Pennsylvania National Mutual C v. New England Reinsurance Corp

NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
________________
No. 19-1805
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PENNSYLVANIA NATIONAL MUTUAL CASUALTY INSURANCE COMPANY
v.
NEW ENGLAND REINSURANCE CORPORATION; HARTFORD FIRE
INSURANCE COMPANY
EVEREST REINSURANCE COMPANY
(Intervenor in District Court)
Everest Reinsurance Company,
Appellant
On Appeal from the United States District Court
for the Middle District of Pennsylvania
(M.D. Pa. No. 1-18-mc-00278)
District Judge: John E. Jones, III
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No. 19-1806
PENNSYLVANIA NATIONAL MUTUAL CASUALTY INSURANCE COMPANY
v.
EVEREST REINSURANCE COMPANY (f/k/a Prudential Reinsurance Company)
(M.D. Pa. No. 1-18-mc-00653)
EVEREST REINSURANCE COMPANY
v.
PENNSYLVANIA NATIONAL MUTUAL CASUALTY INSURANCE COMPANY
(M.D. Pa. No. 1-18-mc-00656)
Everest Reinsurance Company,
Appellant
________________
On Appeal from the United States District Court
for the Middle District of Pennsylvania
District Judge: John E. Jones, III
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Argued on November 13, 2019
Before: AMBRO, KRAUSE, and BIBAS, Circuit Judges.
(Opinion filed: December 6, 2019)
Jeffrey S. Leonard [Argued]
Joseph J. Schiavone
Saiber
18 Columbia Turnpike, Suite 200
Florham Park, NJ 07932
Attorneys for Everest Reinsurance Company
Matthew M. Haar
Kenneth W. Mishoe
Saul Ewing Arnstein & Lehr
2 N. Second Street, 7th Floor
Harrisburg, PA 17101
Paul M. Hummer [Argued]
Saul Ewing Arnstein & Lehr
Centre Square West
1500 Market Street, 38th Floor
Philadelphia, PA 19102
Attorneys for Pennsylvania National Mutual Casualty Insurance Company
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OPINION *
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KRAUSE, Circuit Judge.
Everest Reinsurance Company appeals two orders from the District Court: an order
compelling arbitration before one arbitral panel instead of another and an order denying a
motion to unseal. We will affirm the first order and vacate and remand the second.
Discussion 1
A. Cross-Petitions to Compel Arbitration
Because we write only for the parties, our summary of the facts is brief. Everest
Reinsurance Company (“Everest”) appeals the District Court’s order compelling it to
submit to a new panel of arbitrators the question of whether its dispute with Pennsylvania
National Mutual Casualty Insurance Company (“Penn National”) is the same as a
previously arbitrated dispute between Penn National and two other reinsurers (the
“Hartford Arbitration”). If these two disputes are the same, then, pursuant to the parties’
agreement, the disputes would be consolidated and heard by the same panel of arbitrators
that decided the Hartford Arbitration. If the disputes are not the same, then they would not
*
This disposition is not an opinion of the full Court and pursuant to I.O.P. 5.7
does not constitute binding precedent.
1
The District Court had jurisdiction under 28 U.S.C. § 1332. We have jurisdiction
under 28 U.S.C. § 1291. “We exercise plenary review over questions regarding the
validity and enforceability of an agreement to arbitrate.” Puleo v. Chase Bank USA, N.A.,
605 F.3d 172, 177 (3d Cir. 2010) (en banc).
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be consolidated and a new panel of arbitrators would have to hear Everest’s dispute with
Penn National.
But both parties agree that whether the two disputes must be consolidated is a
“procedural” question that only an arbitrator can answer. Certain Underwriters at Lloyd’s
London v. Westchester Fire Ins. Co., 489 F.3d 580, 585–87 (3d Cir. 2007) (discussing
Green Tree Fin. Corp. v. Bazzle, 539 U.S. 444 (2003) and Howsam v. Dean Witter
Reynolds, Inc., 537 U.S. 79 (2002)). So our role is limited to determining which panel of
arbitrators will answer that question.
Everest argues that the District Court erred when it sent the consolidation question
to a new panel of arbitrators instead of the panel that heard the Hartford Arbitration. We
disagree and will thus affirm.
Courts faced with motions to compel arbitration must “enforce covered arbitration
agreements according to their terms.” Lamps Plus, Inc. v. Varela, 139 S. Ct. 1407, 1412
(2019). See also 9 U.S.C. § 4 (stating that a party may petition a district court for “an order
directing that such arbitration proceed in the manner provided for in [an arbitration]
agreement” and “in accordance with the terms of the agreement”); id. § 5 (“If in the
agreement provision be made for a method of naming or appointing an arbitrator or
arbitrators or an umpire, such method shall be followed . . . .”). Here, the parties’ agreement
provides for a specific method of choosing arbitrators: “Each party shall appoint an
individual as arbitrator and the two so appointed shall then appoint a third arbitrator.” App.
58. If the arbitrators cannot agree on the third, neutral arbitrator, the contract provides
further procedures. And, critical to this appeal, the agreement provides for consolidation
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of disputes in certain circumstances: “If more than one reinsurer is involved in the same
dispute, all such reinsurers shall constitute and act as one party for the purposes of
[arbitration] . . . .” Id.
By asking us to send the consolidation question to the panel that decided the
Hartford Arbitration, Everest invites us to prejudge that question and to disregard the
express language of the agreement. But we are bound to enforce the agreement according
to its terms and to compel the parties to follow the procedure they agreed to. Because of
this, we can only compel arbitration of the consolidation issue before a new panel chosen
according to the express terms of the agreement. Consistent with the agreement’s terms,
the two disputes must be consolidated if and only if: (1) a new panel determines that
Everest’s dispute is “the same” as the dispute at issue in the Hartford Arbitration, and
(2) the panel that decided the Hartford Arbitration is still extant such that it can handle this
new dispute. For these reasons, we will affirm the District Court’s order compelling
arbitration of the consolidation question before a new panel of arbitrators. 2
B. Motion to Unseal
Everest also argues that the District Court applied the wrong legal standard in
denying its motion to unseal records from the Hartford Arbitration that Penn National
2
This outcome is wholly consistent with our previous decision in Certain
Underwriters, 489 F.3d at 582–83, and the First Circuit’s decision in Shaw’s Supermarkets,
Inc. v. United Food and Commercial Workers Union, Local 791, 321 F.3d 251, 252 (1st
Cir. 2003). In both those cases, one party attempted to initiate a consolidated arbitration,
and the party resisting arbitration sought a court order compelling non-consolidated
arbitration. Therefore, the consolidation issue was actually before the first-formed panel.
But here, the first-formed panel had already issued a final award in a non-consolidated
arbitration when Penn National sought to arbitrate with Everest.
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attached to its petition to confirm the award from that arbitration. We exercise plenary
review over the District Court’s choice of which legal standard to apply to a motion to seal.
In re Avandia Mktg., Sales Practices & Prods. Liab. Litig., 924 F.3d 662, 674 n.8 (3d Cir.
2019).
The District Court’s denial of Everest’s motion to unseal the records of the Hartford
Arbitration was based on its application of the seven factors that we articulated in Pansy v.
Borough of Stroudsburg, 23 F.3d 772, 787–91 (3d Cir. 1994). However, as the District
Court recognized when staying its order pending appeal, our recent decision in Avandia
Marketing (filed two months after the District Court’s initial order) clarified that, for
“discovery materials . . . filed as court documents”, we apply “the more rigorous common
law right of access.” 924 F.3d at 670. We will vacate and remand for the District Court to
apply Avandia Marketing in the first instance.
Conclusion
For the foregoing reasons, we will affirm the District Court’s order compelling
arbitration and vacate and remand its order denying the motion to unseal.
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