## Facts

- Plaintiffs maintained commodities and securities accounts with Paine Webber and sued Paine Webber and its representative alleging Commodity Exchange Act violations, Florida securities-law violations, and related common-law claims.
- The customer agreement contained an arbitration clause; the court compelled arbitration under the Federal Arbitration Act (FAA) and retained jurisdiction to enforce any award.
- In the pending AAA arbitration, defendants sought subpoenas duces tecum to third parties for plaintiffs’ tax returns and records of plaintiffs’ accounts at other firms to contest plaintiffs’ claimed lack of sophistication and alleged unsuitability.
- The arbitration panel issued subpoenas requiring pre-hearing production of documents directly to defendants.
- Plaintiffs filed an emergency motion for a temporary restraining order and preliminary injunction to bar defendants from requesting or serving subpoenas except for attendance or production before the arbitration panel itself.

## Issues

1. Whether, after ordering arbitration and staying judicial proceedings, a federal district court may enjoin parties from using arbitration subpoenas that require third-party pre-hearing document production.
2. Whether FAA § 7 authorizes arbitrators to issue subpoenas that compel production of documents before the hearing and to a party, notwithstanding the absence of court-supervised discovery.

## Decision

- The court denied plaintiffs’ motion for a temporary restraining order and preliminary injunction.
- The court held that a judicial stay of discovery in the court action does not prohibit evidence-gathering measures authorized and managed within the arbitration.
- The court declined to interfere with the arbitrators’ subpoena practice, concluding that FAA § 7 provides statutory authority for arbitrators to summon witnesses and require production of material documents.
- The court found no sufficient basis for injunctive relief to restrict the arbitration subpoenas or their pre-hearing production requirements.

## Legal Principles

- When a court compels arbitration, the stay of judicial discovery applies to the court proceeding; it does not, by itself, bar arbitral evidence-gathering controlled by the arbitrators.
- FAA § 7 authorizes arbitrators to summon persons to attend before them and, in a proper case, to bring material documents; courts generally will not preemptively limit the arbitrators’ use of that authority during an ongoing arbitration.
- Federal courts have a limited role once arbitration is compelled and should avoid intervening in the conduct of arbitration, including discovery-like disputes, absent a clear statutory or contractual violation.
- Injunctive relief aimed at supervising arbitration procedures requires satisfaction of equitable requirements, including likelihood of success and irreparable harm; generalized objections to arbitral subpoenas ordinarily are not enough.

## Conclusion

The court refused to enjoin arbitration subpoenas requiring third-party pre-hearing document production, reasoning that the judicial discovery stay did not control arbitral procedure and that FAA § 7 places primary responsibility for such evidence-gathering decisions with the arbitrators during the arbitration.


Stanton v. Paine Webber Jackson & Curtis, Inc., 685 F. Supp. 1241 (S.D. Fla. 1988)