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In a lawsuit involving an insurance underwriting agreement, a federal district court in Connecticut deferred to an arbitration panel on the question of whether a confidentiality agreement between the parties required the Court to exclude certain documents as evidence.
In Discover Re Managers, Inc. v. Preferred Employers Group, Inc., No. 3-05-CV-809 (WWE), 2006 WL 2838901 (D. Conn. Sept. 29, 2006), Discover Re Managers, Inc. (Discover) sued Preferred Employers Group, Inc. (PEGI), alleging that PEGI failed to pay Discover for insurance premiums collected by PEGI.
PEGI tried to introduce as evidence three documents that were produced during an arbitration proceeding involving affiliates of Discover and PEGI. In the course of that arbitration, the parties entered into a confidentiality agreement that precluded the parties from disclosing any information “derived” from the arbitration proceeding without the consent of the other party or an order from the arbitration panel allowing the disclosure.
Discover asked the Court to exclude the documents as evidence. PEGI claimed that the confidentiality agreement did not apply to the documents because they were not related to the substantive issues of the arbitration. However, as the Court observed, the confidentiality agreement applied to all documents produced in arbitration.
Since the confidentiality agreement applied to the documents, and since the agreement provided that the arbitration panel could authorize disclosure of confidential documents, the Court deferred to the arbitrators on the question of whether the documents could be introduced as evidence.
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