Facts
- Cheryl Leandri applied for disability benefits on March 15, 2019, citing various physical impairments, and initially reported no mental impairments [lines="14-19"].
- In late 2020, she was diagnosed with an adjustment disorder, which she claimed affected her work capabilities [lines="23-25"].
- The ALJ considered medical opinions, including that of a State agency consultant, which concluded she had no mental health impairment prior to her diagnosis [lines="28-30"].
- The ALJ found Leandri’s adjustment disorder to be non-severe and denied her disability claim based on this determination [lines="34-36"].
- Leandri argued that the ALJ failed to develop the record sufficiently, as the only mental impairment assessment occurred before her diagnosis [lines="38-41"].
Issues
- Did the ALJ err by concluding that Leandri's adjustment disorder was non-severe? [lines="36"].
- Was the ALJ required to order a consultative examination to assess the impact of Leandri's adjustment disorder on her functional abilities? [lines="688"].
Holdings
- The court found that substantial evidence supported the ALJ’s conclusion that Leandri’s adjustment disorder was non-severe, noting that she did not demonstrate significant limitations in her daily activities [lines="787-788"].
- The court held that it was within the ALJ's discretion to decide against ordering a consultative examination, as the evidence provided was sufficient to make a determination regarding her disability [lines="846-849"].
OPINION
| Matter of Investcloud Inc. v Siegal |
| Decided on April 24, 2024 |
| Supreme Court, Monroe County |
| Doyle, J. |
| Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. |
| This opinion is uncorrected and will not be published in the printed Official Reports. |
Decided on April 24, 2024
In the Matter of Application of Investcloud, Inc., Petitioner,
against Evan Siegal, PRICEWATERHOUSECOOPERS ADVISORY SERVICES LLC, and PRICEWATERHOUSECOOPERS LLP, Respondents. For a Judgment Pursuant to the Federal Arbitration Act. |
Index No. E2024004906
John T. Murray, Esq., Tristan D. Hujer, Esq., Christopher Barraza, Esq., and David L. Cook, Esq., PHILLIPS LYTLE LLP, for the Petitioner
Brendan R. McGuire, Esq., and Brad E. Konstandt, Esq., WILMER CUTLER PICKERING HALE AND DOOR LLP, for Respondents
Daniel J. Doyle, J.
Petitioner seeks judicial intervention in a pending arbitration proceeding, conducted pursuant to the Federal Arbitration Act, to compel third party discovery by respondents. For the reasons that follow, the Petition is DENIED, and the stay of the arbitral hearing is vacated.
Findings of Fact
Petitioner Investcloud, Inc. (hereinafter "petitioner") entered into a Master Services Agreement (hereinafter "agreement") with Manning & Napier Advisors, LLC (hereinafter "Manning") to develop software for Manning. Manning claimed a breach of the agreement, and pursuant to the agreement's mandatory arbitration provision, the matter was referred to arbitration. That provision stated that "[a]ll [*2]disputes hereunder shall be settled by arbitration under the auspices of JAMS in the state of New York".[FN1]
Relevant herein, petitioner was selected as the vendor to provide the services to Manning pursuant to a "request for information" (hereinafter "RFI") process overseen by the respondents herein. Respondent Evan Siegal (hereinafter "Siegal") was the partner at Respondents Pricewaterhousecoopers Advisory Services LLC and Pricewaterhousecoopers LLP (hereinafter "PWC"). Petitioner alleges that Manning had little involvement in the selection of petitioner under the RFI process as PWC oversaw the RFI process. Siegal was identified by Manning as a relevant witness at the arbitral hearing.
The arbitrator issued a scheduling order in which the arbitrator noted that the arbitration would be "governed by the JAMS Comprehensive Arbitration Rules and Procedures ("JAMS Rules")". The parties agree that the arbitrator determined that the Federal Arbitration Act (hereinafter "FAA") would apply, and petitioner does not dispute that determination. Additionally, petitioner and Manning agreed to a confidentiality agreement wherein the parties agreed that should any third-party discovery be provided, it would be considered confidential. Thereafter, the parties engaged in discovery.
Petitioner sought discovery from Siegal and PWC through Manning but petitioner alleges that Manning has not been forthcoming will all relevant discovery as to PWC's work on the RFI process. Petitioner notes that Manning has produced 4,266 documents (out of a combined discovery production by the parties of 19,385 documents) and only 48 non-substantive emails from PWC were provided (and no emails authored by Siegal). Petitioner avers that it has not been provided PWC discovery outlining how the RFI process was developed and scored, and how Siegal and PWC ultimately determined to select petitioner. Petitioner also averred that Manning refused to provide relevant information, as it "cannot speak for [PWC]".
Counsel for petitioner served a deposition subpoena on Siegal and a document subpoena on PWC to obtain evidence relevant to the arbitral hearing. Siegal and PWC refuse to comply with the subpoenas. Petitioner initiated this special proceeding seeking to compel respondents' compliance with the subpoenas.[FN2] Petitioner did not seek to obtain a ruling from the arbiter as to whether the sought non-party discovery should be ordered prior to initiating this [*3]proceeding.
On March 26, 2024 this Court entered an Order temporarily staying the arbitration proceeding until resolution of the issues herein.
Conclusions of Law
Whether the FAA allows non-party pre- hearing discovery has resulted in a "circuit split" among the U.S. Court of Appeals. (See e.g., In re Sec. Life Ins. Co. of Am.,
In ImClone Sys. Inc. v. Waksal (
We subscribe to the view that depositions of nonparties may be directed in FAA arbitration where there is a showing of "special need or hardship," such as where the information sought is otherwise unavailable (see COMSAT Corp. v National Science Found.,(Id. at 388.)190 F3d 269 , 276-277 [1999]; Application of Deiulemar Compagnia Di Navigazione S.p.A. v M/V Allegra,198 F3d 473 , 479-480 [1999], cert denied sub nom. Pacific Eternity, S.A. v Deiulemar Compagnia Di Navigazione, S.p.A.,529 US 1109 [2000]). This view properly takes into consideration the realities and complexities of modern arbitration.
This Court is bound by ImClone and its holding. Under New York's interpretation of the FAA, an arbitrator is authorized to order non-party discovery (through subpoena) upon a showing of "special need or hardship".[FN3]
However, the determination on whether process should be issued to compel non-party discovery (a determination as to whether petitioner established a "special need or hardship"), and the issuance of such process, must be made by the arbiter.
As respondents correctly note, the Court of Appeals has cautioned trial courts from becoming "unnecessarily entangled in arbitrations or from serving " 'as a vehicle to protract litigation' " (Nationwide Gen. Ins. Co.,
The parties herein agreed that the JAMS rules would apply to their arbitration proceeding. The relevant JAMS rules (although not as clear as one would hope) do contemplate the use of pre-hearing, non-party discovery. (See JAMS Rule 17[e].) The JAMS Recommended Arbitration Discovery Protocols for Domestic, Commercial Cases set forth relevant factors arbiters should consider in determining the scope of relevant discovery, including its power to subpoena third-party information, and whether the "denial of the requested discovery would, in the arbitrator's judgment (after appropriate scrutinizing of the issues), deprive [*4]the requesting party of what is reasonably necessary to allow that party a fair opportunity to prepare and present its case". As petitioner herein agreed to arbitrate any disputes with Manning, and the arbitration rules are not arbitrary and satisfy the necessary due process to protect the rights of the parties and ensure a fair arbitration proceeding, this Court declines to intervene. (See gen. Goldfinger v. Lisker,
Furthermore, as the parties agreed that the FAA applies to their arbitration, any authority to issue subpoenas is derived from Section 7. Its plain language limits the power to issue subpoenas to the arbitrator. ("Most significantly, the FAA permits the arbitration panel—but not the parties—to summon witnesses before the panel to testify and produce documents and to petition the district court to enforce the summons." Servotronics, Inc. v. Rolls-Royce PLC,
Finally, whether petitioner has established a "special need or hardship" to justify the issuance of a third-party subpoena for documents and pre-hearing discovery is best determined by the arbiter. The arbiter has overseen the extensive discovery in the proceeding and can fairly determine — employing the factors outlined by JAMS as agreed to by the parties- whether the discovery is required to ensure a fair arbitral hearing. This Court should not intrude into the arbitration proceeding to determine issues best left to the discretion of the arbiter, and ImClone and Roche do not mandate same.
Based upon the forgoing, and the submissions of the parties [FN4] , it is hereby
ORDERED that the Petition is DENIED; and it is further
ORDERED that the stay of the arbitration proceedings is vacated.
Dated: April 24, 2024Honorable Daniel J. Doyle, JSC
Footnote 1:The agreement also stated that it was governed by the laws of the State of New York.
Footnote 2:Petitioner also alleges that Manning and respondents are conspiring to prevent petitioner from obtaining the requested discovery. The Court rejects this argument.
Footnote 3:The Court rejects petitioner's argument that this Court is required to determine whether a "special need or hardship" exists to justify non-party discovery. ImClone did not hold that an intervening Court must make that determination. Instead, the Second Department affirmed the issuance of a New York commission pursuant to CPLR Rule 3108 on a different ground than that relied upon by the trial court. Important to the analysis is the fact that the arbiters had authorized the subpoenas of out-of-state non-party witnesses (ruling that such evidence was relevant to the proceeding). Similarly, in Matter of Roche Molecular Sys., Inc. (
Footnote 4:Petition and exhibits (NYSCEF Docket #s 1-41); Memorandum of Law (NSYCEF Docket # 43); Affirmation (NYSCEF Docket # 44); Affidavit (NYSCEF Docket # 45); Affirmation of Brad E. Konstandt with exhibits dated April 9, 2024; Respondents' Memorandum of Law in Opposition; Memorandum of Law in Reply; Affirmation in Reply with exhibits.