The California Supreme Court has held that the same statutory language granting an arbitrator the authority to order discovery against non-parties and to sanction non-compliance does not limit the scope of judicial review of those orders when review is sought by non-parties.

In Berglund v. Arthroscopic & Laser Surgery Center of San Diego, L.P., No. S144813, 2008 WL 2757560 (Cal. July 17, 2008), Berglund brought suit against various medical care providers for battery and breach of fiduciary duty by a doctor allegedly abusing narcotics. Berglund had agreed to arbitrate his disputes with all defendants but ALSC, so a court compelled arbitration of all claims except those against ALSC.

During the arbitration proceeding, Berglund requested discovery of records from ALSC regarding "missing medications, prescriptions, and/or other chemical substances" during the time of his treatment at ALSC. The arbitrator ordered discovery of the documents. ALSC refused to comply and sought a protective order from the trial court. The order was denied; the trial court ruled that an arbitrator has jurisdiction over discovery orders at arbitration. A divided appellate court affirmed the trial court's decision, holding that arbitrators have the statutory authority to enforce discovery subpoenas against non-parties.

On appeal, the Court pointed to clear statutory language giving arbitrators authority over discovery orders in arbitration proceedings and the right to exercise all procedures as provided for in the statutes regarding subpoenas and discovery at trial courts. Cal. Civ. Proc. Code §§ 1283.1, 1283.05. By judicial analogy, this arbitral power also included permitting discovery from non-parties as provided for in the California Civil Discovery Act and imposing sanctions on a non-party for non-compliance. Cal. Civ. Proc. Code § 2020.010, et seq.

The Court then held that, following logically from these arbitral powers, any dispute over discovery at arbitration proceedings must be submitted first to the arbitrator. "It is reasonable to infer," from the broad delegation of arbitral power in the statute, "that the Legislature intended discovery disputes arising out of arbitration to be initially litigated before the arbitrator."

However, the Court disagreed that judicial review of arbitral discovery orders directed at non-parties was as limited as the judicial review afforded to arbitration awards. According to the Court, review of an order against a non-party was to be more expansive "because without consent a non-party to an arbitration agreement cannot be compelled to arbitrate a dispute." See, e.g., Buckner v. Tamarin, 98 Cal.App.4th 140, 142 (Cal. Ct. App. 2002). To the Court, holding otherwise "would violate the principle that non-parties to arbitration are not bound by an arbitrator's decision because the arbitrator's authority is derived from the parties' consent and . . . nonparties have not consented to arbitration."

The Court determined that the most logical reading of the provision establishing the same level of judicial review for awards and discovery orders was to find that the standard of review was limited only when the discovery order affected parties to the dispute. Once non-parties are involved, the Court found the more reasonable interpretation of the statute was to require full judicial review "because it preserves the legal rights of non-parties," a denial of which "would implicate the non-party's constitutional rights to due process of law."