92 Cal.App.5th 596
Cal. Ct. App.2023Background
- Advantest sued several former employees and related entities in arbitration after learning a former executive, Samer Kabbani, deleted the WhatsApp app from his phone before turning it over; Advantest sought WhatsApp messages and related communications.
- Arbitrator ordered Lattice to produce WhatsApp messages; Lattice said it lacked possession or control and did not produce.
- Advantest then obtained arbitrator-signed subpoenas directed to five nonparty recipients (including McConnell and Bachelder) requiring production of broad categories of messages and emails at a specially convened "hearing" scheduled Jan. 28, 2022, with the hearing then to be adjourned and merits hearing set nearly 12 months later.
- Subpoenas allowed uploading documents to an FTP controlled by Advantest’s counsel; nonparties refused to comply.
- Arbitrator compelled compliance; trial court denied nonparties’ petition to vacate. Court of Appeal reversed, holding the subpoenas were unauthorized prehearing discovery subpoenas and the arbitrator exceeded statutory authority under Cal. Code Civ. Proc. §1282.6.
Issues
| Issue | Advantest's Argument | McConnell's Argument | Held |
|---|---|---|---|
| Whether an arbitrator may compel nonparties to produce documents at a separately convened prehearing production date (i.e., prehearing discovery) under §1282.6 | §1282.6 authorizes subpoenas for evidence "at an arbitration proceeding;" requiring production at a hearing suffices regardless of timing or label | Substance controls: subpoenas were effectively prehearing discovery and Aixtron prohibits nonparty discovery via arbitrator unless statutory exception applies | Court reversed: subpoenas were unauthorized discovery subpoenas; arbitrator exceeded authority under §1282.6 |
| Whether courts must look beyond the subpoena's label to its practical purpose | Label and the requirement to produce at an arbitration proceeding control; no further inquiry required | Courts should examine purpose and circumstances to prevent work‑around of arbitration discovery limits | Court examined substance, not just form, and found the subpoenas functioned as discovery and were improper |
| Whether production by upload to a party‑controlled FTP and long adjournment satisfies the "at a hearing" requirement | Such procedures are permissible means of producing evidence at an arbitration proceeding | Upload to opposing counsel’s FTP and adjournment undermine arbitrator control and are de facto prehearing production | Court held FTP upload and long adjournment undercut the "at hearing" requirement and supported finding of prehearing discovery |
| Whether expanding scope beyond WhatsApp to multiple platforms, broad topics, and additional individuals was justified | Expansion was reasonable to capture potentially deleted communications and avoid later subpoenas | Expansion was untethered to known evidence, overbroad, and sought irrelevant materials; proper route was to seek from parties | Court found scope expansion converted the subpoenas into broad discovery and was improper |
Key Cases Cited
- Aixtron, Inc. v. Veeco Instruments, Inc., 52 Cal.App.5th 360 (Cal. Ct. App. 2020) (interpreting §1282.6 to prohibit prehearing discovery subpoenas not tied to an arbitration hearing)
- Hay Group v. E.B.S. Acquisition Corp., 360 F.3d 404 (3d Cir. 2004) (requiring production at an actual hearing discourages large‑scale nonparty subpoenas and prehearing fishing expeditions)
- CVS Health Corp. v. Vividus, LLC, 878 F.3d 703 (9th Cir. 2017) (section 7 of the FAA does not permit prehearing discovery from nonparties)
- Life Receivables Tr. v. Syndicate 102 at Lloyd’s of London, 549 F.3d 210 (2d Cir. 2008) (presence requirement under FAA forces assessment of necessity for nonparty production)
- Security Life Ins. Co. v. Duncanson & Holt, 228 F.3d 865 (8th Cir. 2000) (minority view allowing prehearing production in unusual circumstances upon special need)
- Berglund v. Arthroscopic & Laser Surgery Ctr. of San Diego, L.P., 44 Cal.4th 528 (Cal. 2008) (discovery in arbitration is generally limited; wrongful death/personal injury exception exists)