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COA panel divided on trial court involvement with subpoena

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The Indiana Court of Appeals split today on whether an Indiana trial court had the authority to order a company to comply with a subpoena issued by arbitrators in New York.

Monsanto Co. and Monsanto Technology entered into corn and soybean license agreements with Pioneer Hi-Bred International and its parent company, E.I. DuPont de Nemours & Co. Based on those agreements, when Monsanto alleged DuPont had engaged in a sublicensing scheme involving third parties in the U.S., the dispute was to be resolved by arbitration in New York City. One of those third parties was Beck’s Superior Hybrids in Indiana.

The arbitration panel issued a subpoena duces tecum to Beck’s, ordering the company to appear at a preliminary hearing in Indiana before one of the panel members and to produce business records relating to the arbitration claim. Beck’s refused, believing the Federal Arbitration Act required Monsanto to seek enforcement of its nonparty subpoena in the Southern District of New York, based on Section 7 of the act. Monsanto then filed a petition to assist in Hamilton Superior Court pursuant to Indiana Trial Rule 28(E); the trial court ordered Beck’s to comply with the subpoena.

The majority concluded that Section 7 of the act preempts Trial Rule 28(E), and that in order to enforce the subpoena against a nonparty, Monsanto had to file its petition to compel “in the United States district court for the district” where the arbitration panel, or a majority of its members, is sitting, based on the language in Section 7. That would be the Southern District of New York, since Monsanto and DuPont agreed to arbitrate in New York City.

Judges Edward Najam and Paul Mathias also held that Monsanto’s lack of federal subject matter jurisdiction to enforce its subpoena doesn’t justify ignoring the plain text of Section 7 regarding that the petition to compel must be filed in the U.S. District Court for the district where the arbitrators are. The majority also relied on caselaw that has ruled if the party attempting to invoke Section 7 lacks federal jurisdiction to do so, then the arbitration panel’s nonparty subpoena may not be enforced by the “United States district court,” wrote Judge Najam for the majority.

The majority also held in Beck's Superior Hybrids, Inc. v. Monsanto Company, et al., No. 29A05-1008-MI-489, that Congress wrote Section 7 to require the enforcement of an arbitration panel’s nonparty subpoena to be brought in the federal forum.

“Indeed, the only reason why Monsanto petitioned an Indiana trial court in the first place is because Monsanto cannot avail itself of relief from a federal court,” wrote Judge Najam. “Both Monsanto and DuPont are Delaware corporations—and therefore Monsanto lacks federal diversity jurisdiction—and the dispute between them does not arise under the laws of the United States.”

Judge John Baker dissented because he believed as in this case, where there is no federal jurisdiction, Congress didn’t intend to “tie the hands of arbitrators and the States in this fashion.” He wrote if there was ongoing litigation in a Minnesota state court, an Indiana trial court could step in pursuant to Trial Rule 28(E), but the result reached by the majority means an Indiana court couldn’t offer the same help to a sister arbitration panel, notwithstanding the fact that there is no federal court jurisdiction.

“Indeed, this interpretation of Section 7 means, essentially, that only the largest corporations, which engage in business in all fifty states, are without recourse. Whereas an entity that does not have a presence in all fifty states would be able to achieve diversity jurisdiction, and the arbitrators in such a scenario would be able to enforce nonparty subpoenas in the federal district courts, a large entity such as Monsanto has no such option. Congress could not have intended to treat large and small corporations so disparately,” he wrote.

The majority remanded with instructions that the trial court dismiss Monsanto’s petition.
 

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  1. Frankly, it is tragic that you are even considering going to an expensive, unaccredited "law school." It is extremely difficult to get a job with a degree from a real school. If you are going to make the investment of time, money, and tears into law school, it should not be to a place that won't actually enable you to practice law when you graduate.

  2. As a lawyer who grew up in Fort Wayne (but went to a real law school), it is not that hard to find a mentor in the legal community without your school's assistance. One does not need to pay tens of thousands of dollars to go to an unaccredited legal diploma mill to get a mentor. Having a mentor means precisely nothing if you cannot get a job upon graduation, and considering that the legal job market is utterly terrible, these students from Indiana Tech are going to be adrift after graduation.

  3. 700,000 to 800,000 Americans are arrested for marijuana possession each year in the US. Do we need a new justice center if we decriminalize marijuana by having the City Council enact a $100 fine for marijuana possession and have the money go towards road repair?

  4. I am sorry to hear this.

  5. I tried a case in Judge Barker's court many years ago and I recall it vividly as a highlight of my career. I don't get in federal court very often but found myself back there again last Summer. We had both aged a bit but I must say she was just as I had remembered her. Authoritative, organized and yes, human ...with a good sense of humor. I also appreciated that even though we were dealing with difficult criminal cases, she treated my clients with dignity and understanding. My clients certainly respected her. Thanks for this nice article. Congratulations to Judge Barker for reaching another milestone in a remarkable career.

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