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Wash. Nat’l Ins. Co. v. Obex Grp. LLC, No. 18 CV 9693 (S.D.N.Y. Jan. 18, 2019) [click for opinion]

Washington National Insurance Company (“Petitioner”) claims it was fraudulently induced to enter a reinsurance agreement with Beechwood Re (“Beechwood”). Petitioner alleged that Beechwood had connections to a hedge fund, Platinum Partners (“Platinum”), which allegedly used Beechwood as a vehicle to, among other things, “invest in other companies in which Platinum had interests, in violation of Beechwood Re’s duties to Petitioner.” Petitioner, and an affiliate, brought an arbitration and sought more than $134 million in damages.

In February 2018, the arbitration panel issued non-party subpoenas that required non-parties Obex Group LLC and its principal, Randall Katzenstein (“Respondents”), to appear as witnesses at a hearing and to bring documents set forth in the subpoena schedules. After Respondents objected to the subpoena, Petitioner twice agreed to narrow their scope, without the need for a hearing, on condition that Respondents produce the agreed documents. Respondents produced documents, but in April 2018, another non-party produced an email from Respondent Katzenstein which neither he, nor Respondent Obex Group LLC, had produced. This prompted Petitioner to insist on further production in compliance with the subpoenas, but Respondents refused to agree. In August 2018, the panel issued two summonses that required Respondents to appear at a hearing in New York City in October 2018, and to bring documents responsive to the subpoena schedules. Respondents again objected. The hearing proceeded with a court reporter present and the Panel prepared to receive evidence, but Respondents did not appear. The Panel then granted leave for Petitioner to seek enforcement of the arbitration summonses by “a Court of appropriate jurisdiction.”

Petitioner filed a petition with the United States District Court for the Southern District of New York in October 2018 seeking the court’s enforcement of the arbitration summonses. Respondents moved to dismiss the petition for lack of jurisdiction, which the court denied in a bench ruling in December 2018. After Respondents filed a motion for reconsideration, and to quash the summons, the court affirmed its denial and enforced the summonses.

The court began by referring to Section 7 of the Federal Arbitration Act (the “FAA“), which authorizes arbitrators to “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.” The court rejected Respondents’ argument that the court lacked jurisdiction to enforce the arbitration summonses because the parties to the underlying arbitration were not diverse. According to the court, Section 7 actions “involve different parties than those in the underlying arbitration,” and Respondents’ approach would inappropriately “have the Court ignore the citizenship of the parties to the controversy actually before the Court and rely on the citizenship of the parties to a different controversy.” The court thus refused to “look through” the Section 7 petition to the underlying proceeding in determining whether to exercise diversity jurisdiction: the parties immediately before the court drove the determination instead. Because this case also satisfied the jurisdictional threshold amount—a determination the court also made by noting the “$134 million in damages in the underlying arbitration” and the corresponding value of the requested documents—the court determined that the requirements had been met for diversity jurisdiction.

The court similarly rejected Respondents’ arguments that the summonses should be quashed on grounds that the majority of the arbitrators were not sitting in the Southern District of New York. In rejecting this suggested approach of looking to the arbitrators’ business addresses, the court noted that the summonses at issue “ordered respondents to appear at a hearing in New York City,” and thus the “arbitrators are sitting in the Southern District of New York.” Under the language of Section 7—under which a district court sitting in the district “in which such arbitrators, or a majority of them, are sitting,” can compel compliance with a summons—the court ruled that it had authority to enforce the summonses. As the court explained, nothing “in Section 7 requires an arbitration panel to sit in only one location,” and were it held otherwise, it “would greatly circumscribe an arbitration panel’s ability to decide a case, potentially discourage litigants from arbitrating disputes involving nonparty witnesses in multiple locations, and thus contract the strong federal policy in favor of arbitration.”

Finally, the court held that the summonses were proper under FAA Section 7 and thus denied Respondents’ motion to quash them. The court rejected the argument that the summonses were defective for seeking impermissible pre-hearing discovery, explaining that the “panel summoned respondents to a hearing before the arbitrators—not to a deposition.” The court also rebuffed Respondents’ contention that the district court, not the arbitrator, has the power to rule on the merits of objections to the summonses, since Section 7 does not provide a mechanism for non-parties to challenge objectionable summonses. Without taking a position on whether the court itself had authority to rule on the merits of Respondents’ objections, the court opined that the panel, rather than the court, “is far better positioned” to “make any assessment of whether the non-parties’ testimony is material, cumulative, or otherwise objectionable.”

The court thus required Respondents to comply with the summonses by expressly requiring them to appear before the panel on a set date and produce all of the responsive documents required by the panel.

A version of this post originally appeared in the May 2019 edition of Baker McKenzie’s International Litigation & Arbitration Newsletter, which is edited by David Zaslowsky and Grant Hanessian.


Kyle Olson is a member of the Dispute Resolution team at Baker McKenzie in Chicago. Mr. Olson focuses his practice on international arbitration and complex commercial litigation with a focus on business torts, product liability and class action defense. He has appeared in a variety of litigation matters in state and federal court, has given argument and taken and defended several depositions. Mr. Olson has also sole authored several articles related to public international law in newspapers and legal publications, including the Chicago Tribune and the International Bar Association. Kyle Olson can be reached at and + 1 312 861 2521.


David Zaslowsky has been practicing international litigation and international arbitration for almost 40 years. He has been Chambers-ranked in international arbitration and also sits as an arbitrator. He specializes in technology cases and is the editor of the Firm's Blockchain Blog and its International Litigation & Arbitration Newsletter.