DENVER (Legal Newsline) - The Colorado Supreme Court has vacated an order by a lower court to enforce a civil subpoena that was issued by an arbitrator against an out-of-state non-party.

The Court, in its Feb. 6 opinion, said state courts do not have the authority to enforce such a subpoena.

In an arbitration proceeding between respondent SunOpta Grains and Foods Inc. and Colorado Mills LLC, an arbitrator -- at SunOpta's request -- issued subpoenas to petitioners SK Food International and Adams Vegetable Oil Inc.

SunOpta claimed it required information from SK Food and Adams about the pricing of sunflower oil. It argued it could not compile the relevant pricing information from other sources.

SK Food and Adams are not parties to the underlying arbitration. Neither company is incorporated in Colorado, is registered as a foreign corporation in Colorado, or maintains its principal office in Colorado.

The subpoenas, which requested business records, were served on SK Food and Adams at their places of business in California and North Dakota.

When SK Food and Adams refused to comply with the arbitration subpoenas, SunOpta asked the Prowers County District Court to enforce them.

The district court issued an order enforcing the subpoenas, and in response SK Food and Adams filed a petition for a rule to show cause.

Justice Allison H. Eid said the state's high court has "long held" that Colorado courts, as a matter of state sovereignty, have no authority to enforce civil subpoenas against out-of-state non-parties.

Instead, such enforcement, if any, is left to the states in which the discovery is to take place, she said.

"The district court concluded that Colorado's version of the Revised Uniform Arbitration Act and the Colorado long-arm statute gave it authority to enforce the arbitration subpoenas against SK Food and Adams, both out-of-state non-parties," Eid wrote for the Court.

"We find that neither of these sources of law provided the district court with the authority to non-parties. We find that neither of these sources of law provided the district court with the authority to enforce the subpoenas in question and that enforcement, if any, must come from the jurisdictions in which the discovery is to take place."

The Court noted that if SunOpta was correct, there would be no need for uniform acts to enforce civil subpoenas against out-of-state non-parties, as a state's long-arm statute would accomplish the task.

"Yet Colorado and other states recently adopted the Uniform Interstate Depositions and Discovery Act, which provides a mechanism for parties litigating in one state, the 'trial state,' to issue a subpoena to a non-party in another state, the 'discovery state.'

Eid continued, "Colorado's version of the UIDDA is not directly controlling in this case, as it governs how a Colorado court would enforce a 'foreign subpoena' issued in another state for discovery within Colorado. However, the principles behind it are instructive."

The Court also noted that SK Food and Adams made two additional arguments challenging the subpoenas issued in the case, including that the information sought is a privileged trade secret and therefore not discoverable.

However, because it found the subpoenas not enforceable by a state court, the Court declined to address the other arguments.

From Legal Newsline: Reach Jessica Karmasek by email at jessica@legalnewsline.com.

More News