In the Matter of Trader Pro LLC v. Pires, No. 012334/09 (N.Y. Sup. Ct., Apr. 16, 2009), the Petitioners moved for an order pursuant to CPLR 3102[c] for the issuance of pre-arbitration subpoenas to the Respondents, in order to determine the identity of other potential parties for an arbitration that Petitioners intended to commence. Petitioner claimed that judicial relief was the only means by which such discovery could be obtained, as the rules and procedures governing the contemplated arbitration (the Financial Industry Regulatory Authority’s (“FINRA”) Code of Arbitration Procedure) did not provide a mechanism for pre-arbitration discovery. Certain Respondents objected to the subpoenas on the grounds that (a) Petitioners’ ability to obtain discovery was limited to that provided by the FINRA Code and (b) the court was precluded from issuing the subpoenas because the dispute was governed by the Federal Arbitration Act (the “FAA”).
Initially, the court noted that the Petitioners were not attempting to circumvent the jurisdiction of FINRA by seeking court-ordered discovery, as the FINRA Code did not provide a means to compel such discovery. Further, the court found that CPLR 3102 did not conflict with the FAA, which, like the FINRA Code, also does not provide a mechanism for pre-arbitration discovery. Although the court noted that pre-action disclosure in connection with a contemplated arbitration was generally frowned upon by courts, CPLR 3102 provides that a court may order pre-arbitration discovery for information “in aid of arbitration” to determine the identity of parties for which a party may have a claim. The court found that Petitioners inability to learn the identity of potential additional parties to the arbitration would cause prejudice and unnecessary delay. Accordingly, the court granted Petitioners’ motion in part, limiting the information sought by the pre-arbitral subpoenas to the identity of parties against whom Petitioners may have a claim in the contemplated arbitration.