Seventh Circuit issues ruling regarding confidentiality agreements in arbitration proceedings | Practical Law

Seventh Circuit issues ruling regarding confidentiality agreements in arbitration proceedings | Practical Law

Daniel J. Leffell (Partner), Marc Falcone (Partner) and Jeffrey D. Kleinman (Associate), Paul, Weiss, Rifkind, Wharton & Garrison LLP

Seventh Circuit issues ruling regarding confidentiality agreements in arbitration proceedings

Published on 02 Oct 2009USA
Daniel J. Leffell (Partner), Marc Falcone (Partner) and Jeffrey D. Kleinman (Associate), Paul, Weiss, Rifkind, Wharton & Garrison LLP
The United States Court of Appeals for the Seventh Circuit has affirmed a district court decision enforcing a subpoena for certain documents relating to an arbitration award. The court rejected the defendant's argument that it could not produce the documents due to the existence of a confidentiality agreement.
On 3 September 2009, in Gotham Holdings, LP v. Health Grades, Inc., No. 09-2377 (7th Cir. 2009), the United States Court of Appeals for the Seventh Circuit affirmed a district court decision enforcing a subpoena for certain documents relating to an arbitration award. The court rejected the defendant's argument that it could not produce the documents due to the existence of a confidentiality agreement it had with a third-party to keep information contained in the documents secret. The court held that the plaintiff was entitled to view relevant evidence as part of discovery because the defendant's pledge of secrecy did not create legal bar to disclosure. The court noted that "[n]o one can 'agree' with someone else that a stranger's resort to discovery under the Federal Rules of Civil Procedure will be cut off." The court also noted that the third party did not object to production.
With its decision, the Seventh Circuit affirmed the primacy of the Federal Rules of Civil Procedure over confidentiality agreements with third parties relating to arbitration awards, especially when the third party does not object to disclosure. Although the confidentiality of documents generated in arbitration may be relevant to the question of whether disclosure will be ordered, it cannot create an absolute bar to disclosure.