Jones Day v. Orrick, Herrington & Sutcliffe, LLP, No. 21-16642 (9th Cir. Aug. 1, 2022) [click for opinion]

A Jones Day partner based in its Paris office left the firm to join Orrick, Herrington & Sutcliffe. Under the Jones Day partnership agreement, all disputes among partners were to be resolved by arbitration proceedings under the Federal Arbitration Act (the "FAA") in Washington, DC. Accordingly, Jones Day commenced an arbitration in Washington, DC concerning the departure.

During the arbitration, the arbitrator issued a subpoena to Orrick for documents requested by Jones Day. Orrick refused to comply with the subpoena and Jones Day sought to enforce it in the Superior Court of the District of Columbia. That court dismissed the petition, concluding (1) that it lacked jurisdiction over Orrick, whose principal place of business was San Francisco and (2) that § 7 of the FAA required Jones Day to file its action to enforce the subpoena in federal district court.

Jones Day then requested that the arbitrator sit in the Northern District of California and issue a revised subpoena requiring that two Orrick partners appear at a hearing in San Jose, California. The arbitrator obliged, but Orrick refused to comply with these subpoenas as well. Jones Day then filed this action in the U.S. District Court for the Northern District of California seeking to enforce the subpoenas.

The Northern District of California denied Jones Day's petition, concluding that it lacked jurisdiction. In doing so, the court construed § 7 of the FAA to only provide jurisdiction to the district court in which the arbitrator sits. The district court rejected Jones Day's argument that the arbitrator could "sit" at more than one location, and could sit within the Northern District of California for the purposes of compelling Orrick's attendance. Because the case was dismissed on venue grounds, the court did not reach a decision on whether Chapter 2 of the FAA conferred subject matter jurisdiction over actions to enforce an arbitral summons to a third party.

The Ninth Circuit answered this question first, in the affirmative. The court explained that Congress enacted Chapter 2 of the FAA, 9 U.S.C. §§ 201–208, to provide for the effective and efficient resolution of international arbitral disputes after the United States entered into the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards ("the New York Convention" or "Convention"). Unlike Chapter 1 of the FAA, which governs domestic arbitral disputes and does not include a jurisdictional provision, Chapter 2 of the FAA includes a jurisdictional provision, 9 U.S.C. § 203, which provides federal district courts with original jurisdiction over "action[s] or proceeding[s] falling under the Convention."

The court rejected Orrick's arguments that arbitral summons to third parties did not "fall under" the Convention because summonses are not listed in Chapter 2 of the FAA. In doing so, the Ninth Circuit cited dictionaries from around 1970 (the year Congress enacted § 203) which contained broad definitions of "falling under," and made clear that enforcement provisions need not be explicitly listed in Chapter 2 to fall under the Convention. The court further explained that neither the Convention nor Chapter 2 contains any language excluding the use of petitions to enforce arbitral summonses. The only limitation is set forth in § 208, which disallows only those processes provided for in domestic arbitrations under Chapter 1 that conflict with Chapter 2 or the Convention. Here, far from conflicting with the Convention, judicial enforcement of an arbitrator's summons only aids in the arbitration process. The court therefore concluded that § 7 was a non-conflicting provision in Chapter 1 that residually applies through Chapter 2, and accordingly falls under the Convention.

The Ninth Circuit further found that the Convention's removal statute, 9 U.S.C. § 205, supported this broader interpretation, as § 205 permits removal to federal courts when "the subject matter of an action or proceeding pending in a state court relates to an arbitration agreement or award falling under the Convention." In adopting this interpretation, the Ninth Circuit joined the Second, Fifth, and Eleventh circuits in holding that "falling under" encompasses additional proceedings necessary to complete the arbitration process. These courts reasoned that it would be illogical to permit removal of these related actions to federal court if the district courts would not have original jurisdiction over them.

On these bases, the court held that "a federal court has original jurisdiction over an action or proceeding if two requirements are met: (1) there is an underlying arbitration agreement or award that falls under the Convention, and (2) the action or proceeding relates to that arbitration agreement or award." As such, the court concluded that the underlying agreement between Jones Day and its former partner fell under the Convention, and that the petition to compel Orrick's compliance related to the underlying arbitration agreement and the Northern District of California had original subject matter jurisdiction over the action.

The Court next addressed whether venue was proper. Section 204 of the FAA provides that proceedings authorized by § 203 "may be brought in any such [district] court in which save for the arbitration agreement an action or proceeding with respect to the controversy between the parties could be brought, or in such court for the district and division which embraces the place designated in the agreement as the place of arbitration if such place is within the United States." Jones Day argued that this was a non-exclusive venue provision which supplements, rather than supplants, other venue rules.

The Ninth Circuit agreed, citing Supreme Court case law which provides that the general federal venue statute will only be supplanted where there is evidence that "Congress intended the specific venue provision to be exclusive or … restrictively applied." Because the court did not find this evidence, it held that the general venue statute, 28 U.S.C. § 1391, applied, and that as a result venue was proper in the Northern District of California, where Orrick resided. The court did not resolve the parties' dispute as to whether 9 U.S.C. § 7, which provides for enforcement of an arbitral summons in the "district in which such arbitrators, or a majority of them, are sitting," provided for venue in California if the seat of the underlying arbitration was in Washington, DC.

The case was accordingly reversed and remanded to the district court with instructions to enforce Jones Day's petitions to compel Orrick and its partners to comply with the arbitral summonses.

Peter Shapiro of the San Francisco office contributed to this summary.