Third Circuit Affirms Order Unsealing Arbitration Award

The Third Circuit Court of Appeals recently affirmed an order unsealing an arbitration award because the award had been filed with the district court as part of confirmation proceedings and the recipient of the award had not demonstrated a specific harm sufficient to overcome the presumption of public access to documents filed with the courts.

Pennsylvania National Mutual Casualty Insurance Co. arbitrated whether it “was entitled to proceeds based on insurance claims it made to [two of its] reinsurers.”

The arbitration panel issued an award in Penn National’s favor, and Penn National petitioned the district court to confirm that award. As part of the confirmation process, Penn National filed the award with the court, which granted Penn National’s motion to seal the award.

The parties settled before the court confirmed the award.

After the settlement, Everest Reinsurance Co. moved to intervene and unseal the award. The district court originally denied that motion, but the Third Circuit remanded the case after concluding that the court had applied the wrong standard.

On remand, the district court granted Everest’s motion.

The Third Circuit affirmed. It rejected Penn National’s argument “that the arbitration award [was] not a judicial record to which the common-law right of access applies,” explaining that “Penn National filed the arbitration award on the docket with the District Court as part of its motion to confirm the award. Thus, according to [the Third Circuit’s] precedents, the award became a judicial record subject to the common-law right of access.” The court also held that the district court did not err by “holding that [Penn National] did not demonstrate a specific harm sufficient to overcome the presumption of public access.” The Third Circuit explained that an affidavit submitted by one of Penn National’s officers that “other reinsurers might choose to forego paying Penn National and contest their contractual obligation to pay if they learned of the contents in the arbitration award” was insufficient because the court “could not ‘determine how many possible relationships could be impacted, the amount of money that could be at stake, the types of actions other parties may pursue, or the likelihood that any such actions would be successful.’”

Pennsylvania National Mutual Casualty Insurance Co. v. New England Reinsurance Corp., Nos. 20-1635 & 20-1872 (3d Cir. Dec. 24, 2020).