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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. As one of the many consumers affected by this breach, I found my bank data had been lifted and used to buy over $200 of various merchandise in New York. I did a pretty good job of tracing the purchases to stores around a college campus just from the info on my bank statement. Hm. Mr. Hill, I would like my $200 back! It doesn't belong to the state, in my opinion. Give it back to the consumers affected. I had to freeze my credit and take out data protection, order a new debit card and wait until it arrived. I deserve something for my trouble!

  2. Don't we have bigger issues to concern ourselves with?

  3. Anyone who takes the time to study disciplinary and bar admission cases in Indiana ... much of which is, as a matter of course and by intent, off the record, would have a very difficult time drawing lines that did not take into account things which are not supposed to matter, such as affiliations, associations, associates and the like. Justice Hoosier style is a far departure than what issues in most other parts of North America. (More like Central America, in fact.) See, e.g., http://www.theindianalawyer.com/indiana-attorney-illegally-practicing-in-florida-suspended-for-18-months/PARAMS/article/42200 When while the Indiana court system end the cruel practice of killing prophets of due process and those advocating for blind justice?

  4. Wouldn't this call for an investigation of Government corruption? Chief Justice Loretta Rush, wrote that the case warranted the high court’s review because the method the Indiana Court of Appeals used to reach its decision was “a significant departure from the law.” Specifically, David wrote that the appellate panel ruled after reweighing of the evidence, which is NOT permissible at the appellate level. **But yet, they look the other way while an innocent child was taken by a loving mother who did nothing wrong"

  5. Different rules for different folks....

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