## In the



# U n ited S ta tes Co urt o f Ap p ea ls

F o rth eS e v e n th C ir cu it

N o. 09

- 2377 G OT H A M H OLDI NGS, LP, e tal ., P la intif fs-A pp ellees , v. H EA LT H G RADES, I NC ., D e f e ndan t

-Appe l l ant
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A pp eal from the United S t ates Di strictC our t fo r the N o rthernDi stricto f Illino is, Eas tern Div isi on. No . 09 C1843

—Jam es B. Z agel, Ju dge
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S UB MI TT ED A UGUS T 28, 2009

— D ECI DE D S EP TE MBE R 3, 2009

Befo re E A S T E RB R OO K, Chi e f Judg e, a nd W I L L I A MSa nd S YKES, C ircu it Judges . E A S T E R B R OO K, Chi e

f Judg e . Go th am H o l di ng s i s a pl ainti ff, and H ea lth G ra des a defe nd ant, in l i ti gat i on pend i ng i n the So uthern Dist ri ct o fN ew Yor k. ( A l though ther e a re m u ltipl e pl ai nti ff s, we use o ne nam e t o denote al l

. ) H eal th Grades conte nd s i n the N ew Yor k c ase that an arb itr at ion aw ar d su p p or ts its vie w of t h e m er its . I t te nde r ed th e awar d a nd s o m e of th e do cument s ex changed i n the a rbi tr ati on. W hen Gotham H ol dings2 N o. 09

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a s k e d t o s e e r e l a t e d d o c ume nt s , He a l th Gr a de s b a l k e d, obs er vi ng that the parti es to the arbi tr ati on (Heal th G ra des and H ew i tt A sso ci ate s, LLC ) had ple dged confi denti al i ty. G otham H ol dings r ej oi ned that, by re l yi ng o n the aw ar d, H eal th G ra des had w ai ved confi denti al i ty. W hen H eal th Grades re fused to budge f r o m i ts po si ti o n, G oth am H o l di ng s se r ve d a s ubpo en a o n Hewi ttA ssociate s an d m o ve d t o e nf o r ce i t i n the N or ther n Dis tr i ct o fI l l i noi s, wh er e Hew i tt A sso ci ate s’ pri nci pal o ffi ces ar e l oca ted. S ee Fed. R. Ci v. P. 34 ( c) , 45

. No o ne c o nt e nd s tha tthe s ub po e na e xc e e ds the b o un ds se t b y F ed . R. C iv. P . 26(b )(1) , an d th e d ist ric t c ou rtd ire cted Hew i tt A sso ci ate s t o p ro du ce the docum ents. H ewi ttAss o ci at es i s wi l l i ngt o ha nd the m o ve r . But the d ist ric t c ou rtis su ed a st ay p en d in g H ea lth G ra d es ’ ap p ea l. ( A pp ell ate j uri sdic ti on r est s o n the doctr i ne o fPe r l m an v . U n i t ed S ta tes , 247 U

. S. 7 ( 1918 ). ) B ecau se th e d iscovery dea dl i ne i n the New Yo r ks ui t i s appr o ac hi ng, a nd the d oc u m en ts co ve re d by th e s u b p oe n a m ay lea d to ad d iti onal disc ove ry re quests i n N ew York, w e g ra n ted Gotham H ol dings ’ r equest t o expedite the appeal

. I t has been subm i tte d on the bri ef s t o th e m ot ions panel that g r an te d the r eque stf o r e xpe di te d c o ns i der at i o n. W e a ffi rm the dist ri ct c ourt ’ s deci sio n , for tw o re aso ns. Fi rs t, ¶6 ofthe agr eem ent b et w een Heal th Grades and H ew itt A sso ci ate s pro vi des thatm ate ri al s fro m the a rbi tr ati on m ay be di sclo se d in res ponse t o a s ubpoena. S eco nd , ev en if the a gr eem ent had purpor ted to bloc k d i scl osur e, such a pro vi si on would be i neff ectual

. Contr ac ts bi nd o nl y the par ti es. N o one can “a gr ee”N o. 09

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w ith som eon e else that a stra n g e r ’s resort to d iscovery un d er th e F ed eral R ules of C ivi l Proc ed ure w il l be cu t off

. W e a p p lied th is p rin c ip le in Jeps on, In c. v . M akita E le ctr ic Works, Ltd

. , 30 F. 3d 854 ( 7th Ci r. 19 94) , to co nfi d en tia l i ty agr eem ents re ached du ri ng l i ti gat i on. That concl usion is equal l y a pp l i cabl e t o confi denti al i ty agr eem ents that acc om p a n y a rbitration. I nd eed , w e hav e stated m ore bro adlythata perso n’s desi re f orco n fidenti al i ty i s no t honor ed i n l i ti gat i on. Tra de sec r e t s , p r i vi l ege s, and sta tutes orr ule s r eq u iring co nfi denti al i ty m ust be r espect ed, se e Fed. R. Ci v. P. 45 ( c) ( 3) ( A ) ( i i i ) , but l i tigants’ pre f er ence f or secr ecy does not cre ate a l ega l barto di scl osur e. S ee B a xter Inte r n a tio na l, Inc. v. A bbo tt La bo rato ries , 29 7 F

. 3d 544 ( 7th C ir. 20 02 ); U nited Sta tes v. Fo ster, 564 F

. 3d 852 (7th C ir. 2009 ) (Ea sterbrook, C.J. , i n ch am bers). H eal th Grades and H ew i tt A sso ci ate s were en tit l ed to agree thattheywould notvoluntari lydisclose an y i nform ati on r el ate d t o the a rbi tr ati on. S ee I TTEduc at i onal Service s, Inc. v. Arce, 533 F.3d 342 , 347–4 8 ( 5th Cir. 2008). Disclosure woul d be a uthor i zed onl y when a thi rd party had a l ega l r i ght o facc ess . Th at ’s what ¶6 o fthi s a gr eem en t do es : The par ti es pr o m i se d to k ee p their m o uths (and fil es) shu t u n le s s a sub p oen a requ ired a tu rnov er. Gotham H ol dings i s e nti tl ed to co m pu l sory proc ess to acqui re docum ents f ro m third part i es. H eal th Grades d oe s n otarg u e t h at an y p riv i l e g e p ro te c ts th is m at er ial. The Suprem e C ourthas express ed re l uctance to cre ate new p riv i l ege s, se e Un i v e rs i tyo f P e n n s y l v a n i a v . E E OC, 49 3 U .S. 18 2 (1 99 0) (d ec lin in g t o c re at e a n “a c ad em ic del iber ati ons pr ivil ege ”) , and H eal th Grades does not4 N o. 09

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att em pt to sho w thatan “ arbi tr ati on pri vi l ege ” would be appropri ate under the Court ’ s s tandards. A ccor ding to H ea lth Grades, acc ess to the i nfo rm ati on w oul d und er m i ne the nati onalpol i cy favor i ng arbi tr ation. T he re i s no su ch policy. A rbitrat io n a greem en ts are opti onaland enf or ced j ust l i ke othe r contr acts
. 9 U

. S. C. §2. The Feder alA rbi tr ati on Act el i m in ate s ho sti l i ty to pri vate di spute r eso l uti on; i t doe s no t cr eat e a pre f er ence f o r tha t pr o ce ss . “ The r e i s n o fede r alpo l i cyf av o r i ng arbi tr at i o n und er a cer ta i n s eto fpr o ce dur alr ul es ; the f edera l pol i cy is sim plyto ensur e the enf or ceabi l i ty, ac c or d in g to th eir te rm s, of pr iva te ag re em en ts t o arb itr ate
. ” Vo ltInform ation Sci ences, In c. v. Stanfor d U niversi ty, 48 9 U .S. 46 8, 47 6 (19 89 ). Se e also , e.g., A r t hurA nde rs e n, LL P v. C arlisl e, 129 S. C t. 1896, 1901 (2 009) (federa l p ol i cy i s “ to pl ac e [ arbi tr at i o n] a g r ee m en ts upo n the s ame fo o ting as oth er cont racts ”). Peop le do not “viol ate” or “u nd erm in e” an y fe d e r a l p olic y if th ey litiga te rat h er th an arb itr ate
. Feder al pol i cy f avo rs arbi tr ati on onl y i n the sen se th at it fav or s c on tr ac ts in g en er al. The Fed er alA rbi tr ati on Act does not prom ote arbi tr ati on a t the expense ofst ra nger s. S up po se H eal th Grades and H ew i tt A ss oci ate s had ag re ed bet w een them sel ves that Gotham H ol dings w ou ld pay the arbi tr ato rs ’ fees . Tha t woul d m ak e arbi tr at i o n mor e at tr ac ti ve , b utno o ne w oul d thi nk the agre em ent e nfo rce abl e; thi rd part i es’ ri ghts m ay be a ff ecte d on l y with thei r conse nt. J ust s o here

. Gotham H ol dings has an enti tl em ent t o m ate ri al i nf o r m at i o n i n the ha nds o fHewi ttAss o ci at es . Nothi ng that H eal th Grades and H ew itt A sso ci ate s ca n do orN o. 09

- 2377 5 say, se parat el y o r col l ecti vel y, ca n a ff ect that l ega l r i ght. W e c on c lu d e d inTe am s t e rs Negot i at i ng Com m i t t e ev. Troh a , 32 8 F

. 3d 325 ( 7th Ci r. 20 03) , thatpart i es to a l aborarbi tr ati on m ay use s ubpoenas t o obtai n i nfo rm ati on f r o m thi r d pa r t i e s . I t wo ul d b e we i r d t o t r e a t thi s a s a o ne - wa y s t r e e t, s o tha t pa r t i e s t o a rb i t r a t i o n m ay o bt ain, b utne ed no t div ul g e, i nf o r m at i o n r el ev an t to the re sol uti on o fo therdi sputes. H ewi ttAss o ci at es do es no t co nt en d tha t th e su bpo en a i s unduly burden so m e. N o one conte nd s that a r eco gni zed pri vi l ege appli es to these docum ents. S o the s u bpo e n a wa s p r o p e r l y e n f o r c e d

. T h e s t a y i s l i ft e d , a n d t he j ud gm ent i s a ffi rm ed. The m andate wil l i ssue today.

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