Stanton v. Paine Webber Jackson & Curtis, Inc.

685 F.Supp. 1241

United States District Court, S.D. Florida.

Richard STANTON, individually and as Trustee for Minnie Stanton, Cheryl Stanton, Linda Heffron and James Urie, Plaintiffs,
v.
PAINE WEBBER JACKSON & CURTIS, INC. and Robert Diamond, Defendants.

No. 85-6632-CIV.

June 14, 1988.

Investors, who had brought action alleging violations of Commodity Exchange Act, Florida security laws, and common law, and whose claims had been ordered to arbitration pursuant to the Federal Arbitration Act, moved for temporary restraining order and preliminary injunction enjoining defendants from requesting issuance of and serving subpoenas for attendance of witnesses or production of documents other than for attendance or production before arbitration panel. The District Court, Gonzalez, J., held that: (1) court could not interfere with procedures of arbitration panel and impose judicial control over arbitration proceedings pursuant to the Federal Arbitration Act, and (2) Act section authorizing arbitrators to summon witnesses and have them bring documents is not limited to authorizing arbitrators to compel witnesses at hearing, so as to prohibit compelled prehearing appearances.
Motion denied.

West Headnotes


[1] Headnote Citing References KeyCite Citing References for this Headnote

Key Number Symbol 25T Alternative Dispute Resolution
Key Number Symbol 25TII Arbitration
Key Number Symbol 25TII(D) Performance, Breach, Enforcement, and Contest
Key Number Symbol 25Tk190 Stay of Proceedings Pending Arbitration
Key Number Symbol 25Tk191 k. In General. Most Cited Cases
(Formerly 33k23.9 Arbitration)

All discovery between parties must be stayed by court pending arbitration pursuant to the Federal Arbitration Act. 9 U.S.C.A. § 1 et seq.
[2] Headnote Citing References KeyCite Citing References for this Headnote

Key Number Symbol 25T Alternative Dispute Resolution
Key Number Symbol 25TII Arbitration
Key Number Symbol 25TII(D) Performance, Breach, Enforcement, and Contest
Key Number Symbol 25Tk184 k. Jurisdiction and Powers of Court. Most Cited Cases
(Formerly 33k23.8 Arbitration)

Court may not interfere with procedures of arbitration panel and impose judicial control over arbitration proceedings pursuant to the Federal Arbitration Act. 9 U.S.C.A. § 1 et seq.
[3] Headnote Citing References KeyCite Citing References for this Headnote

Key Number Symbol 25T Alternative Dispute Resolution
Key Number Symbol 25TII Arbitration
Key Number Symbol 25TII(F) Arbitration Proceedings
Key Number Symbol 25Tk252 k. Discovery and Depositions. Most Cited Cases
(Formerly 33k31 Arbitration)

Under Federal Arbitration Act, arbitrators may order and conduct such discovery as they find necessary. 9 U.S.C.A. § 1 et seq.
[4] Headnote Citing References KeyCite Citing References for this Headnote

Key Number Symbol 25T Alternative Dispute Resolution
Key Number Symbol 25TII Arbitration
Key Number Symbol 25TII(F) Arbitration Proceedings
Key Number Symbol 25Tk252 k. Discovery and Depositions. Most Cited Cases
(Formerly 33k31 Arbitration)

Federal Arbitration Act section authorizing arbitrators to summon witnesses and have them bring documents is not limited to authorizing arbitrators to compel witnesses at hearing, so as to prohibit compelled prehearing appearances. 9 U.S.C.A. § 7.
*1241 Douglas de Almeida, Forkey & Falco, P.A., Deerfield Beach, Fla., for plaintiffs.

Keith Olin, Ruden, Barnett, McCloskey, Smith, Schuster & Russell, P.A., Miami, Fla., for defendants.

ORDER

GONZALEZ, District Judge.


THIS CAUSE has come before the court upon the Third Verified Emergency Motion for Temporary Restraining Order and Preliminary Injunction of the plaintiffs, Richard Stanton, individually and as Trustee for Minnie Stanton, Cheryl Stanton, Linda Heffron *1242 and James Urie (collectively referred to as "plaintiffs"). Plaintiffs seek an order enjoining the defendants, Paine Webber Jackson & Curtis, Inc. ("Paine Webber") and Robert Diamond ("Diamond") from requesting the issuance of and serving subpoenas for the attendance of witnesses or production of documents, other than for attendance or production before the arbitration panel.
Plaintiffs brought the underlying action against Paine Webber and Diamond for violations of the Commodity Exchange Act, Florida securities laws and common law. Defendants moved for, and this court Ordered arbitration of plaintiffs' claims pursuant to the Federal Arbitration Act, 9 U.S.C. § 4. The court retained jurisdiction to enforce the arbitration award.
A hearing before the American Arbitration Association panel is scheduled to begin shortly. Defendants Paine Webber and Diamond have requested that the arbitration panel issue subpoenas duces tecum to various third parties. The documents sought are records of commodities accounts maintained by plaintiffs with firms other than Paine Webber and plaintiffs' tax returns. Defendants claim that production of these documents is necessary because they tend to disprove plaintiffs' claims of unsophistication and financial unsuitability.
It appears from plaintiffs' Motion that the arbitrators have issued several of the subpoenas requested. The subpoenas require pre-hearing production of documents to the defendants. Plaintiffs contend that the issuance of these subpoenas to third parties violates the law and the production of documents constitutes impermissible pre-hearing discovery.
[1] Headnote Citing References Plaintiffs are correct that all discovery between parties must be stayed by the court pending arbitration. See Suarez-Valdez v. Shearson/American Express, Inc., 845 F.2d 950, 951 (11th Cir. May 23, 1988) . "An agreement to arbitrate is an agreement to proceed under arbitration and not under court rules." Id. (footnote omitted).
[2] Headnote Citing References However, the court can find no support for plaintiffs' contention that the court may interfere with the procedures of the arbitration panel. The Federal Arbitration Act, 9 U.S.C. § 1 et seq., sets forth the district courts' powers to enforce arbitration agreements. These include the power to (1) stay court proceedings when an issue therein is arbitrable ( 9 U.S.C. § 3); (2) compel such issues to arbitration ( 9 U.S.C. § 4); (3) enforce summons issued by arbitrators ( 9 U.S.C. § 7); and (4) confirm, vacate, modify or correct an arbitration award ( 9 U.S.C. §§ 9- 13). Nothing in the Act contemplates interference by the court in an ongoing arbitration proceeding. See Foremost Yarn Mills, Inc. v. Rose Mills, Inc., 25 F.R.D. 9, 11 (E.D.Pa.1960) ("[I]t is clearly evident that the Arbitration Act does not in any wise attempt to regulate the procedures before the arbitrators or prescribe rules or regulations with respect to hearings before arbitrators.")
The Arbitration Act does provide the parties with some protection from the arbitrators' acts. When the arbitrators have by their misbehavior prejudiced the rights of any party or have exceeded their powers, the court may vacate an award made by the arbitrators. 9 U.S.C. § 10. The procedures and standards for vacating an award must be followed.
However, the plaintiffs are not seeking to vacate an award by the arbitrators. They are asking the court to impose judicial control over the arbitration proceedings. Such action by the court would vitiate the purposes of the Federal Arbitration Act: "to facilitate and expedite the resolution of disputes, ease court congestion, and provide disputants with a less costly alternative to litigation." Recognition Equipment, Inc. v. NCR Corp., 532 F.Supp. 271, 275 (N.D.Tex.1981) .
[3] Headnote Citing References [4] Headnote Citing References Furthermore, the court finds that under the Arbitration Act, the arbitrators may order and conduct such discovery as they find necessary. See Corcoran v. Shearson/American Express, Inc., 596 F.Supp. 1113, 1117 (N.D.Ga.1984) ; Mississippi Power Co. v. Peabody Coal Co., 69 F.R.D. 558 (S.D.Miss.1976) (arbitrator, in *1243 his discretion, may permit and supervise discovery he deems necessary); see also 9 U.S.C. § 7 (arbitrators may issue summons to bring witnesses and documents before them). Plaintiffs' contention that § 7 of the Arbitration Act only permits the arbitrators to compel witnesses at the hearing, and prohibits pre-hearing appearances, is unfounded. For the foregoing reasons, it is hereby
ORDERED AND ADJUDGED that the Third Verified Emergency Motion for Temporary Restraining Order and Preliminary Injunction be and the same is DENIED. The court notes that this is the third time this identical motion has been denied. No further motions on this issue will be considered.
S.D.Fla.,1988.
Stanton v. Paine Webber Jackson & Curtis, Inc.
685 F.Supp. 1241