New California Laws 2026
SB 940: Expanding third- party discovery in California arbitration
By Bentley P. Stansbury III
Enforcing the subpoena against a nonparty witness When an arbitrator authorizes nonparty discovery, the subpoena recipient should proceed carefully. If a third party refuses to comply with an arbitra- tor-authorized subpoena, the arbitrator may impose sanctions in the same manner as in civil litigation. CCP § 1983.05(b). This creates meaningful exposure for nonparty witnesses who never agreed to arbitra- tion but now may be compelled to participate in its process. That authority, however, is not unchecked. While discovery orders against parties to arbi- tration are conclusive and subject to extremely lim- ited judicial review, that deference does not extend to nonparties. In Berglund v. Arthroscopic & Laser Surgery Center of San Diego, 44 Cal. 4th 528 (2008), the California Supreme Court held that discovery orders against third-party witnesses are subject to full judicial review. Because those nonparties never consented to arbitration, they were not bound by ar- bitration-level finality. Mapping the landscape under SB 940 SB 940 fundamentally alters arbitration practice in California. The statute may stop short of turning arbitration into litigation — but it unmistakably nar- rows the divide. Parties now enjoy significantly expanded access to third-party discovery. Arbitrators can exercise increased authority to manage that discovery. And third-party witnesses may face new obligations tem- pered by the protection of judicial oversight. Bentley P. Stansbury III is a partner at Stradley Ronon Stevens & Young, LLP. He can be reached at bstansbury@stradley.com.
In an article written a decade ago, “Is your depo- sition subpoena enforceable under California law?”, Daily Journal Sept. 16, 2016, I examined the strict limits California law imposed on third-party discov- ery in arbitration. Senate Bill (SB) 940 now marks a decisive departure from that regime. In late 2024, the California Legislature enacted SB 940, signifi- cantly expanding the ability of parties in arbitration to obtain discovery from third-party witnesses. Impact of SB 940 on nonparty discovery in arbitration Until SB 940 was enacted, the California Civil Dis- covery Act restricted third-party discovery unless the matter involved personal injury or death, or the arbitration agreement expressly authorized such dis- covery. Those limitations no longer exist. Effective Jan. 1, 2025, the legislature repealed Code of Civil Procedure Section 1283.1, which had long imposed these restrictions. Now, arbitration no longer operates under a distinct discovery regime when it comes to third-party witnesses. Parties to a pending arbitration have the same ability to obtain third-party discovery as parties litigating in superior court. Under California Civil Code Section 1983.05, once an arbitrator is appointed, parties may obtain discovery from third parties, including depositions, in the same manner as other parties subject to the California’s Civil Discovery Act. There are import- ant limitations, however. First, the discovery sought must be “regarding the subject matter of the arbi- tration.” CCP § 1283.05(a). Second, depositions re- main subject to the discretion of the arbitrator. CCP §1283.05(e). Important limitations based on forum rules The arbitrator’s continued role is significant be- cause arbitration forums often impose their own dis- covery parameters. Some forums, like AAA, leave the number of depositions entirely to the arbitrator’s discretion. In others, such as JAMS, the rules pre- sume a single deposition is appropriate. And in other forums still, depositions are strongly discouraged. Ultimately, the availability of nonparty depositions depends on the forum in which the arbitration is pending.
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