United States District Court, D. Utah, Central Division
AND RECOMMENDATION TO DISMISS CASE FOR LACK OF SUBJECT MATTER
JURISDICTION AND ORDER DENYING AS MOOT (1) ROYAL MERCHANT
HOLDINGS, LLC'S PETITION TO COMPEL COMPLIANCE WITH
ARBITRAL SUBPOENA (ECF NO. 2), AND (2) TRAEGER PELLET GRILLS,
LLC'S SHORT FORM DISCOVERY MOTION TO QUASH OR MODIFY
ARBITRAL SUBPOENA (ECF NO. 12)
J. FURSE United States Magistrate Judge.
February 15, 2019, Petitioner Royal Merchant Holdings, LLC
(“Royal”) initiated this action against
Respondent Traeger Pellet Grills, LLC (“Traeger”)
by filing a Petition to Compel Compliance with Arbitral
Subpoena (“Petition”) (ECF No. 2). Royal
petitions the Court, under 9 U.S.C. § 7 (“Section
7”) of the Federal Arbitration Act (“FAA”),
for an order compelling Traeger to comply with an arbitral
subpoena seeking testimony and the production of documents in
an arbitration to which Traeger is not a party. (See id.) In
the Petition, Royal asserts that the Court has subject matter
jurisdiction over the action because “the claims in the
arbitration arise under federal law.” (Id.
¶ 5.) Subsequently, on March 20, 2019, Traeger filed a
Short Form Discovery Motion to Quash or Modify Arbitral
Subpoena (“Motion to Quash”), asking the Court to
quash or modify the subpoena since it already produced
documents to Royal and claims it did so based on an
understanding that Royal would seek no further discovery from
Traeger in connection with the arbitration (ECF No. 12).
April 2, 2019 the undersigned held a hearing on the pending
Motions (ECF No. 20). At the hearing, the undersigned raised
the issue of whether the Court had subject matter
jurisdiction over this action. The undersigned ordered Royal
to submit additional briefing on subject matter jurisdiction
by April 5, 2019 and indicated that Traeger could respond by
April 11, 2015 if it elected to do so. (Id.) Royal
submitted a Supplemental Memorandum Regarding Jurisdiction
(“Supplemental Memorandum”) on April 5, 2019 (ECF
No. 21). In the Supplemental Memorandum, Royal acknowledged
that the FAA does not create independent federal question
jurisdiction but asserts that the Court has subject matter
jurisdiction over this action because the parties are
diverse, and the amount in controversy in the underlying
arbitration exceeds $75, 000. (Id. at 2-5.) After
receiving the Supplemental Memorandum, the undersigned
ordered Royal to disclose the names and citizenship of its
members since the assertion that “Royal's members
are domiciled in and therefore are citizens of Florida and
Tennessee" failed to allow the undersigned to assess
independently the citizenship of those parties (ECF No. 22).
Royal submitted its Supplemental Memorandum Regarding
Citizenship of Royal Merchant Holdings, LLC
(“Supplemental Memorandum re Citizenship”) on
April 9, 2019 (ECF No. 23). On April 11, 2019, Traeger filed
a Notice indicating it would not file a response (ECF No.
reviewed the Supplemental Memorandum, the other filings on
the docket, and relevant case law, the undersigned finds that
the Court does not have subject matter jurisdiction over this
action. Royal does not present any controlling authority that
would require the Court to look to the underlying arbitration
to determine the amount of controversy in this case and fails
to meet its burden to show that the amount in controversy in
this case exceeds $75, 000.
the Court finds Royal's concerns regarding enforcement of
the subpoena unwarranted. Royal would not have to enforce the
subpoena in Florida, where the arbitration is taking place.
Utah law allows parties to enforce subpoenas arising from
out-of-state arbitrations in state court. See Utah Code
§ 78B-11-118(7) (“The court may enforce a subpoena
or discovery-related order for the attendance of a witness
within this state and for the production of records and other
evidence issued by an arbitrator in connection with an
arbitration proceeding in another state . . .”).
Therefore, as set forth in more detail below, the undersigned
RECOMMENDS the District Judge DISMISS this case for lack of
subject matter jurisdiction.
given the undersigned's finding and recommendation to the
District Judge the undersigned DENIES AS MOOT (1) Royal's
Petition to Compel Compliance with Arbitral Subpoena (ECF No.
2), and (2) Traeger's Short Form Discovery Motion to
Quash or Modify Arbitral Subpoena (ECF No. 12).
initiated this action pursuant to Section 7 of the FAA to
enforce a subpoena for testimony and documents issued to
Trager in an arbitration. (See Petition, ECF No. 2.) The
arbitration involves Royal and its former attorneys, James L.
Ferraro and The Ferraro Law Firm, P.A.
(“Ferraro”). (Id. ¶ 7; Mot. to
Quash 1-2, ECF No. 12.) The arbitration concerns an Ohio
malpractice dispute between Royal and Ferraro arising out of
a dismissed lawsuit that Royal brought against Traeger. (Mot.
to Quash 1, ECF No. 12.) Trager is not a party to the
arbitration. (Id.) The arbitration is taking place
in Florida, but the subpoena at issue demanded that Traeger
appear on February 1, 2019 in Salt Lake City, Utah for a
hearing. (Id.; Petition ¶ 7, ECF No. 2; Ex. A
to Petition, 1/4/19 Arbitral Subpoena, ECF No. 2-2.) The
subpoena commanded Traeger to designate one or more
representatives to bring certain documents to the hearing and
testify on behalf of Traeger concerning those documents.
(Petition ¶ 7, ECF No. 2; 1/4/19 Arbitral Subpoena, ECF
No. 2-2.) Trager has not complied with the subpoena and moves
the Court to quash or modify it. (Petition ¶ 12, ECF No.
2; Mot. to Quash, ECF No. 12.)
to the subpoena at issue, Royal issued two other arbitral
subpoenas to Traeger. (Mot. to Quash 1-2, ECF No. 12; Ex. A
to Pet.'s. Resp. in Opp'n to Mot. to Quash
(“Opp'n to Mot. to Quash”), 4/5/17 Arbitral
Subpoena, ECF No. 15-1; Ex. C to Opp'n to Mot. to Quash,
9/7/18 Arbitral Subpoena, ECF No. 15-3.) Trager objected to
the first subpoena, which requested documents only, on the
grounds that the FAA does not permit pre-hearing discovery
from non-parties. (Mot. to Quash 1-2, ECF No. 12; Ex. B to
Opp'n to Mot. to Quash, Objection to Subpoena, ECF No.
15-2.) As to the second subpoena, which sought documents and
testimony relating to damages, Traeger produced thousands of
pages of documents in response, along with an affidavit in
lieu of live testimony. (Mot. to Quash 2, ECF No. 12;
Opp'n to Mot. to Quash 2, ECF No. 15.) Traeger claims it
made this production based on Royal's representation that
Traeger would not have to produce any other documents or
provide live testimony in the arbitration. (Mot. to Quash 2,
ECF No. 12.) Royal claims that Traeger did not fully comply
with the parties' agreement and that it reserved its
right to additional discovery. (Opp'n to Mot. to Quash 2,
ECF No. 15.)
courts are courts of limited jurisdiction. They possess only
that power authorized by Constitution and statute, . . .
which is not to be expanded by judicial decree[.]”
Kokkonen v. Guardian Life Ins. Co., 511 U.S. 375,
377 (1994) (internal citations omitted). “Since federal
courts are courts of limited jurisdiction, there is a
presumption against our jurisdiction, and the party invoking
federal jurisdiction bears the burden of proof.”
Penteco Corp. Ltd. P'ship-1985A v. Union Gas Sys.,
Inc., 929 F.2d 1519, 1521 (10th Cir. 1991); see also
Kokkonen, 511 U.S. at 377 (stating that the burden of
establishing federal jurisdiction “rests upon the party
courts ‘have an independent obligation to determine
whether subject-matter jurisdiction exists, even in the
absence of a challenge from any party,' and thus a court
may sua sponte raise the question of whether there is subject
matter jurisdiction ‘at any stage in the
litigation.' ” 1mage Software, Inc. v. Reynolds
& Reynolds Co.,459 F.3d 1044, 1048 (10th Cir. 2006)
(quoting Arbaugh v. Y & H Corp.,546 U.S. 500,
506, 513 (2006)); see also State Farm Mut. Auto. Ins. Co.
v. Narvaez,149 F.3d 1269, 1271 (10th Cir. 1998)
(stating that a court “ ‘must, sua sponte,
satisfy itself of its power to adjudicate in every case and
at every stage of the proceedings' ” (quoting
Tafoya v. U.S. Dept. of Justice, 748 F.2d 1389, 1390
(10th Cir. 1984))). “ ‘A court lacking
jurisdiction cannot render judgment but must dismiss the
cause at any ...