under Section 7, and that such a reading would create an absurd result.

The Ninth Circuit rejected Vividus’ arguments and affirmed the district court. The court determined “[a] plain reading of the text of section 7 reveals that an arbitrator’s power to compel the production of documents is limited to production at an arbitration hearing. . . . section 7 grants an arbitrator no freestanding power to order third parties to produce documents other than in the context of a hearing.”[2] The court took some time to discuss other circuits’ views on the issue, noting the Second,[3] Third,[4] and Fourth[5] circuits had drawn similar conclusions, while the Eight Circuit[6] had instead concluded the arbitrator’s greater power, to compel witnesses to provide testimony and produce documents at a hearing, must inherently include the lesser power of compelling the production of documents pre-hearing.

The Vividus court also considered whether the relationship between Express Scripts and the Arizona arbitration should be a factor to consider, given that Express Scripts had not begun as a non-party to the issue, and could be considered “integrally related” to the Arizona proceedings.[7] The court determined this relationship did not affect the plain language of Section 7, concluding that where “the statute’s language is plain, the sole function of the courts . . . is to enforce it according to its terms.”[8] The court’s result was an absolute limit on the power of arbitrators—“section 7 of the FAA does not grant arbitrators the power to order third parties to produce documents prior to an arbitration hearing.”[9]

So What Now

This decision presents thorny choices for participants in arbitration or those considering arbitration.

First, when deciding whether to agree to arbitration, clients need to consider the possibility that pre-hearing subpoenas to third parties for documents will be unavailable.

Second, parties to an arbitration may need to ask the arbitrator to schedule an initial hearing, during which non-parties are required to produce documents and testify. That could be followed by hearing sessions scheduled after the parties have had an opportunity to review and evaluate document productions by third parties. This approach, however, will increase arbitration costs considerably. Another approach, for non-parties within the same state as the arbitration, may be to invoke the Uniform Arbitration Act, enacted by many states.  Note, however, given the similarity between the language of the UAA and the FAA, state courts may take the same issue with non-party discovery pursuant to the UAA.[10]

Third, for non-parties who receive subpoenas to produce documents, attorneys should advise their client such production is not required, and they can assert a blanket objection or move to quash the subpoena on the basis of CVS Health Corp v. Vividus, LLC.

We might eventually see higher guidance on the issue, given the circuit split. How, for example, should an attorney advising a client in Washington respond to a subpoena from an arbitrator in Iowa, given the divide between the Ninth and Eight circuit holdings? Attorneys should consider where the client’s principal place of business is and the court that could end up deciding a motion to compel.

In the Ninth Circuit, however, the rule is plain—if you’re looking to subpoena documents from a non-party in arbitration, think strategically, and if you are a non-party, object.



[1] CVS Health Corp. v. Vividus, LLC, 878 F.3d 703 (9th Cir. 2017).

[2] Id. at 706.  

[3] Id. at 707 (citing Life Receivables Tr. V. Syndicate 102 at Lloyd’s of London, 549 F.3d 210 (2d Cir. 2008)).

[4] Id. (citing Hay Group, Inc. v. E.B.S. Acquisition Corp., 360 F.3d 404 (3d Cir. 2004)).

[5] Id. (citing COMSAT Corp v. Nat’l Sci. Found., 190 F.3d 269 (4th Cir. 1999)).

[6] Id. (citing In re Security Life Insurance Co. of America, 228 F.3d 865 (8th Cir. 2000).

[7] Id. at 707-08.

[8] Id. at 708 (quoting Hartford Underwriters Ins. Co. v. Union Planters Bank, N.A., 530 U.S. 1, 7 (2000)).

[9] Id.

[10] Compare RCW 7.04A.170(1) (“An arbitrator may issue a subpoena for the attendance of a witness and for the production of records and other evidence at any hearing and may administer oaths.”) with 9 U.S.C. § 7 (“The arbitrators . . . 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.”).

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