Security Life Insurance Co. of America v. Duncanson & Holt

Security Life Insurance Company (Security) (plaintiff), a health-insurance provider, had a reinsurance contract with Transamerica Occidental Life Insurance Company (Transamerica) (defendant). The reinsurance contract was managed by Duncanson & Holt (D&H) and provided that, in the event that Security was found liable for claims made under Security’s health-insurance policies, Transamerica would share a percentage of Security’s losses. The reinsurance contract contained an arbitration clause. When Security was later sued and found liable in other cases, Transamerica refused to pay their share of the losses, claiming that Security had failed to comply with the terms of the reinsurance contract. Security and D&H proceeded to arbitration. The arbitration panel issued a subpoena to Transamerica’s California office, directing it to produce documents for Security’s inspection prior to the arbitration hearing and ordering a prehearing deposition of an employee of Transamerica. Transamerica refused to comply with the panel’s subpoena, asserting that it was not a party to the arbitration, that the panel lacked authority to issue the subpoena, and that the subpoena was defective because it did not include the required witness fee payable to Transamerica’s employee. Security filed suit and motioned the Minnesota federal district court to compel Transamerica’s compliance with the subpoena. The Minnesota court determined that Security’s attorney, as an officer of the court, could issue a subpoena on behalf of the court for the district from which the information was being sought. The court thus directed Security’s attorney to do so on behalf of the California district court. Transamerica appealed. While the appeal was pending, Transamerica partially complied with the subpoena by producing its employee for a deposition, thereby rendering that aspect of the appeal moot. However, Transamerica continued to object to the production of the subpoenaed documents on the grounds that the panel lacked such subpoena power and that the subpoena for documents violated the 100-mile territorial limit set forth in Federal Rule of Civil Procedure (FRCP) 45.