McConnell v. Advantest America ( 2023 )

Filed 5/24/23; Certified for Publication 6/15/23 (order attached)
COURT OF APPEAL, FOURTH APPELLATE DISTRICT
DIVISION ONE
STATE OF CALIFORNIA
TIM MCCONNELL et al., D080532
Plaintiffs and Appellants,
(Super. Ct. No. 37-2022-
v.
00009244-CU-PT-CTL)
ADVANTEST AMERICA, INC., et al.,
Defendants and Respondents.
APPEAL from a judgment of the Superior Court of San Diego County,
Matthew C. Braner, Judge. Reversed.
Willkie Farr & Gallagher, Jonathan A. Patchen and Jennifer S.
Maybee, for Petitioners and Appellants.
Debevoise & Plimpton, John M. Neukom; Skadden, Arps, Slate,
Meagher & Flom, Abraham A. Tabaie; and Michael M. Powell (pro hac vice)
for Defendants and Respondents.
INTRODUCTION
The California Arbitration Act (CAA; Code Civ. Proc., § 1280 et seq.)1
confers upon an arbitrator the power to issue “[a] subpoena requiring the
attendance of witnesses, and a subpoena duces tecum for the production of
books, records, documents and other evidence, at an arbitration proceeding[.]”
(§ 1282.6, subd. (a), italics added.) Interpreting section 1282.6,
subdivision (a), as a matter of first impression, the Court of Appeal in
Aixtron, Inc. v. Veeco Instruments, Inc. (2020) 52 Cal.App.5th 360, 370
(Aixtron) concluded the subpoena provisions of the CAA did not give an
arbitrator the power to issue “prehearing discovery subpoenas.” (Italics
added.)
In this case, an arbitrator issued subpoenas to compel two individuals,
who are not parties to the arbitration, to appear and produce documents at a
hearing specially set “for the limited purpose of receiving documents” from
them, or to download the documents to a website controlled by counsel for the
party requesting the subpoenas. The subpoenas provided that after the
production of documents, the “hearing” would be adjourned to a later date, at
which time the subpoenaed nonparties would be summoned to appear and
testify. The date for their compliance with the document production was
nearly 12 months before the scheduled arbitration hearing on the merits.
After the nonparties refused to comply with the subpoenas, the
arbitrator compelled compliance. The nonparties petitioned the trial court to
vacate the order compelling their compliance with the subpoenas. The trial
court denied the petition to vacate the order, concluding the subpoenas were
statutorily authorized “hearing” subpoenas under section 1282.6, not
1 Undesignated statutory references are to the Code of Civil Procedure.
2
subpoenas issued for the purposes of discovery. The nonparties assert the
judgment should be reversed because the subpoenas are improper discovery
subpoenas, despite being labeled “hearing” subpoenas.
Under the specific facts of this case, we agree with the nonparties.
Because we reverse the judgment on this ground alone, we need not and do
not reach the nonparties’ second contention that the subpoenas are
unenforceable because the good cause affidavit filed in support of them failed
to satisfy section 1985, subdivision (b).
FACTUAL AND PROCEDURAL BACKGROUND
I.
The Business Dispute in the Underlying Arbitration
In the underlying arbitration, Advantest America, Inc. and Advantest
Test Solutions, Inc. (together, Advantest) assert claims against Samer
Kabbani, its former senior executive; Lattice Innovation, Inc. (Lattice), a
company Kabbani allegedly managed and majority-owned at the same he was
working for Advantest; AEM Holdings Ltd. (AEM) which subsequently
purchased Lattice; and Wavem US Inc.2
Advantest alleges Kabbani “improperly exploited” his position at
Advantest and, without disclosing his ties to Lattice, arranged to have
Lattice selected as one of Advantest’s sub-suppliers and personally profited
from the arrangement. Advantest also alleges Lattice “aided and abetted”
Kabbani’s wrongdoing by failing to provide Advantest the intellectual
property and work product it had created under contract for Advantest, after
Kabbani’s dealings came to light.
2 Neither the parties nor the record offer an explanation as to the
relationship of Wavem US Inc. to the underlying business dispute.
3
When the company learned of his ties to Lattice, Advantest’s lawyers
interviewed Kabbani on June 5, 2020. At the end of the interview, Kabbani
provided the lawyers with his personal cell phone to be forensically imaged
for further investigation into his ties with Lattice. The investigation led to
Advantest’s arbitration claims against Kabbani, Lattice, AEM, and Wavem
US Inc. (together, Arbitration Respondents).
II.
Kabbani’s Deletion of the WhatsApp Messaging Application
During arbitration, Advantest learned Kabbani purposefully deleted
the “WhatsApp”3 messaging application from his cell phone before turning it
over to Advantest’s lawyers, on June 5, 2020. In November 2021, Advantest
deposed Kabbani in the arbitrator’s presence “regarding his use of and
deletion of WhatsApp and messages from his phone.” He admitted deleting
the application while sitting in the conference room with Advantest lawyers
present, and that deletion of the WhatsApp messaging application resulted in
the loss of any WhatsApp messages he sent or received before June 5, 2020.4
Kabbani identified five people associated with Lattice with whom he
“could potentially . . . have exchanged WhatsApp messages” regarding
3 WhatsApp is a messaging application that uses “end-to-end encryption”
which “ensures only you and the person you’re communicating with can read
or listen to what is sent, and nobody in between, not even WhatsApp.”
( [as of May
24, 2023], archived at .) Kabbani testified he
“like[d] using WhatsApp for certain communications. It’s Highly encrypted
and off the grid.”
4 In its letter to the arbitrator requesting issuance of the nonparty
subpoenas at issue in this appeal, Advantest stated that Kabbani’s counsel
represented that the deleted WhatsApp messages are not recoverable from
Kabbani’s phone or back-up accounts.
4
Lattice’s affairs.” They included Appellants Tim McConnell (Lattice’s former
president and current consultant) and Don Bachelder (Lattice’s senior
engineer), as well as three others, including another Lattice employee and
two persons formerly affiliated with Lattice’s board. Kabbani testified he
“[p]ossibly” used WhatsApp to discuss matters related to or regarding Lattice,
including product development “from a design point of view.” He did not
recall using WhatsApp for “substantive business discussions regarding
Lattice” or discussions regarding “Lattice’s finances.”
At the conclusion of Kabbani’s deposition, Advantest requested “in light
of Kabbani’s deletion of his WhatsApp messages” that the arbitrator order
Lattice to produce “WhatsApp messages between Lattice employees . . . and
Kabbani.” (Italics added.) The arbitrator found that such documents should
have been produced as part of the Arbitration Respondents’ “Rule 17
obligations and order[ed] their production” in Order No. 4.5 Lattice did not
comply with the order, apparently contending it lacked “possession, custody,
or control over its employees’ WhatsApp messages with . . . Kabbani, and can
5 JAMS Rule 17 pertains to the exchange of information and provides in
part: “(a) The Parties shall cooperate in good faith in the voluntary and
informal exchange of all non-privileged documents and other information
(including electronically stored information (‘ESI’)) relevant to the dispute or
claim immediately after commencement of the arbitration. They shall
complete an initial exchange of all relevant, non-privileged documents,
including, without limitation, copies of all documents in their possession or
control on which they rely in support of their positions, and names of
individuals whom they may call as witnesses at the Arbitration Hearing,
within twenty-one (21) calendar days after all pleadings or notice of claims
have been received. The Arbitrator may modify these obligations at the
Preliminary Conference.”
( [as of May 24,
2023], archived at .)
5
produce them only with the voluntary consent of those Lattice employees”
and “that such consent ha[d] not been granted.”
III.
The Nonparty Subpoenas
After Lattice failed to produce the WhatsApp messages between its
employees and Kabbani, Advantest requested the arbitrator “open[ ] the
arbitration hearing early to obtain (via hearing subpoenas) WhatsApp
messages between . . . Kabbani and others regarding Lattice business
affairs.” (Italics added.) Advantest provided the arbitrator with prepared
subpoenas directed to the five individuals identified by Kabbani, including
Appellants, with whom Kabbani potentially exchanged WhatsApp messages.
The proposed subpoenas requested each recipient appear at the hearing
bearing the documents called for by the subpoenas and indicated the hearing
would then “be adjourned until a later date, at which point the subpoena
recipient [would] be called to provide testimony.”
The proposed subpoenas went beyond the original scope of WhatsApp
messages exchanged between Kabbani and the five individuals previously
identified by Kabbani. Advantest explained to the arbitrator that the
proposed subpoenas also included requests “for all other correspondence
with . . . Kabbani concerning the subject matter of Lattice business, in
addition to WhatsApp messages,” because, as Advantest asserted, “all of the
documents will ultimately be necessary to litigate this arbitration.” (Italics
added.) Thus the documents requested in the proposed subpoenas included:6
6 The parties’ citations to the proposed subpoenas are to objections filed
by Appellants and a letter to the arbitrator. Accordingly, we rely on the
parties’ summaries of the proposed subpoenas, which appear similar to the
redrafted subpoenas signed and issued by the arbitrator, which are in the
record on appeal.
6
Messages “ ‘using WhatsApp, SMS, MMS, iMessage, Signal Telegram, Wickr,
WeChat and/or any other messaging service or platform concerning or
relating to Lattice or the subject matter of Lattice’s business’ ”; “messages
(from any messaging service or platform) not only to and from . . . Kabbani
but encompass ‘employees or independent contractors associated with . . .
Kabbani, D&K Engineering, FusionX, Lattice, AEM, or any agents of the
foregoing parties’ ”; and “email correspondence from all email accounts
(including personal email accounts) ‘relating to Lattice or the subject matter
of Lattice’s business.’ ”
The Arbitration Respondents objected to the issuance of the nonparty
subpoenas, on four grounds: (1) the document requests were “overbroad” and
Advantest made no showing they contain “material evidence relevant to any
claim” in the arbitration; (2) “the list of individuals subject to the third party
subpoenas broaden[ed] without justification those implicated beyond
employees of Lattice”; (3) the period requested was “unnecessarily and
unreasonably overbroad”; and (4) “the proposed subpoenas [we]re
procedurally deficient on their face” under section 1985. The Arbitration
Respondents asserted that “[d]espite the clear focus of both the Kabbani
deposition and Order No. 4 on WhatsApp messages between . . . Kabbani and
Lattice employees, Advantest’s third party subpoenas [were] considerably
broader⎯in scope, subject matter, and targeted individuals⎯and not
tethered to any claims in this [a]rbitration.”
After hearing argument, the arbitrator issued Order No. 6 overruling
the Arbitration Respondents’ objections and granting Advantest’s request for
issuance of the subpoenas, with modifications. The arbitrator rejected the
Arbitration Respondents’ objection that it was inappropriate to expand the
scope to applications other than WhatsApp, finding that “[w]hile Kabbani
7
may have some of the [non-WhatsApp] documents requested, it is more than
plausible that Kabbani deleted individual messages or communications on
other applications as a regular practice. As such, expanding the scope beyond
WhatsApp is reasonable and avoids issuing a later subpoena to these
individuals for additional documents.” The arbitrator also rejected the
Arbitration Respondents’ objection to the subpoenas including individuals
who are not employed by Lattice or the parties, finding that “Kabbani
testified that he communicated with these individuals regarding Lattice; as
such, they are likely to have discoverable information.” (Italics added.)
However, the arbitrator found merit in two of the Arbitration
Respondents’ objections. He agreed the proposed date range of “January 1,
2017 to the present” was overbroad and accordingly narrowed the date range
to “May 1, 2017 to December 31, 2020”; and that “asking for all documents
related to Lattice was overbroad as that would likely go beyond
communications with Kabbani” and thus narrowed the scope to “Lattice’s
finances, Lattice’s business in the semiconductor industry, Active Thermal
Interposer related technology, semiconductor test technology, Advantest, and
Astronics.”7
Advantest redrafted the subpoenas to conform to Order No. 6 and the
arbitrator signed them. The subpoenas, entitled as an “arbitration subpoena
to appear and present documentary evidence at an arbitration hearing”
(capitalization omitted), stated:
“By the authority conferred on the undersigned Arbitrator
by Cal. Code Civ. Proc. §§ 1985 and 1282.6 (c), you are
hereby summoned to attend as a witness at a hearing to be
7 The Arbitration Respondents and Advantest also litigated and the
arbitrator made rulings on whether Advantest complied with the good cause
requirements of section 1985, subdivision (b), an issue we do not reach.
8
held on January 28, 2022 at 10:00 AM (PST) at JAMS San
Diego, 401 B Street, Suite 2100, San Diego, CA 92101 or
via remote audiovisual conference on Zoom, as agreed upon
by the parties, and to bring with you to the hearing or
upload to the FTP site (described below) the documents
identified in Schedule A annexed to this SUBPOENA,
which hearing shall thereafter be adjourned to a later date,
at which time you are further summoned to appear and to
testify.” (Italics added.)
Schedule A identified the documents requested as two categories:
“1. All messages in your possession, custody, or control
exchanged using WhatsApp, SMS, MMS, iMessage, Signal,
Telegram, Wickr, WeChat, and/or any other messaging
service or platform dating from May 1, 2017 to December
31, 2020, and concerning or relating to (i) Lattice’s finances,
(ii) Lattice’s business in the semiconductor test industry,
(iii) ATI-related technology, (iv) semiconductor test
technology, or (v) Advantest or Astronics, including all
messages sent to or from employees or independent
contractors associated with . . . Kabbani, D&K Engineering,
FusionX, Lattice, AEM, or any agents of the foregoing
parties.
“2. All correspondence sent or received from all email
accounts controlled or accessible by you (including personal
email accounts), other than a Lattice email account, dating
from May 1, 2017 to December 31, 2020, and concerning or
relating to (i) Lattice’s finances, (ii) Lattice’s business in
the semiconductor test industry, (iii) ATI-related
technology, (iv) semiconductor test technology, or
(v) Advantest or Astronics.”
The subpoenas also contained an attached list of governing
“Definitions.”8 (Boldface omitted.) As one example, “ ‘Lattice’ ” named in
Schedule A was defined to include “its directors, officers, managers,
members, current and former employees, counsel, agents, consultants,
8 The Definitions and Schedule A are appended to this opinion. (See
appendix A, post.)
9
representatives, and any other persons acting on behalf of any of the
foregoing, and its affiliates, parents, subsidiaries, divisions, joint ventures,
licensees, franchisees, assigns, predecessors and successors in interest, and
any other legal entities, whether foreign or domestic, that are owned or
controlled by these entities and all predecessors and successors in interest to
such entities.”
Also attached to the subpoenas was Exhibit B, instructions on how to
upload the requested documents to an FTP website apparently hosted and
maintained by counsel for Advantest: https://secureftp.skadden.com.
As previously noted, the subpoenas summoned Appellants “to attend as
a witness at a hearing to be held on January 28, 2022” at the JAMS San
Diego office “or via remote audiovisual conference on Zoom.” However, as the
arbitrator described in a subsequent order, “the arbitrator convened the
arbitration hearing . . . for the limited purpose of receiving documents from
subpoenaed third parties.” (Italics added.) And although compliance with the
document requests was set for January 28, 2022, the arbitration hearing on
the merits was not to occur until December 5 through 16, 2022, almost one
year later. Advantest served the subpoenas on Appellants.
IV.
Advantest’s Request to Compel Appellants’ Compliance with the Subpoenas
At the January 28, 2022 hearing to receive the documents, counsel for
Appellants appeared without the subpoenaed documents and informed the
arbitrator that Appellants would not comply with them. Advantest then filed
a request to compel compliance with the subpoenas. Appellants opposed the
request. Relying on Aixtron, supra, 52 Cal.App.5th at page 391, Appellants
argued an arbitrator in a private, contractual arbitration cannot compel a
nonparty to the arbitration to respond to a subpoena duces tecum for
10
production of documents issued by the arbitrator “ ‘for the purposes of
discovery,’ ” and, however they are labeled, these were improper discovery
subpoenas.
After considering briefing and argument on February 14, 2022, the
arbitrator issued Order No. 11 granting Advantest’s request to compel
Appellant’s compliance with the subpoenas. The arbitrator rejected
Appellant’s argument that the subpoenas were improper discovery subpoenas
and concluded Aixtron did not preclude his power to issue them, because
Aixtron “dealt with a discovery subpoena not a hearing subpoena.” In so
ruling, the arbitrator stated that Appellant’s counsel “conceded” that
section 1282.6, subdivision (a), conferred upon an arbitrator “the power to
issue document subpoenas to non-parties for production at the arbitration
hearing,” and that under section 1282, subdivision (b), the arbitrator “has the
power to convene an arbitration hearing and then adjourn it to another
date.”9
V.
Appellants’ Petition to Vacate Arbitration Discovery Order
Appellants petitioned the trial court to vacate Order No. 11 compelling
their compliance with the subpoenas. The trial court issued a tentative
ruling denying Appellants’ petition to vacate compliance with the subpoenas.
During oral argument, the court agreed with Appellants’ counsel that the
subpoenas effectively constituted “a work-around” from the prohibition
against nonparty discovery, but stated, “I don’t agree that it’s not a legal
9 We note that at the hearing on the motion to compel, Appellants’
counsel⎯in response to the arbitrator’s question “do I have the power to open
a hearing for a limited purpose such as getting documents and then
continuing for 10 months?”⎯responded, “I would argue no you don’t.
Because that is effectively conducting discovery.”
11
work-around.” After hearing argument, the trial court confirmed its
tentative ruling.
The trial court found it was “undisputed that, on its face, the
[s]ubpoena states it is a hearing subpoena and, thus, is a subpoena
authorized” by section 1282.6. It rejected Appellants’ argument that the
court should look “beyond the plain language” of the subpoena and find they
are “actually a ‘discovery’ subpoena.” It held that the “numerous indicators”
which Appellants contend support such a finding were not dispositive
because the key distinction between a discovery subpoena and a hearing
subpoena was whether the demand required production “at a hearing.”
Because the subpoenas demanded the production of evidence at a hearing, it
concluded they “me[t] the requirements of Aixtron” and were hearing
subpoenas.
DISCUSSION
I.
Standard of Review
“The question whether an arbitrator in a private, contractual
arbitration can compel a nonparty to the arbitration to respond to a subpoena
duces tecum for the production of business records issued by the arbitrator
for the purposes of discovery is a question of law, which we review de novo.”
(Aixtron, supra, 52 Cal.App.5th at p. 391.) To the extent this question
requires us to construe a statute; determine whether the arbitrator exceeded
his or her powers; or apply law to undisputed facts⎯these are also questions
which we review de novo. (See United Riggers & Erectors, Inc. v. Coast Iron
& Steel Co. (2018) 4 Cal.5th 1082, 1089 (United Riggers) [statutory
interpretation is “an issue of law, which we review de novo”]; Richey v.
AutoNation, Inc. (2015) 60 Cal.4th 909, 918, fn. 1 [“whether the arbitrator
12
exceeded his [or her] powers . . . is generally reviewed on appeal de novo”];
Martinez v. Brownco Construction Co. (2013) 56 Cal.4th 1014, 1018 [where
the “issue involves the application of law to undisputed facts, we review the
matter de novo”].) But where the trial court made factual findings based on
disputed facts, we review those findings for substantial evidence. (Cooper v.
Lavely & Singer Professional Corp. (2014) 230 Cal.App.4th 1, 11–12.)
II.
Discovery in Arbitration Proceedings
California law reflects a strong public policy favoring contractual
arbitration as an expeditious and economical means of dispute resolution.10
(Ericksen, Arbuthnot, McCarthy, Kearney & Walsh, Inc. v. 100 Oak Street
(1983) 35 Cal.3d 312, 322.) “[A] limitation on discovery is one important
component of the ‘simplicity, informality, and expedition of arbitration.’ ”
(Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th
83, 106, fn. 11, abrogated in part on another ground in ATT Mobility LLC v.
Concepcion (2011) 563 U.S. 333, quoting Gilmer v. Interstate/Johnson Lane
Corp. (1991) 500 U.S. 20, 33.) For that reason, “[t]he right to discovery in
arbitration proceedings under the CAA ‘is generally limited’ and ‘highly
10 Although normally the first step in reviewing an arbitration dispute is
to determine whether the question presented is subject to the Federal
Arbitration Act (FAA; 9 U.S.C. § 1 et seq.) (see Aixtron, supra, 52 Cal.App.5th
at p. 391), neither Appellants nor Advantest have taken the position that the
FAA applies to this arbitration. Moreover, the arbitration agreement
between Advantest and the Arbitration Respondents is not part of the record
on appeal and thus the default rules and procedures in the Code of Civil
Procedure apply. (Broughton v. Cigna Healthplans (1999) 21 Cal.4th 1066,
1087 [“When parties agree to resolve statutory claims through arbitration, it
is reasonable to infer that they consent to abide by the substantive and
remedial provisions of the [CAA].”].) We also note that Advantest relied on
the CAA in its request to compel Appellant’s compliance with the subpoenas.
13
restricted.’ ” (Aixtron, supra, 52 Cal.App.5th at p. 395, quoting Berglund v.
Arthroscopic & Laser Surgery Center of San Diego, L.P. (2008) 44 Cal.4th
528, 534 (Berglund); accord Alexander v. Blue Cross of California (2001) 88
Cal.App.4th 1082, 1088 [right to discovery is generally “highly restricted in
arbitration proceedings”].)
The CAA grants arbitrators authority over discovery in certain
arbitration proceedings. “Section 1283.05 describes the circumstances under
which ‘depositions may be taken and discovery obtained in arbitration
proceedings,’ as well as the powers of the arbitrator with regard to such
discovery.” (Aixtron, supra, 52 Cal.App.5th at p. 395.) The discovery
authorized in section 1283.05, however, is limited to arbitration of a claim for
wrongful death or for personal injury (§ 1283.1, subd. (a); see Berglund,
supra, 44 Cal.4th at p. 535), and in all other arbitrations, the arbitrator may
grant discovery “[o]nly if the parties by their agreement so provide” (§ 1283.1,
subd. (b); Brock v. Kaiser Foundation Hospitals (1992) 10 Cal.App.4th 1790,
1802.) “Unquestionably, discovery is limited in arbitrations (except in injury
or death cases or where the parties have expressly agreed otherwise).” (Coast
Plaza Doctors Hospital v. Blue Cross of California (2000) 83 Cal.App.4th 677,
690, fn. 9.)
Section 1282.6, at issue in this appeal, governs the issuance of
subpoenas. Subdivision (a) of section 1282.6 provides:
“A subpoena requiring the attendance of witnesses, and a
subpoena duces tecum for the production of books, records,
documents and other evidence, at an arbitration proceeding or a
deposition under [s]ection 1283, and if [s]ection 1283.05 is
applicable, for the purposes of discovery, shall be issued as
provided in this section. In addition, the neutral arbitrator upon
their own determination may issue subpoenas for the attendance
of witnesses and subpoenas duces tecum for the production of
books, records, documents, and other evidence.” (Italics added.)
14
There is a paucity of case law addressing section 1282.6. The seminal case is
Aixtron, supra, 52 Cal.App.5th 360. There, as a matter of first impression,
the appellate court interpreted subdivision (a) of section 1282.6 to address
the question whether this statute allows an arbitrator to issue a “prehearing
discovery subpoena[ ]” on a nonparty. (Aixtron, at pp. 370, 373.)
In Aixtron, a party to the arbitration proceeding announced it would be
seeking “ ‘prehearing discovery’ ” from a nonparty to the arbitration.
(Aixtron, supra, 52 Cal.App.5th at p. 374.) The party then circulated a
proposed subpoena for production of the nonparty’s business records, “which
demanded 16 different categories of documents and the production of certain
[of the nonparty’s] computers.” (Id. at p. 375.) After the parties disputed the
scope of the subpoena, the arbitrator modified the language of two demands
and approved the subpoena, as modified, for service. (Id. at p. 376.) The
nonparty refused to comply with the subpoena and the arbitrator granted a
motion to compel compliance. (Id. at p. 377.) The trial court denied the
nonparty’s petition for a protective order and for rehearing, and the nonparty
appealed. (Id. at pp. 378, 380.)
The Aixtron court concluded the parties did not provide for discovery in
their arbitration agreement and section 1283.05 did not apply because the
dispute did not involve a claim for wrongful death or personal injury.
(Aixtron, supra, 52 Cal.App.5th at pp. 396, 397.) The court then interpreted
subdivision (a) of section 1282.6 as limiting an arbitrator’s power to issue “ ‘a
subpoena requiring the attendance of witness, and a subpoena duces tecum
for the production of books, records, documents and other evidence’ ” to three
circumstances: “(1) ‘at an arbitration proceeding’; (2) at ‘a deposition under
Section 1283,’ and (3) ‘if Section 1283.05 is applicable, for the purposes of
discovery.’ ” (Aixtron, at p. 398.)
15
The court found “[t]he first circumstance for which a subpoena may be
used to compel the attendance of witnesses and the production of evidence is
‘at an arbitration proceeding.’ ” (Aixtron, supra, 52 Cal.App.5th at p. 398.)
But it concluded this circumstance did not apply because the plain language
of this phrase meant a hearing before an arbitrator or panel of arbitrators.
(Ibid.) Because the subpoena at issue “did not demand that [the nonparty]
produce documents or other evidence (its computers) for an arbitration
hearing,” the court concluded it “was a discovery subpoena.” (Ibid.)
The court found the “second circumstance for which a subpoena may be
used to compel attendance of witnesses and production of documents is at ‘a
deposition under [s]ection 1283.’ ” (Aixtron, supra, 52 Cal.App.5th at p. 398.)
Section 1283 provides that an arbitrator, on application of a party, “may
order the deposition of a witness to be taken for use as evidence and not for
discovery if the witness cannot be compelled to attend the hearing or if
exceptional circumstances exist as to make it desirable, in the interest of
justice and with due regard to the importance of presenting the testimony of
witnesses orally at the hearing.” (Italics added.) The Aixtron court observed
that “[n]otably, section 1283 underscores the importance of presenting the
testimony of witnesses orally at the hearing (i.e., live testimony before the
arbitrator).” (Aixtron, at p. 398, italics added.) It then concluded the
subpoena at issue was “not for a deposition for evidentiary purposes under
section 1283.” (Ibid.)
Last, the court found “[t]he third circumstance for which a subpoena
may be used in arbitration to compel attendance of witnesses and production
of evidence is ‘if [s]ection 1283.05 is applicable, for the purposes of
discovery.’ ” (Aixtron, supra, 52 Cal.App.5th at pp. 398–399.) The court
construed the statute’s plain language here to mean “the procedures for
16
issuing subpoenas described in section 1282.6 may only be used for purposes
of discovery if section 1283.05 applies.” (Id. at p. 399.) Here, the court had
already found that section 1283.05 was inapplicable because the dispute did
not involve a claim for wrongful death or personal injury. (Aixtron, at
pp. 396−397.)
In addition to the language of section 1282.6, the Aixtron court further
relied on the legislative history to conclude that the subpoena authorized
under the statute “was intended to be used to compel the attendance of
witnesses and the production of documents and other evidence at the
arbitration hearing only and not for discovery purposes.” (Aixtron, supra, 52
Cal.App.5th at p. 401.) The court took specific notice of the Law Revision
Commission report that led to the enactment of section 1282.6 as part of the
1961 overhaul of the CAA, which stated “ ‘ “[i]t would be most unwise and
inappropriate in an arbitration proceeding to permit the taking of depositions
. . . for discovery purposes of the parties” ’ and opined that subpoenas duces
tecum should not be used ‘for the purpose of a “fishing expedition.” ’ ”
(Aixtron, at p. 401.)
III.
The Subpoenas Issued on Appellants Were Unauthorized Discovery Subpoenas
Appellants agree arbitrators have the power to issue subpoenas to
nonparties to an arbitration proceeding under section 1282.6. But they
contend the subpoenas here were improper discovery subpoenas, however
they are labeled. They claim that because Aixtron, supra, 52 Cal.App.5th
360, precludes discovery subpoenas, Advantest crafted a “work-around” by
requesting the arbitrator issue hearing subpoenas requiring Appellants to
produce the subpoenaed documents at an arbitration hearing. They assert
17
the trial court erred in permitting the workaround and improperly examined
only the form and title of the subpoenas without considering their purpose.
Advantest claims Appellants’ characterization of the subpoenas as for
discovery misses the point in that “[t]he ‘purpose’ of an Arbitration
Proceeding Subpoena like the Hearing Subpoenas here is compelling the
provision of evidence ‘at an arbitration proceeding’ before an arbitrator, full
stop.” Citing Aixtron, supra, 52 Cal.App.5th 360, Advantest argues courts
are not required to examine the purpose of a subpoena and Appellants’
approach should be rejected.
As the Aixtron court found, and we agree, the plain language of section
1282.6 allows the issuance of “[a] subpoena requiring the attendance of
witnesses, and a subpoena duces tecum for the production of books, records,
documents and other evidence, at an arbitration proceeding[.]” (Aixtron,
supra, 52 Cal.App.5th at p. 398.) Because the subpoenas satisfied this plain
language requirement for a hearing subpoena, Advantest asserts the analysis
is over because “the Aixtron court treated the fact that a subpoena calls for
the provision of evidence at an arbitration hearing as the sine qua non of an
Arbitration Proceeding Subpoena, with no further analysis required.” We
reject this contention.
A case is not authority for a proposition not considered therein or an
issue not presented by its own particular facts. (Ginns v. Savage (1964) 61
Cal.2d 520, 524, fn. 2; Mercury Ins. Group v. Superior Court (1998) 19 Cal.4th
332, 348 [“A decision, of course, is not authority for what it does not
consider.”].) In Aixtron, supra, 52 Cal.App.5th 360, the court was called upon
to consider a subpoena seeking 16 categories of documents, that did not
require production of the documents at an arbitration proceeding and was
described by the party seeking it as being for “discovery.” (Id. at pp. 374, 375
18
& 377, fn. 4.) Aixtron did not address the circumstances before us where the
subpoenas included a requirement that the document production take place
at a hearing specially set for the limited purpose of receiving the subpoenaed
documents.
We reject Advantest’s contention that because the subpoenas required
production of the documents at a hearing, our analysis ends. If this were the
case, parties to an arbitration proceeding could avoid the prohibition against
nonparty discovery, and demand any manner of documents, by simply
requiring the nonparty produce the documents at an arbitration proceeding.
We reject Advantest’s literal reading of section 1282.6 because it would defeat
the purpose of the statutory scheme and lead to absurd results. To
paraphrase the Aixtron court: “To construe section 1282.6 as granting
arbitrators unlimited power to issue discovery subpoenas as long as the
subpoena is [labeled a hearing subpoena], is inconsistent with the limitations
on discovery in sections 1283.05 and 1283.1. Such an interpretation would
also nullify the limits on discovery in sections 1283.05 and 1283.1, rendering
both sections superfluous.” (Aixtron, supra, 52 Cal.App.5th at p. 402.)
Turning to the undisputed facts before us, although the subpoenas
required the document production at a hearing presided over by the
arbitrator, the hearing was limited to the arbitrator appearing only for so
long as needed for the documents to be collected with the intent that the
hearing be adjourned for nearly 12 months, at which time Appellants would
later be summoned to testify. The subpoenas also allowed Appellants to
upload the documents to a website controlled by Advantest’s counsel. There
is no indication in the record showing the arbitrator would have access to this
website to review or evaluate the purported evidence. This defeats the
purpose of production at a hearing which gives the arbitrator control over
19
what is produced, such as ruling on objections and ordering redactions. As
explained by one federal court addressing the FAA:11
“The requirement that document production be made at an
actual hearing may, in the long run, discourage the
issuance of large-scale subpoenas upon non-parties. This is
so because parties that consider obtaining such a subpoena
will be forced to consider whether the documents are
important enough to justify the time, money, and effort
that the subpoenaing parties will be required to expend if
an actual appearance before an arbitrator is needed.
Under a system of pre-hearing document production, by
contrast, there is less incentive to limit the scope of
discovery and more incentive to engage in fishing
expeditions that undermine some of the advantages of the
supposedly shorter and cheaper system of arbitration.”
(Hay Group v. E.B.S. Acquisition Corp. (3d Cir. 2004) 360
F.3d 404, 409 (Hay Group).)
Subdivision (a) of section 1282.6 requires “the attendance of witnesses”
at the arbitration proceeding. Section 7 of the FAA, titled “Witnesses before
arbitrators; fees; compelling attendance” contains a similar requirement. It
reads in relevant part, as follows:
“The arbitrators selected either as prescribed in this
title . . . or otherwise, or a majority of them, may summon
in writing any person to attend before them or any of them
as a witness and in a proper case to bring with him or them
any book, record, document, or paper which may be deemed
material as evidence in the case.” (Ibid., italics added.)
A majority of federal courts interpret the italicized language in
section 7 of the FAA as authorizing arbitral summonses for a person to
physically appear before the arbitrator to provide testimony and documents.
(See Managed Care Advisory Grp., LLC v. CIGNA Healthcare, Inc. (11th Cir.
11 Although the parties briefed this appeal under the CAA, we refer to the
FAA based on its similarity to the CAA.
20
2019) 939 F.3d 1145, 1159–1160 [“[T]he FAA implicitly withholds the power
to compel documents from non-parties without summoning the non-party to
testify. And if Congress intended the arbitrators to have the broader power
to compel documents from non-parties without summoning the non-party to
testify, it could have said so. Accordingly, we conclude that 9 U.S.C. § 7 does
not permit pre-hearing depositions and discovery from non-parties.”]; CVS
Health Corp. v. Vividus, LLC (2017) 878 F.3d 703, 708 (CVS Health); Life
Receivables Trust v. Syndicate 102 at Lloyd’s of London (2d Cir. 2008) 549
F.3d 210, 216–217 & p. 218 [FAA “[s]ection 7’s presence requirement . . .
forces the party seeking the non-party discovery—and the arbitrators
authorizing it—to consider whether production is truly necessary.”].) There
is a minority view holding that section 7 of the FAA gives arbitrators implicit
“power to order the production of relevant documents for review by a party
prior to the hearing.” (Security Life Ins. Co. of Am. v. Duncanson & Holt (8th
Cir. 2000) 228 F.3d 865, 870–871 (Security Life); COMSAT Corp. v. Nat’l
Science Found. (4th Cir. 1999) 190 F.3d 269, 276 [noting a party may be able
to compel pre-arbitration discovery “under unusual circumstances” and “upon
a showing of special need or hardship”].)
At the hearing on Appellants’ petition to vacate Order No. 11, the trial
court appeared to rely on the minority view expressed in Security Life, supra,228 F.3d 865, that arbitrators have the “implicit” power “to order the
production of relevant documents for review by a party prior to the hearing.”
(Id. at pp. 870–871.) The Aixtron court, however, adopted the majority view,
as expressed by the Ninth Circuit in CVS Health, supra, 878 F.3d at
page 703, that arbitrators do not have the implicit power to order document
discovery from nonparties for review by a party prior to a hearing. (Aixtron,
21
supra, 52 Cal.App.5th at p. 395.) We also adopt the majority view and reject
the minority view relied on by the trial court.
Additionally, the chronology of events and the subpoenas themselves,
show they went far beyond the deleted WhatsApp messages, the original
reason for issuing the subpoenas. Based on Kabbani’s purposeful deletion of
his WhatsApp messaging application from his cell phone before he turned it
over to Advantest, the arbitrator ordered Lattice to produce copies of all
WhatsApp messages between Kabbani and Lattice employees finding that
the documents should have been produced as part of the Arbitration
Respondents’ “Rule 17 obligations and orders their production.” When
Lattice claimed it lacked control of the messages, Advantest turned to
Appellants, as the recipients of Kabbani’s messages to obtain this evidence.
Advantest argued to the arbitrator that the subpoenas were not for discovery
but for “the collection of evidence for the hearing in this matter.”
We agree that Advantest was entitled to obtain from Appellants
evidence that it could not obtain from Kabbani; namely, the WhatsApp
messages exchanged between Kabbani and Appellants regarding Lattice.
The subpoenas, however, went far beyond obtaining these messages—
evidence that was known to exist. The subpoenas turned into discovery when
they were expanded to seek, among other things, “all messages sent to or
from” unidentified employees or independent contractors associated with
Kabbani, Lattice, and three other entities on WhatsApp, to messages sent on
seven other messaging applications and “any other messaging service or
platform” concerning or relating to “(i) Lattice’s finances, (ii) Lattice’s
business in the semiconductor test industry, (iii) ATI-related technology,
(iv) semiconductor test technology, or (v) Advantest or Astronics.” When the
arbitrator rejected the Arbitration Respondents’ objection to the subpoenas
22
including individuals who are not employed by Lattice or the parties, he
implicitly acknowledged they were discovery subpoenas in his finding that
“Kabbani testified that he communicated with these individuals regarding
Lattice, as such, they are likely to have discoverable information.” (Italics
added.)
There also is no evidence in the record showing Kabbani communicated
with Appellants using these other messaging services. In fact, citing
Kabbani’s deposition transcript, Appellants’ counsel informed the arbitrator
that Kabbini testified he did not remove any other applications from his
phone before turning it over for forensic imaging. Rather, the arbitrator
speculated “Kabbani deleted individual messages or communications on other
applications as a regular practice” and concluded that “expanding the scope
beyond WhatsApp [was] reasonable and avoid[ed] issuing a later subpoena to
these individuals for additional documents.” Even assuming Kabbani and
Appellants had used a non-WhatsApp messaging platform, there is no
evidence in the record showing Kabbani deleted any messages existing on
those platforms and thus Advantest could seek such evidence from the
Arbitration Respondents directly, rather than from the nonparty Appellants.
The subpoenas also seek documents in five broad categories. For
example, the term “finances” is so broad as to potentially refer to financial
information that is entirely irrelevant to this arbitration proceeding such as
how much Lattice paid its employees. Assuming the term “finances” refers to
financial statements like cash flow statements, income statements, profit and
loss statements, and balance sheets, Advantest has not explained why it
cannot seek this information directly from the Arbitration Respondents.
In their arbitration agreement, Advantest and the Arbitration
Respondents did not agree to the full panoply of discovery under California’s
23
Civil Discovery Act (§ 2016.010 et seq.). They are bound by their agreement.
Our independent review of the subpoenas and the record leading to their
issuance shows their clear purpose was for discovery. Because discovery is
not a permissible purpose of an arbitration hearing subpoena, the arbitrator
abused his discretion by overstepping his statutory authority under section
1282.6. Accordingly, under the specific facts presented here, we conclude the
trial court erred when it denied Appellants’ petition to vacate the arbitration
discovery order and entered judgment in Advantest’s favor.
DISPOSITION
The judgment is reversed and the trial court is directed to enter an order
granting Appellants’ petition to vacate the arbitration discovery order.
Appellants are entitled to their costs on appeal.
DO, J.
WE CONCUR:
HUFFMAN, Acting P. J.
O’ROURKE, J.
24
APPENDIX
A.
Definitions
1. “Advantest America” means Advantest America, Inc. and its
directors, officers, managers, members, current and former
employees, counsel, agents, consultants, representatives, and any
other persons acting on behalf of any of the foregoing, and its
affiliates, parents, subsidiaries, divisions, joint ventures, licensees,
franchisees, assigns, predecessors and successors in interest, and
any other legal entities, whether foreign or domestic, that are
owned or controlled by these entities and all predecessors and
successors in interest to such entities. “Advantest America” should
not be interpreted to include Samer Kabbani.
2. “Advantest Test Solutions” or “ATS” means Advantest Test Solutions,
Inc. and its directors, officers, managers, members, current and
former employees (with the exception of Samer Kabbani), counsel,
agents, consultants, representatives, and any other persons acting on
behalf of any of the foregoing, and its affiliates, parents, subsidiaries,
divisions, joint ventures, licensees, franchisees, assigns, predecessors
and successors in interest, and any other legal entities, whether
foreign or domestic, that are owned or controlled by these entities and
all predecessors and successors in interest to such entities.
3. “Advantest” means, collectively, Advantest America and Advantest
Test Solutions, as defined above.
4. “Astronics” means Astronics Corporation and its directors, officers,
managers, members, current and former employees (with the
exception of Samer Kabbani), counsel, agents, consultants,
representatives, and any other persons acting on behalf of any of the
foregoing, and its affiliates, parents, subsidiaries, divisions, joint
ventures, licensees, franchisees, assigns, predecessors and successors
in interest, and any other legal entities, whether foreign or domestic,
that are owned or controlled by these entities and all predecessors
and successors in interest to such entities.
25
5. “DUT” means device under test, as commonly understood in the
semiconductor test industry.
6. “Active thermal interposer” or “ATI” or “interposer” broadly refers
to an apparatus that serves as a thermally conductive interface
between a DUT and a semiconductor tester, and generally conforms
to the shape of the DUT.
7. “Lattice” means Lattice Innovation, Inc. and its directors, officers,
managers, members, current and former employees, counsel, agents,
consultants, representatives, and any other persons acting on behalf of
any of the foregoing, and its affiliates, parents, subsidiaries, divisions,
joint ventures, licensees, franchisees, assigns, predecessors and
successors in interest, and any other legal entities, whether foreign or
domestic, that are owned or controlled by these entities and all
predecessors and successors in interest to such entities. “Lattice”
includes any divisions, lines of business, operations, or teams relating
to products, technologies, customers, or other operations performed by
Lattice Innovation, Inc. prior to its acquisition by AEM and Wavem,
and subsequently continued by AEM and Wavem.
8. “AEM” means AEM Holdings Ltd. and its directors, officers,
managers, members, current and former employees, counsel,
agents, consultants, representatives, and any other persons acting
on behalf of any of the foregoing, and its affiliates, parents,
subsidiaries, divisions, joint ventures, licensees, franchisees,
assigns, predecessors and successors in interest, and any other legal
entities, whether foreign or domestic, that are owned or controlled
by these entities and all predecessors and successors in interest to
such entities.
9. “D&K Engineering” means D&K Engineering, Inc. and its directors,
officers, managers, members, current and former employees,
counsel, agents, consultants, representatives, and any other persons
acting on behalf of any of the foregoing, and its affiliates, parents,
subsidiaries, divisions, joint ventures, licensees, franchisees, assigns,
predecessors and successors in interest, and any other legal entities,
whether foreign or domestic, that are owned or controlled by these
entities and all predecessors and successors in interest to such
entities.
26
10. “FusionX” means FusionX Ventures and all its partners, officers,
managers, members, current and former employees, counsel,
agents, consultants, representatives, and any other persons acting
on behalf of any of the foregoing, and its affiliates, parents,
subsidiaries, divisions, joint ventures, licensees, franchisees,
assigns, predecessors and successors in interest, and any other legal
entities, whether foreign or domestic, that are owned or controlled
by these entities and all predecessors and successors in interest to
such entities.
11. The terms “relating to,” “relate to,” “referring to” and “refer to”
mean relating to, reflecting, referring to, concerning, mentioning,
pertaining to, evidencing, involving, describing, discussing,
commenting on, embodying, responding to, supporting,
contradicting, or constituting (in whole or in part), as the context
makes appropriate.
12. The terms “include” and “including” means including without
limitation.
13. The term “all” includes and encompasses “any” and “each.”
14. The terms “or” and “and” shall be read in the conjunctive and in the
disjunctive wherever they appear, and neither of these words shall be
interpreted to limit the scope of these Interrogatories.
15. Use of the singular shall be read as including the plural and vice-
versa.
16. Use of a verb in any tense shall be construed as the use of the verb in
all other tenses.
27
Schedule A – Document Requests
Document Requests
1. All messages in your possession, custody, or control exchanged using
WhatsApp, SMS, MMS, iMessage, Signal, Telegram, Wickr, WeChat,
and/or any other messaging service or platform dating from May 1,
2017 to December 31, 2020, and concerning or relating to
(i) Lattice’s finances, (ii) Lattice’s business in the semiconductor test
industry, (iii) ATI- related technology, (iv) semiconductor test
technology, or (v) Advantest or Astronics, including all messages sent
to or from employees or independent contractors associated with Mr.
Kabbani, D&K Engineering, FusionX, Lattice, AEM, or any agents of
the foregoing parties.
2. All correspondence sent or received from all email accounts
controlled or accessible by you (including personal email accounts),
other than a Lattice email account, dating from May 1, 2017 to
December 31, 2020, and concerning or relating to (i) Lattice’s
finances, (ii) Lattice’s business in the semiconductor test industry,
(iii) ATI-related technology, (iv) semiconductor test technology, or
(v) Advantest or Astronics.
28
Filed 6/15/23
CERTIFIED FOR PUBLICATION
COURT OF APPEAL, FOURTH APPELLATE DISTRICT
DIVISION ONE
STATE OF CALIFORNIA
TIM MCCONNELL et al., D080532
Plaintiffs and Appellants,
(Super. Ct. No. 37-2022-
v. 00009244-CU-PT-CTL)
ADVANTEST AMERICA, INC., et al.,
ORDER CERTIFYING OPINION
Defendants and Respondents. FOR PUBLICATION
THE COURT:
The opinion in this case filed May 24, 2023 was not certified for
publication. It appearing the opinion meets the standards for publication
specified in California Rules of Court, rule 8.1105(c), the request pursuant to
rule 8.1120(a) for publication is GRANTED.
IT IS HEREBY CERTIFIED that the opinion meets the standards for
publication specified in California Rules of Court, rule 8.1105(c); and
ORDERED that the words “Not to Be Published in the Official Reports”
appearing on page one of said opinion be deleted and the opinion herein be
published in the Official Reports.
HUFFMAN, Acting P. J.
Copies to: All parties
2