Sometimes the legal gods smile on you. Your earth-scouring investigation of the facts surrounding an arbitration dispute yields a cool reward: the revelation of a potential game-changing witness. Perhaps you've found someone who was present when alleged statements were made at a corporate meeting that are key to the case, but where, regrettably, no minutes were kept--except by your guy, who took private notes of the meeting and stored it in his computer, because that's what he always did. Maybe your witness was the recipient of instructions to implement--or not--a highly relevant but hotly disputed company policy.
There is ample history to show that such witnesses can, sometimes singlehandedly, decide a case. Ideally, a game-changing witness (1) will have no vested interest in the outcome of a dispute; (2) will not come with baggage, such as hostility toward a party for whom they used to be employed, and (3) will be "presentable" and capable of telling a story clearly, in his or her own words.
An unforgettable example that bubbles to the surface from my years of practice, (it occurred in a medical malpractice trial rather than an arbitration), was a Catholic nun nurse who assisted in the delivery of a mother, but otherwise had no connection with the parties. The claim was that the physician had mishandled the delivery and caused a brain injury to the child. The nurse appeared in her nun's habit (as her calling required), and after defense counsel led with his chin at the beginning of cross-examination by "reminding" her that she was still under oath. She said, with a reassuring smile, "I am always under oath." This was followed up by other ill-fated attempts to undermine the nurse-nun's credibility, which fell flat because she simply testified to what she saw, first-hand, in the operating room, and made no attempt to offer an opinion or advocate for either party. The jury hung on her every word, and when she left the witness stand, the case was over. That kind of witness.
There is a long and winding pathway, however, from identifying a potential game-changing witness to actually eliciting devastating testimony from him or her at an arbitration hearing. A few of the sharper curves deserve attention.
First, it is a good move to always use a subpoena with a potential game-changing witness. The choice might not be yours--the witness may have to be subpoenaed to appear at the hearing, such as where he or she is employed by an organization that requires a subpoena to be served in order to be excused from work without having to take vacation time. But even with no such impediments, formal service of a subpoena at the very least articulates the scope of what the witness will be expected to do, particularly in collecting subpoenaed documents, and can create a positive impression for the arbitrator that the witness is appearing because he or she has to, not because of a desire to help out one party over the other.
It is surprising how disparate lawyers' views can be regarding the subpoena process in an arbitration, largely because of the mistaken belief that an arbitration subpoena is no different than a subpoena for a court action. Statutes and case law lay out a pretty clear road map. The geographical limits of a third party subpoena are the same.
The California Arbitration Act gives an arbitrator the same power as a judge, (under CCP 1985 et seq.) to issue and enforce subpoenas to a third party (except to arrest or imprison anyone who disobeys a legitimate subpoena), as well as subpoenas duces tecum for the production of documents. (CCP 1282.6). Subpoenas are limited to persons residing in the state or doing business in the state which requires their personal presence (CCP 1989). Under the FAA, the geographical scope of an arbitration subpoena, as in federal court, is 100 miles from the location of the arbitration hearing, or within the state if the requesting party can show good cause (FRCP 45 (b), (c)). Outside the state, the parties must petition a court located within the prescribed geographical limits to issue a subpoena.
But geographical boundaries are where the arbitration and litigation subpoenas part company. Unlike litigation, a party must ask the arbitrator to issue a third party subpoena, and show that (1) the parties have expressly incorporated CCP 1283.05 into their arbitration agreement, which gives the parties access to the full panoply of discovery rights and obligations available in a civil action, including the power of an arbitrator to issue third party subpoenas for a hearing, as well as depositions and subpoenas duces tecum for discovery. (CCP 1283.05, 1283.1--though many arbitration clauses reference Section 1283.5, given that parties commonly agree to arbitration to avoid drawn-out litigation discovery); (2) the dispute is for personal injury or wrongful death, which gives the parties discovery rights without having to stick Section 1283.05 into their arbitration clause (CCP 1283.1(a)); or (3) "exceptional circumstances" exist which make it "desirable" to secure the witness' testimony in the "interest of justice," by the arbitrator ordering a deposition of the witness for use as evidence at the hearing, but not for purposes of discovery. (CCP 1283)
Apart from this, the arbitrator can issue a third party subpoena if he or she believes it is necessary to obtain key testimony or documents. (CCP 1282.6). But in practice arbitrators are rarely this proactive.
Any third party subpoena for documents must identify documents that meet the arbitration standard of relevance, i.e., directly relevant to the issues and material to their outcome. General or boilerplate requests that flourish under the relevance standard for discovery in civil litigation (relevant to the subject matter and likely to lead to the discovery of admissible evidence) won't cut it, and even if they do get by the arbitrator, will expose the subpoena to a "motion to quash" by the third party itself.
Like many things in life, there is a caveat. If the dispute involves interstate commerce, the Federal Arbitration Act could be applicable. Section 10 of the FAA restricts an arbitrators' subpoena powers to requiring the witness to appear and produce documents at the hearing; discovery subpoenas and subpoenas duces tecum are not allowed. The rule is strict: the witness must physically appear at the hearing with the subpoenaed documents in tow. Cases from other circuits hold that even videoconferencing and/or production of documents beforehand are not options.
So what to do if the witness is beyond the geographical limits of the subpoena? In such cases, the arbitrator can move the hearing temporarily to a site within the boundaries of a subpoena, take evidence from the witness, and then adjourn the hearing pending a full hearing on the merits. Problem solved, although fair allocation of the costs of such a venture may raise a few issues.
There are plenty of cases establishing that the FAA preempts any substantive state arbitration law that is contrary to it, but not any procedural rules, except where the arbitration agreement expressly provides for arbitration under the FAA. (e.g. Avila v. Southern California Speciality Care, Inc., 20 Cal. App. 5th 835 (2018)) A question thus looms as to whether a subpoena for the deposition of a third party under the California Arbitration Act is a procedural or substantive animal.
One may, not illogically, interpret California case law as generally suggesting that all provisions of the California Arbitration Act are procedural, which is a convenient solution. But there is a rational argument, (not yet addressed by the courts), that whether the arbitrator is empowered to issue third party subpoenas for discovery is a substantive question. I'll chicken out and leave it at that, but with a friendly caution to be ready for an argument from the worthy opposition that issuing a third party subpoena or subpoena duces tecum for discovery would contradict the FAA subpoena restrictions in a substantive way, thereby making the FAA preemptive, and cratering the possibility of a third party discovery subpoena.
Though congratulations may be in order for persuading an arbitrator to properly issue a third party subpoena, the real challenge awaits: incentivizing the witness to live up to his game-changing potential. The irony is that a witness who has nothing to gain from the arbitration and doesn't really care how it turns out--a critical trait of a potential game-changer--may well have no appetite to devote chunks of time traveling to, and testifying at a hearing (or deposition), and reviewing and producing relevant documents to produce from his or her personal files.
Regrettably, as an arbitrator I have seen a witness with game-changing possibilities, who, after being caught in minor, fully explainable inconsistencies between his written witness statement and his testimony at the beginning of cross, decided to abandon ship, resorting to short, cryptic answers just to avoid further discomfort and get to the finish line. Anticipated game-changing impact lost.
Happily, something can be done to minimize the likelihood of this unfortunate scenario, without upsetting the apple cart. First, at the earliest opportunity: the subject of compensating the witness for time and effort spent should be fully vetted. A common, quasi-knee jerk reaction to the idea of paying money to a third party witness is to avoid it, since it arguably opens the door to cross-examination suggesting that the witness' testimony has been "bought and paid for." But this ignores arbitration law that gives a subpoenaed third party witness legal rights to compensation.
The California Arbitration Act provides that, at a minimum, a subpoenaed witness is entitled to payment for "fees and mileage in the same amount and under the same circumstances as prescribed by law for witnesses in civil actions in the superior court." (CCP 1283.2). In addition, the arbitration rules of leading institutions, such as the AAA, empower the arbitrator to award a subpoenaed third party witness "all reasonable costs associated" with appearing and testifying at the hearing. (AAA Commercial Rule 35). Likewise, the Federal Rules of Civil Procedure, which set the parameters of a subpoena issued under the FAA, provide that where a third party would incur an "undue burden" in complying with a subpoena, the court may condition compliance on a party ensuring that the subpoenaed person will be "reasonably compensated", apart from payment of witness fees and mileage. (FAA Section 10; FRCP 45(d), (b)).
There is virtually no case that sets exact parameters for "reasonable" compensation in the subpoena context, but one can rationally argue that it is perfectly proper to offer a third party witness reasonable expenses for time spent to prepare for testimony, including the time it takes to understand what subjects will be covered in examination at the hearing, collecting subpoenaed documents, and, if relevant, preparing a written witness statement.
Yet it is a gamble to let the third party witness go it alone. To insure that your potential game-changer shines forth at the hearing, these activities should involve you--but in a way that does not compromise the perception of the witness being independent and unbiased. Some lawyers are justifiably hyper-sensitive about going down this road. Getting too involved with the preparation of a third party witness raises the specter of an unfavorable cross examination regarding the lawyer's involvement. Things can become more dicey where the lawyer helps the witness create a written witness statement in lieu of live direct examination (always done in international arbitration and becoming more common in domestic ones). For example, when a blue-collar construction worker, whose second language was English, submits a written witness statement with phrases such as "prior to proceeding with my work, I thought it would be prudent to check with my foreman. . . ." (this really happened), the cross-examining lawyer gets a wonderful opening to recite every phrase like this in the witness statement to make the witness admit that he or she doesn't talk that way (and maybe doesn't understand some of the words), and then elicit testimony that his statement was "basically" written by the opposing lawyer. If you think this might flatten the impact of a potential game-changer's testimony, you're right.
It is therefore helpful to bear a few things in mind. First, as to compensation, don't sweat paying a potential game-changer for time spent constructing his testimony or gathering subpoenaed documents, but make sure it's reasonable. Arbitrators are unlikely to balk at an arrangement to pay the witness an amount equivalent to money he or she earns in his or her current line of work, but eyebrows will be raised if the level of compensation has no rational basis, and smacks of a "reward" for the witness testifying in a certain manner.
Second, when you approach preparation of a potential game-changer, proceed with a bit of caution. Nothing you and the witness say to each other is protected by the attorney-client privilege, so it's wise to assume that the witness could be asked to recite everything you tell him. Therefore, it's unwise to tell the witness how you want or expect him to testify, how bad the other side's case is, or how you want the case to be decided. Also, embrace the witness' style of speaking: don't try to make his testimony sound more authoritative, especially if it is to be delivered by a written witness statement. And lastly, don't encourage the witness to be an advocate for your cause: that's your job). You won't be sorry--if a potential game-changer has confidence that his story, told in his way and in his words (even if grammatically incorrect) is the best way he can perform as a witness, the chances of him/her hitting it out of the park in real time go way, way up.
Fred is an experienced international and domestic arbitrator and mediator. He is a fellow with the College of Commercial Arbitrators, member of the National Academy of Distinguished Neutrals and the ICC Commission, and former head of arbitration at Quinn Emanuel and Gibson Dunn.