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PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
IN THE MATTER OF THE
APPLICATION OF DEIULEMAR
COMPAGNIA DI NAVIGAZIONE S.P.A.
FOR THE PERPETUATION OF CERTAIN
EVIDENCE,
Petitioner-Appellee,
v.
No. 99-1378
M/V ALLEGRA,
Respondent,
v.
PACIFIC ETERNITY, S.A.; GOLDEN
UNION SHIPPING CO. S.A.,
Movants-Appellants.
Appeal from the United States District Court
for the District of Maryland, at Baltimore.
Joseph H. Young, Senior District Judge.
(MC-99-78)
Argued: September 24, 1999
Decided: December 6, 1999
Before WILKINSON, Chief Judge, WILLIAMS, Circuit Judge, and
HAMILTON, Senior Circuit Judge.
_________________________________________________________________
Affirmed and remanded by published opinion. Judge Williams wrote
the opinion, in which Chief Judge Wilkinson and Senior Judge
Ham-
ilton joined.
_________________________________________________________________
COUNSEL
ARGUED: Denham Arthur Kelsey, HUNTON & WILLIAMS, Nor-
folk, Virginia, for Appellants. George H. Falter, III, OBER,
KALER,
GRIMES & SHRIVER, P.C., Baltimore, Maryland, for Appellees.
ON BRIEF: Carl D. Gray, HUNTON & WILLIAMS, Norfolk, Vir-
ginia, for Appellants. Manfred W. Leckszas, OBER, KALER,
GRIMES & SHRIVER, P.C., Baltimore, Maryland, for Appellees.
_________________________________________________________________
OPINION
WILLIAMS, Circuit Judge:
Deiulemar Compagnia Di Navigazione (Deiulemar) filed a petition
to perpetuate testimony in the United States District Court for
the Dis-
trict of Maryland pursuant to Federal Rule of Civil Procedure
27. Dei-
ulemar sought to preserve evidence of the condition of a ship
it
chartered from Pacific Eternity and Golden Union Shipping Co.
(col-
lectively, Pacific Eternity) that was undergoing repairs and
was soon
scheduled to leave United States waters. Deiulemar, which expected
to file an arbitration action against Pacific Eternity in London
pursu-
ant to its Charter Party agreement, asserted that"extraordinary
cir-
cumstances" justified the district court's intervention
in preserving
evidence that was crucial to its arbitration case and unable
to be recre-
ated. Pacific Eternity responded that the district court lacked
subject
matter jurisdiction over the petition because Deiulemar could
not sat-
isfy the requirements of Rule 27. Pacific Eternity, citing Federal
Rule
of Civil Procedure 81, argued that it was inappropriate for the
court
to involve itself in an arbitrable dispute and that the proper
forum for
Deiulemar's discovery petition was the London arbitration panel.
The
district court granted Deiulemar's Rule 27 petition and permitted
Dei-
ulemar to inspect and perpetuate the evidence of the ship's condition.
It then sealed the evidence pending appeal. For the reasons stated
below, we affirm the district court's exercise of jurisdiction
to pre-
serve evidence in aid of arbitration in the extraordinary circumstances
presented and remand with instructions to transfer the sealed
evidence
to the arbitrator in the now-pending London arbitration proceeding.
2
I.
On June 4, 1997, Deiulemar time-chartered the M/V Allegra from
Pacific Eternity. The written Charter Party agreement required,
among other things, that Pacific Eternity maintain the "hull,
machinery and equipment in a thoroughly efficient state."
(J.A. at 7.)
The agreement also specified that the vessel would maintain a
guaran-
teed speed of twelve to thirteen knots. The agreement gave Deiulemar
the right to hold "superficial inspection" of the vessel1
and also con-
tained an arbitration provision that required "any dispute
aris[ing]
between Owners and the Charterers" to be referred to arbitration
in
London. (J.A. at 9-10, 24.)
Deiulemar began its voyage from Australia to the United States,
with its final port in Baltimore, Maryland. During this voyage,
Dei-
ulemar discovered that the ship was traveling below the guaranteed
speed, at just seven plus knots. At Richards Bay, South Africa,
the
ship encountered some mechanical problems and had to stop for
repairs. On February 12, 1999, the ship entered the Chesapeake
Bay
and reached the Port of Hampton Roads. The U.S. Coast Guard
inspected the vessel and discovered several mechanical problems.
Cit-
ing safety concerns, the Coast Guard detained the vessel until
the
Owners could repair a lengthy list of problems. 2 As a result,
the
Allegra spent several weeks in anchorage at Hampton Roads undergo-
ing inspection and repairs. Finally, after Pacific Eternity addressed
many of the more critical deficiencies, the Coast Guard released
the
Allegra.3 On March 6, 1999, the ship proceeded to Baltimore to
_________________________________________________________________
1 Clause 69 of the Charter Party agreement provided that Deiulemar
would have the right to "superficial inspection prior to
delivery and also
at any time of this Charter. Owners and Master shall give every
facility
and assistance." (J.A. at 24.)
2 For example, the Coast Guard identified "[e]xcessive fuel
oil leaks in
way of main fuel oil heater"; "oil leaks in way of
#2 main diesel engine
turbo charger"; "[f]uel oil, lube oil, and cooling
water leaks on both
ship's service diesel generators"; and "numerous deficiencies
in the
machinery spaces which created an immediate hazard to the crew,
the
ship and the environment." (J.A. at 79-80.) The Coast Guard
also noted
that "[t]he lack of maintenance, lack of repair, and a lack
of spare parts
was clearly evident." (J.A. at 80.)
3 According to the Coast Guard record of deficiencies, the Coast
Guard
required Pacific Eternity to repair seven of the most critical
deficiencies
3
unload its cargo and complete further repairs. According to Deiule-
mar, Pacific Eternity intended to install new cylinder heads
to the
main engine in Baltimore.
On March 8, 1999, while the ship was in port in Baltimore, Deiule-
mar dispatched Captain Heiner Popp, a marine expert, to inspect
the
vessel.4 Deiulemar believed that Pacific Eternity had breached
the
Charter Party agreement by failing to maintain the Allegra's
guaran-
teed speed of twelve knots throughout the voyage. Deiulemar antici-
pated that Captain Popp would determine that engine problems
were
the cause of the ship's slow pace of travel. Pacific Eternity
denied
Captain Popp access to the ship and ordered him off the vessel.
Pacific Eternity asserts that marine growth on the hull, and
not engine
problems, was the cause of the ship's subpar speed.
On March 9, 1999, Deiulemar filed a Rule 27 petition to perpetuate
testimony with the United States District Court for the District
of
Maryland.5 The petition stated that "Petitioner expects
to be a party
to an action cognizable in the Courts of the United States, either
to
compel arbitration, seek security or to enforce an award."
(J.A. at 3.)
Deiulemar stated that it sought to perpetuate the evidence "to
deter-
mine the nature and extent of Petitioner's claim for a breach
of the
attached [Charter Party agreement]." (J.A. at 5.) In its
supporting
memorandum, Deiulemar argued that "extraordinary circumstances"
warranted Rule 27 discovery because crucial evidence-- the ship's
engine -- was scheduled for substantial repair, and that, as
a result,
"[t]he circumstances and conditions extant today can never
be recre-
_________________________________________________________________
before the Allegra could leave Hampton Roads. The seven remaining
deficiencies identified by the Coast Guard were scheduled to
be repaired
by March 13, 1999.
4 Deiulemar asserts that clause 69 of the agreement entitled
it to inspect
the vessel.
5 Perpetuation of testimony includes the inspection of documents
and
things. See Martin v. Reynolds Metals Corp., 297 F.2d 49, 56
(9th Cir.
1961). For the sake of convenience, we refer to"testimony"
and "evi-
dence" interchangeably in the context of Rule 27 because
Deiulemar is
perpetuating the evidentiary basis of expert testimony of the
ship's con-
dition before completion of repairs.
4
ated." (J.A. at 35.) The supporting memorandum also asserted
that the
Coast Guard's actions in detaining the vessel at Hampton Roads
"raise[d] the inference, at least, that the Allegra's speed
deficiencies
are engine, and not hull, related." (J.A. at 34.)
On March 10, 1999, Pacific Eternity filed a motion to dismiss
the
Rule 27 petition. Along with its motion to dismiss, Pacific Eternity
filed a sworn declaration from English legal counsel. The declaration,
which describes the English rules of arbitration, suggests that
"[a]ll of
the information sought in Deiulemar's Rule 27 petition could
be
requested through the arbitration process." (Appellant's
Br. at 7.) On
the same day, Deiulemar initiated arbitration proceedings in
London,
as required by the Charter Party agreement. Neither party filed
a
motion to stay this action pending arbitration.
On March 16, 1999, the district court heard arguments from both
parties during a conference call. After the call, the court issued
an
order granting Deiulemar's Rule 27 petition. The order, which
the dis-
trict court adopted substantially from Deiulemar, does not contain
any
factual findings. Rather, it simply states that"upon good
cause
shown," Captain Popp and his staff could inspect the vessel,
observe
repairs, and copy documents from the ship. (J.A. at 110.) The
order
also states, in a handwritten note added at the end of the order,
that
"[a]ll information and records produced . . . shall be held
in camera
pending any appeal." (J.A. at 111.)
Pursuant to the district court's order, Captain Popp and his
staff
inspected the Allegra. They observed repairs, collected a large
set of
documents, took photographs, and wrote inspection reports describing
the Allegra's condition. After the crew completed inspection
and
repairs, the Allegra left United States waters. The district
court is
presently holding the collected information in camera pending
appeal.
None of the parties have seen this material, nor do they know
the pre-
cise nature of the information collected.
II.
Pacific Eternity raises several issues on appeal. First, Pacific
Eter-
nity argues that it is generally improper for a district court
to order
discovery incident to an arbitrable dispute. Second, Pacific
Eternity
5
argues that Federal Rule of Civil Procedure 81 permits discovery
in
Title 9 arbitration proceedings only to the extent that the arbitration
agreement does not provide its own discovery procedures. See
Fed.
Rule Civ. P. 81(a)(3). Because the arbitral forum has its own
discov-
ery procedures, Pacific Eternity insists that the district court
erred in
allowing discovery in aid of arbitration. Third, Pacific Eternity
argues
that even if "extraordinary circumstances" would have
justified dis-
covery in aid of arbitration in some circumstances, Deiulemar
did not
choose the proper method of effectuating that discovery in the
present
case because Deiulemar failed to satisfy the specific requirements
of
its chosen discovery mechanism, Rule 27. Specifically, Pacific
Eter-
nity maintains that the district court lacked subject matter
jurisdiction
over Deiulemar's Rule 27 petition because Deiulemar failed to
articu-
late any cognizable action that it legitimately expected to bring
in fed-
eral court. Finally, Pacific Eternity contends that Deiulemar
misused
Rule 27 by seeking to discover new evidence, as opposed to perpetu-
ating known evidence.6
We review the district court's grant of a Rule 27 petition for
an
abuse of discretion. See Shore v. Acands, Inc. , 644 F.2d 386,
388 (5th
Cir. 1981); Ash v. Cort, 512 F.2d 909, 912 (3d Cir. 1975). For
the rea-
sons that follow, we agree that Deiulemar demonstrated "extraordi-
nary circumstances" that justified Rule 27 discovery in
aid of
arbitration and that Rule 81 did not preclude the district court
from
considering Deiulemar's discovery request. We also conclude that
the
district court did not abuse its discretion in entertaining Deiulemar's
Rule 27 petition. Accordingly, we affirm.
III.
We first address whether a district court may, under limited
"ex-
traordinary circumstances," grant discovery in aid of arbitration.
Fed-
eral discovery rules typically do not apply to disputes governed
by
arbitration provisions. See Comsat Corp. v. National Science
Found.,
190 F.3d 269, 276 (4th Cir. 1999) ("A hallmark of arbitration
-- and
_________________________________________________________________
6 Pacific Eternity also argues that we should remand the case
to the dis-
trict court for appropriate fact-finding. Our review of the record,
how-
ever, does not reveal any disputed facts that would materially
affect our
disposition of this case.
6
a necessary precursor to its efficient operation-- is a limited
discov-
ery process."); Burton v. Bush, 614 F.2d 389, 390 (4th Cir.
1980)
("When contracting parties stipulate that disputes will
be submitted to
arbitration, they relinquish the right to certain procedural
niceties
which are normally associated with a formal trial. One of these
accou-
trements is the right to pre-trial discovery." (internal
citations omit-
ted)). Some lower courts, however, allow discovery in aid of
arbitration "where a movant can demonstrate `extraordinary
circum-
stances,'" such as "where a vessel with crew members
possessing par-
ticular knowledge of the dispute is about to leave port,"
or where
there is a "special need for information which will be lost
if action is
not taken immediately." In re Deiulemar, 153 F.R.D. 592,
593 (E.D.
La. 1994) (permitting Rule 27 perpetuation of evidence). Courts
typi-
cally find "extraordinary circumstances" where evidence
is likely to
disappear before a claimant can file suit in federal court. See
id. at
593; Oriental Commercial & Shipping Co. v. Rosseel, 125 F.R.D.
398, 400 (S.D.N.Y. 1989) ("[D]iscovery `in aid of arbitration'
is per-
mitted by the courts where a movant can demonstrate`extraordinary
circumstances.'"); Ferro Union Corp. v. SS Ionic Coast,
43 F.R.D.
11, 14 (S.D. Tex. 1967) (permitting discovery under Rule 34 where
evidence was located on a ship that was about to leave United
States
waters).
In Comsat, we recently recognized the concept of "extraordinary
circumstances" when we stated that a district court could,
upon a
showing of "special need or hardship," compel pre-hearing
discovery.
See 190 F.3d at 278 ("[W]e hold today that a federal court
may not
compel a third party to comply with an arbitrator's subpoena
for pre-
hearing discovery, absent a showing of special need or hardship.").
In
Comsat, we reversed the district court's order requiring the
National
Science Foundation to comply with an arbitrator's subpoena because
the National Science Foundation was not a party to the arbitration.
See id. at 271. We concluded that the discovery provisions of
the Fed-
eral Arbitration Act (FAA), 9 U.S.C.A. S 7 (West 1999), did not
authorize an arbitrator to subpoena third parties and that the
district
court, therefore, erred in enforcing the subpoena. See Comsat,
190
F.3d at 275-76. We noted, however, that in Burton, "we contemplated
that a party might, under unusual circumstances, petition the
district
court to compel pre-arbitration discovery upon a showing of special
7
need or hardship."7 Id. at 276. In addressing whether
Comsat had
demonstrated a "special need," we stated that:
[w]e do not now attempt to define
"special need," except to
observe that at a minimum, a party
must demonstrate that
the information it seeks is otherwise
unavailable. Comsat
did not attempt such a showing
before the district court, and
we infer from the record that
no such showing would be
possible.8
_________________________________________________________________
7 Burton challenged an arbitration award by arguing that the
arbitrator
should have granted him a continuance so that he could address
the unfa-
vorable testimony of a "surprise" witness. See Burton
v. Bush, 614 F.2d
389, 390 (4th Cir. 1980). There was no pre-trial discovery permitted
in
the arbitration, and Burton never applied to compel discovery.
See id. As
a result, although we recognized that some courts permit discovery
in
cases of "special need" to assist arbitration, we did
not address the issue
because Burton had not raised it below. See id. ("Since
Burton never
applied to the district court for an order to compel discovery
we need not
consider those cases allowing discovery upon a showing of special
need.
In passing, however, we note that the former cases would not
have aided
the appellant since there is a total absence of special need
or hardship."
(internal citations omitted)).
One other circuit has raised, but not resolved, the applicability
of "ex-
traordinary circumstances." See Suarez-Valdez v. Shearson
Leh-
man/American Express, Inc., 858 F.2d 648, 649 n.1 (11th Cir.
1988)
("We need not decide whether a district court might order
discovery to
aid in arbitration where the court found some `special need'
for the dis-
covery. Conceivably such a rule risks a plunge into judicial
control over
arbitration." (internal citations omitted)). In Suarez-Valdez,
the district
court stayed trial pending arbitration but did not stay discovery
under the
Federal Rules of Civil Procedure. See id. at 649. In concluding
that the
district court erred, the Eleventh Circuit noted that it did
not have to
address whether "extraordinary circumstances" could
ever justify discov-
ery in aid of arbitration "because the plaintiffs never
contended to the
district court that they had such an unusual circumstance, and
the district
court made no such finding." Id. at 649 n.1.
8 The record showed, among other things, that Comsat could have
obtained the documents it sought through the Freedom of Information
Act (FOIA). Comsat Corp. v. National Science Found., 190 F.3d
269,
276 (4th Cir. 1999). In fact, Comsat had earlier obtained hundreds
of
responsive documents through FOIA. See id.
8
Id. In the present case, Pacific Eternity was repairing the ship's
main
engine and hull and the condition of these items was crucial
to Dei-
ulemar's arbitration claim. Deiulemar's effort to preserve the
evi-
dence on the Allegra was disrupted by Pacific Eternity, which
denied
Deiulemar access to the ship.9 In addition, the Allegra was going
to
leave United States waters once Pacific Eternity completed repairs.
As a result, Deiulemar was in danger of losing access to any
evidence
of the ship's condition. Although Deiulemar arguably could have
sought emergency discovery from the London arbitrator, Deiulemar
represented that it could not do so in time to preserve the rapidly
changing condition of the ship. Given the time-sensitive nature
of
Deiulemar's request and the evanescent nature of the evidence
sought,
we do not believe that the district court abused its discretion
in
accepting Deiulemar's representation. Accordingly, we believe
that
Deiulemar adequately demonstrated that "the information
it [sought
was] otherwise unavailable." Id.
Moreover, these facts fit squarely within the "extraordinary
circum-
stances" exception as applied by the trial courts in Deiulemar
and
Ferro Union. See Deiulemar, 153 F.R.D. at 593 (allowing Rule
27
perpetuation of evidence from a ship that was scheduled to leave
United States waters three weeks after the petitioner was notified
of
an expected indemnity claim); Ferro Union, 43 F.R.D. at 14 (permit-
ting Rule 34 discovery from a ship that was scheduled to leave
port
in four days). Like the petitioners in Deiulemar and Ferro
Union,
Deiulemar sought evidence from a ship that was soon leaving United
States waters. It requested perpetuation of evidence that, if
not pre-
served, was going to disappear or be materially altered. The
evidence
that Deiulemar sought was necessary to its arbitration claim
and Dei-
ulemar was reasonably uncertain whether it could timely preserve
the
_________________________________________________________________
9 Pacific Eternity argues that Deiulemar had over a month to
file for
arbitration, including several weeks while the Allegra was in
Hampton
Roads. As a result, Pacific Eternity contends, there was no real
urgency
behind its discovery request. Deiulemar argues that there were
no "ex-
traordinary circumstances" until Pacific Eternity denied
Deiulemar's
expert, Captain Popp, access to the ship. Deiulemar asserts that
until that
moment, it believed that Pacific Eternity would cooperate and
that Dei-
ulemar would be able to inspect the evidence of the ship's condition
pur-
suant to clause 69 of the Charter Party agreement.
9
evidence outside the district court. In this narrow set of facts,
we
agree with the district court's conclusion that Deiulemar faced
a "spe-
cial need" that justified preserving the evidence on the
Allegra.10
IV.
We next address whether Federal Rule of Civil Procedure 81 pro-
hibited the district court from granting Deiulemar's Rule 27
petition.
Rule 81(a)(3) provides that "[i]n proceedings under Title
9, relating
to arbitration, . . . these rules apply only to the extent that
matters of
procedure are not provided for in [Title 9]." Fed. R. Civ.
P. 81(a)(3).
Section 4 of Title 9 "requires that district courts enforce
arbitration
agreements `in accordance with the terms of the agreement.'"
Champ
v. Siegel Trading Co., 55 F.3d 269, 274 (7th Cir. 1995) (quoting
9
U.S.C. S 4). Consequently, Pacific Eternity argues that Rule
81 per-
mits application of federal discovery rules "only to the
extent that
matters of procedure are not provided for in [the arbitration
agree-
_________________________________________________________________
10 In these specific facts, we do not believe that we "risk[
] a plunge
into judicial control over arbitration" by affirming the
district court's
application of "extraordinary circumstances." Suarez-Valdez
v. Shearson
Lehman/American Express, Inc., 858 F.2d 648, 649 n.1 (11th Cir.
1988).
First, these circumstances were truly unusual because they involved
rap-
idly changing evidence, a ship that was leaving United States
waters, and
arguably dilatory tactics by Pacific Eternity. Second, our review
is com-
plicated by the fact that unlike most discovery disputes incident
to arbi-
tration, we must consider whether to undo discovery that has
already
occurred and that can never be regained. Finally, the district
court, in its
wisdom, merely preserved the evidence by holding it in camera
away
from the eyes of either party. As discussed later, see infra
part VI, this
evidence will remain unseen unless the arbitrator decides to
unseal it. As
a result, no court is exerting "judicial control over arbitration"
whatso-
ever; the judicial system is simply preserving evidence for the
arbitra-
tor's determination of its usefulness.
We also do not intimate that by recognizing Rule 27 discovery
in aid
of arbitration in these specific facts, we intend to open all
forms of pre-
arbitration discovery in circumstances of "special need."
To the contrary,
we limit our holding today to Rule 27 perpetuation in the specific
cir-
cumstances described above. We leave for future determination
the
proper scope of the "special need" exception as it
applies to other forms
of discovery in aid of arbitration.
10
ment]." Fed. R. Civ. P. 81(a)(3). Pacific Eternity maintains
that
because the parties agreed to arbitrate all disputes in London,
they
also agreed to follow the discovery procedures found in the London
Arbitration Act of 1996. As a result, Pacific Eternity asserts,
Rule 81
prohibited the district court from permitting discovery in aid
of arbi-
tration because the London Arbitration Act provided its own discov-
ery procedures. Pacific Eternity also contends that Rule 81 should
trump any "extraordinary circumstances" because none
of the cases
that have allowed discovery in aid of arbitration under "extraordinary
circumstances" has explicitly addressed Rule 81. We conclude,
how-
ever, that Rule 81 does not apply in the present case.
Under Rule 81(a)(3), "the Federal Rules fill in only those
proce-
dural gaps left open by the FAA." Champ, 55 F.3d at 276.
The FAA,
which is codified in Title 9, see 9 U.S.C.A.SS 1-16 (West 1999),
"de-
clares that certain types of agreements for arbitration shall
be enforce-
able and makes provision for their enforcement in the federal
courts."
Commercial Solvents Corp. v. Louisiana Liquid Fertilizer Co.,
20
F.R.D. 359, 361 (S.D.N.Y. 1957). Rule 81, therefore, would authorize
a district court, in enforcing an arbitration agreement, to "order
dis-
covery pursuant to Fed. R. Civ. P. 26 on matters relevant to
the exis-
tence of an arbitration agreement." Champ, 55 F.3d at 276.
The
relevant question for this case, however, is whether Rule 81
applies
to authorize or prohibit the application of the Federal Rules
of Civil
Procedure to matters incident to the merits of the underlying
arbitra-
tion itself.
In Champ, the Seventh Circuit addressed whether the district
court
could certify class arbitration. Intervenors in the case argued
that Rule
81(a)(3) authorized the district court to apply the Federal Rules
of
Civil Procedure to certify class arbitration because the FAA
and the
arbitration agreement were silent on class arbitration. See 55
F.3d at
274. The court rejected this argument for two reasons. First,
the court
noted that
section 4 of the FAA requires
that we enforce an arbitration
agreement according to its terms.
Such terms conceivably
could consist of consolidated
or even class arbitration. The
parties here did not include in
their agreement an express
term providing for class arbitration.
Thus, one could say that
11
through the proper application
of 9 U.S.C. S 4 the FAA has
already provided the type of procedure
to be followed in this
case, namely, non-class-action
arbitration.
Id. at 276. Second, the court concluded that"more to the
point, we
still could not accept the intervenors' assertions because by
its lan-
guage Rule 81(a)(3) only applies to judicial proceedings under
the
FAA," such as motions to stay arbitration, compel arbitration,
or
vacate arbitration awards. Id. Although"a district court
could order
discovery pursuant to Fed. R. Civ. P. 26 on matters relevant
to the
existence of an arbitration agreement" to determine whether
to stay or
compel arbitration, "nothing in the language of Rule 81(a)(3)
purports
to apply the Federal Rules of Civil Procedure to the actual proceed-
ings on the merits before the arbitrators." Id.
Similarly, in Commercial Solvents, the district court vacated
a
notice to take depositions under the Federal Rules of Civil Procedure
in an arbitrable dispute. The court rejected the contention that
Rule
81(a)(3) "fills the void and authorizes application of the
federal dis-
covery rules" to aid arbitration. 20 F.R.D. at 361. The
court noted that
"[a]t this stage, in the instant matter, the parties have
submitted to
arbitration, there is no proceeding pending in another court
relating
to the matter submitted to arbitration, and there has been no
occasion
to initiate any of the proceedings expressly authorized in the
[FAA]."11
Id. The court reasoned that "[a]pplication of the federal
rules in pro-
ceedings under the Federal Arbitration Act to supply`matters
of pro-
cedure,' not provided for therein, is authorized. Rule 81(a)(3)
comes
into play, however, only in proceedings under the Act. The instant
matter involves none." Id.
_________________________________________________________________
11 Title 9 authorizes the court to enforce arbitration agreements
through
the following mechanisms, none of which address the merits of
the
underlying arbitration itself: motions to stay (S 3), petitions
to compel
arbitration (S 4), applications for the appointment of an arbitrator
(S 5),
applications for the confirmation of an arbitration award (S
9), applica-
tions to vacate an award (S 10), and applications to modify or
correct an
arbitration award (S 11). See Champ v. Siegel Trading Co., 55
F.3d 269,
276 (7th Cir. 1995). At oral argument, counsel for Pacific Eternity
stated
that it had sought a stay, both orally and in conjunction with
its motion
to dismiss. The record, however, does not support Pacific Eternity's
assertions.
12
The lesson of Champ and Commercial Solvents is that Rule
81(a)(3) does not affirmatively authorize application of the
federal
rules to matters that are incident to an arbitrable dispute because
Rule
81 does not apply to an underlying arbitration proceeding. Rather,
it
applies only to allow or prohibit use of the federal rules in
Title 9 pro-
ceedings. Consequently, a district court could invoke Rule 81(a)(3)
to
use federal discovery rules to determine whether a dispute is
arbitra-
ble. See Champ, 55 F.3d at 276. The district court could not,
however,
invoke Rule 81 to authorize discovery in aid of arbitration because
Rule 81 simply does not apply with respect to the arbitration
proceed-
ing itself. See id. The flip side is also true; Rule 81 does
not preclude
discovery incident to arbitration because it does not apply in
this con-
text at all.12 The present case does not involve a Title 9 proceeding;
it involves discovery related to the merits of the underlying
arbitra-
tion. For that reason, we conclude that Rule 81, by its language,
did
not prohibit the district court from considering Deiulemar's
request
for discovery in aid of arbitration.13
_________________________________________________________________
12 Moreover, even if Rule 81 applied in the present case, it
is unclear
that it would necessarily be incompatible with discovery in aid
of arbitra-
tion under "extraordinary circumstances." See Penn
Tanker Co. v. C.H.Z.
Rolimplex, Warszawa, 199 F. Supp. 716, 718 (S.D.N.Y. 1961) (rejecting
the argument that Rule 81(a)(3) affirmatively authorizes court
ordered
discovery in aid of arbitration but noting, in dicta, that "I
do not think
that Rule 81(a)(3) is designed to allow judicially imposed and
controlled
discovery as to the merits of a controversy which will be referred
to arbi-
tration . . . except, perhaps, upon a showing of true necessity
because of
an exceptional situation -- which this case does not appear to
be").
13 Pacific Eternity also appears to argue that it is improper
for Deiule-
mar to perpetuate evidence in aid of arbitration, as opposed
to preserving
evidence solely for the anticipated federal action that serves
as its juris-
dictional predicate. See generally infra part V (discussing jurisdictional
requirements of Rule 27). Pacific Eternity correctly notes that
Deiule-
mar's anticipated actions to enforce or compel arbitration are
Title 9
actions that, by themselves, would probably not entitle Deiulemar
to dis-
covery on the merits of the underlying arbitrable dispute. See
Fed. R.
Civ. P. 81(a)(3). We recognize that permitting Rule 27 perpetuation
in
aid of arbitration may create a slight anomaly to the extent
that Deiule-
mar could use Rule 27 to preserve evidence that it could not
otherwise
discover through its anticipated federal court actions. But the
very idea
of "extraordinary circumstances" is to preserve evidence
in aid of arbitra-
13
V.
Pacific Eternity also argues that the district court lacked subject
matter jurisdiction over Deiulemar's Rule 27 petition because
Deiule-
mar failed to satisfy Rule 27's requirements. In particular,
Pacific
Eternity contends that Deiulemar failed to demonstrate a cognizable
action that it expected to bring in federal court and that it
impermiss-
ibly sought to discover new evidence, as opposed to perpetuating
known evidence. We agree with the district court that Deiulemar
established a cognizable action and that Deiulemar did not seek
to use
Rule 27 as an impermissible discovery device. We also agree that
the
district court, by allowing perpetuation of evidence, prevented
a fail-
ure or delay of justice as required by Rule 27(a)(3).
A.
Deiulemar maintains that it established subject matter jurisdiction
by demonstrating three cognizable actions -- "either to
compel arbi-
tration, seek security or to enforce an award"-- that it
was unable to
bring in federal court when it filed its Rule 27 petition.14
(J.A. at 3.)
_________________________________________________________________
tion rather than in aid of anticipated federal court actions.
See Oriental
Commercial & Shipping Co. v. Rosseel, 125 F.R.D. 398, 401
(S.D.N.Y.
1989) (denying discovery in aid of arbitration because the petitioner
sought to discover evidence in order to ensure its ability to
enforce an
arbitration award rather than determine the merits of the underlying
arbi-
tration and noting that "[t]he term `exceptional circumstances'
addresses
situations where a party's ability to properly present its case
to the arbi-
trators will be irreparably harmed absent court ordered discovery,"
and
that "the line of cases permitting discovery`in aid of arbitration'
only
apply to discovery concerning the subject matter of the suit
to be arbi-
trated"). We note that at least one trial court has permitted
Rule 27 dis-
covery in aid of arbitration under "extraordinary circumstances."
See In
re Deiulemar, 153 F.R.D. 592, 593 (E.D. La. 1994) (permitting
Rule 27
perpetuation in aid of arbitration). We have not found any other
case that
directly addresses the compatibility of Rule 27 to discovery
in aid of
arbitration.
14 It is undisputed that Deiulemar's anticipated actions to compel
or
enforce arbitration would have taken place in federal court because
the
Allegra was in United States waters when Deiulemar filed its
petition. It
is also undisputed that Deiulemar was initially unable to bring
its antici-
pated actions to enforce or compel arbitration in federal court
because it
had not yet initiated arbitration when it filed its petition.
14
Pacific Eternity argues that these asserted actions are not "cognizable"
because they are too speculative. Pacific Eternity contends that
it
never affirmatively disputed arbitration, and, therefore, Deiulemar
had no basis to anticipate any future action to enforce or compel
arbi-
tration. We conclude that the district court did not abuse its
discretion
in implicitly finding that Deiulemar had established potentially
cogni-
zable actions to support its Rule 27 petition.
Rule 27 is a means of perpetuating testimony before trial. See
Ash
v. Cort, 512 F.2d 909, 911 (3d Cir. 1975). A Rule 27 petitioner
must
show, among other things, that it expects to be a party to an
action
"that may be cognizable in any court of the United States
but is pres-
ently unable to bring it or cause it to be brought."15 Fed.
R. Civ. P.
27(a)(1). "Rule 27 properly applies only in that special
category of
cases where it is necessary to prevent testimony from being lost."16
_________________________________________________________________
15 Rule 27 requires a petitioner to show:
1, that the petitioner expects
to be a party to an action cognizable
in a court of the United States
but is presently unable to bring it
or cause it to be brought, 2,
the subject matter of the expected
action and the petitioner's interest
therein, 3, the facts which the
petitioner desires to establish
by the proposed testimony and the
reasons for desiring to perpetuate
it, 4, the names or a description
of the persons the petitioner
expects will be adverse parties and
their addresses so far as known,
and 5, the names and addresses
of the persons to be examined
and the substance of the testimony
which the petitioner expects to
elicit from each.
Fed. R. Civ. P. 27(a)(1).
16 A petitioner, therefore, must demonstrate "an immediate
need to per-
petuate testimony." Penn Mut. Life Ins. Co. v. United States,
68 F.3d
1371, 1375 (D.C. Cir. 1995); see In re Checkosky, 142 F.R.D.
4, 7
(D.D.C. 1992) ("[M]ost courts have held that a petitioner
must make a
particularized showing that the testimony needs to be taken in
advance
of the contemplated action."). For the reasons described
above, in our
discussion of Deiulemar's "special need" to preserve
the evidence, we
believe that Deiulemar demonstrated an immediate need for the
evi-
dence. See supra part III (discussing Deiulemar's representation
that
Pacific Eternity was altering the condition of the ship and that
the ship
would soon leave United States waters); In re Bay County Middle-
grounds Landfill Site, 171 F.3d 1044, 1047 (6th Cir. 1999) (requiring
15
Ash, 512 F.2d at 911. Because the rule's purpose"is not
the determi-
nation of substantive rights, but merely the providing of aid
for the
eventual adjudication of such rights in a suit later to be begun,"
it is
designed to "afford a simple ancillary or auxiliary remedy
to which
the usual federal jurisdictional and venue requirements do not
apply."
Mosseller v. United States, 158 F.2d 380, 382 (2d Cir. 1946).
As a
result, "[t]here need not be an independent basis in federal
jurisdiction
in a proceeding to perpetuate, but it must be shown that in the
con-
templated action, for which the testimony is being perpetuated,
fed-
eral jurisdiction would exist and thus is a matter that may be
cognizable in the federal courts." Dresser Indus. v. United
States, 596
F.2d 1231, 1238 (5th Cir. 1979).
A petitioner does not have to demonstrate a cognizable action
with
absolute certainty. See Penn Mut. Life Ins. Co. v. United States,
68
F.3d 1371, 1374 (D.C. Cir. 1995). In De Wagenknecht v. Stinnes,
250
F.2d 414 (D.C. Cir. 1957), a petitioner sought the return of
certain
property under the Trading with the Enemy Act. See id. at 415.
Although the petitioner could not bring suit because she did
not meet
all of the Act's requirements, other parties had filed administrative
claims under the Act to obtain the same property. See id. at
416. The
petitioner asserted that she had a potential "cognizable
action" in
United States court based upon two contingent possibilities:
(1) that
the other parties seeking the property might prevail, in which
case the
petitioner could then sue them in federal court; and (2) that
Congress
might pass legislation that would return the property to its
former
German owners, in which case the petitioner could sue the Attorney
General for refusing to recognize her claim. See id. at 417.
The court
concluded that the district court did not abuse its discretion
in finding
that there was a "sufficient likelihood that the expected
litigation
[would] eventuate." Id. Accordingly, the court affirmed
the district
court's finding that the petitioner had established a cognizable
action
_________________________________________________________________
only a "reasonable showing of the need to perpetuate the
testimony lest
it be lost because of the commencement of litigation");
cf. Penn Mut., 68
F.3d at 1375 (noting that although general allegations are not
sufficient
to show an immediate need to perpetuate testimony,"the age
of a pro-
posed deponent may be relevant in determining whether there is
suffi-
cient reason to perpetuate testimony").
16
despite the existence of contingent events, i.e., that the other
parties
would prevail, or that Congress would pass legislation returning
the
property to its former German owners. See id. at 418. Thus,
even
anticipated actions that are contingent and uncertain can be
cogniza-
ble for the purposes of Rule 27 jurisdiction.
In the present case, Deiulemar filed its Rule 27 petition the
day
after Pacific Eternity denied Captain Popp access to the Allegra.
At
the time of filing, Deiulemar had not yet initiated arbitration.
Thus,
it was not certain that Deiulemar would have to compel or enforce
arbitration. Under the circumstances, however, Deiulemar reasonably
believed that it could not wait and see whether Pacific Eternity
would
comply with arbitration because Pacific Eternity was repairing
the
ship and crucial evidence was rapidly disappearing or changing.
Moreover, Deiulemar asserted that Pacific Eternity demonstrated
bad
faith and dilatory intent by stonewalling Deiulemar and denying
Cap-
tain Popp access to the ship. Given the district court's reasonable
reli-
ance on Deiulemar's allegations at the time of filing, as well
as the
clear exigency of the moment, we cannot say that the district
court
abused its discretion. We recognize that Deiulemar's anticipated
actions to compel or enforce arbitration were not absolutely
certain,
nor were they present rights of action. But, Rule 27 does not
require
absolute certainty. See Penn Mut., 68 F.3d at 1374; De Wagenhecht,
250 F.2d at 417. A cognizable action only requires"a sufficient
likeli-
hood that the expected litigation will eventuate." Id. In
the present
case, given Pacific Eternity's questionable conduct in denying
Deiule-
mar access to the ship -- an act that, on its face, may be described
as a dilatory tactic -- we cannot say that the district court
abused its
discretion when it asserted jurisdiction over Deiulemar's petition
after
Deiulemar represented that it would potentially have to bring
an
action to enforce or compel arbitration in federal court.
B.
Pacific Eternity next argues that Deiulemar abused Rule 27 by
using it to discover new evidence, as opposed to perpetuating
known
evidence. As a result, Pacific Eternity argues, Deiulemar exceeded
the
proper scope of Rule 27 jurisdiction. We disagree.
Rule 27 is not a substitute for broad discovery, see Penn Mut.
Life
Ins. v. United States, 68 F.3d 1371, 1376 (D.C. Cir. 1995), nor
is it
17
designed as a means of ascertaining facts for drafting a complaint,
see
In re Storck, 179 F.R.D. 57, 58 (D. Mass. 1998) ("The rule
is not
designed to allow pre-complaint discovery."); In re Sitter,
167 F.R.D.
80, 82 (D. Minn. 1996) ("Here, because the testimony of
the proposed
deponents is unknown to Sitter, she is wholly unable to set forth
the
substance of the testimony that she would hope to preserve by
the tak-
ing of the pre-action depositions."). A petitioner must
know the sub-
stance of the evidence it seeks before it can invoke Rule 27
perpetuation. See Nevada v. O'Leary, 63 F.3d 932, 936 (9th Cir.
1995) (finding that the petitioner could not satisfy Rule 27
because it
could not "set forth the substance of the testimony");
Penn Mut., 68
F.3d at 1376; In re Ford, 170 F.R.D. 504, 507 (M.D. Ala. 1997)
("Here, Ford seeks to discover or uncover testimony, not
to perpetuate
it. . . . Ford simply wants to know who shot Roberts and why.
Rule
27 simply does not provide for such discovery.").
In the present case, Pacific Eternity argues that Deiulemar sought
to use Rule 27 as a discovery device to uncover new evidence
rather
than perpetuating known evidence. Pacific Eternity points to
Deiule-
mar's petition, which states that Deiulemar needed Rule 27 discovery
"to learn the present condition of the engine," (J.A.
at 34), and that
"[t]he purpose in perpetuating this evidence is to determine
the nature
and extent of Petitioner's claim for breach of the attached [Charter
Party agreement.]" (J.A. at 5.) These statements suggest
that Deiule-
mar might not have known the exact nature of the evidence that
it
sought to gather. At the time Deiulemar filed its petition, however,
the
Coast Guard had already revealed several engine-related defects
on
the Allegra. See supra note 2 (describing deficiencies uncovered
by
Coast Guard). Based on these reports alone, the district court
had
some basis to conclude that Deiulemar, in requesting perpetuation
of
evidence related to the condition of the ship and its engine
parts,
largely knew the substance of the information that it sought
to pre-
serve through Rule 27. In particular, the district court could
reason-
ably conclude that Deiulemar knew of and sought to preserve the
present condition of the defective engine parts, as described
by the
Coast Guard's safety reports. The district court, therefore,
did not
abuse its discretion in implicitly finding that Deiulemar sought
to per-
petuate, rather than discover, the evidence on the Allegra.17
See In re
_________________________________________________________________
17 In arguing that Deiulemar simply sought to use the district
court as
a vehicle for impermissible discovery, Pacific Eternity misapprehends
18
Bay County Middlegrounds Landfill Site, 171 F.3d 1044, 1046 (6th
Cir. 1999) ("We hold that the judge's discretion encompasses
the
nature and quality of evidence required to make or rebut the
required
showing in Rule 27(a)(1).").
C.
Before a district court can order perpetuation of testimony,
the
court must be "satisfied that the perpetuation of the testimony
may
prevent a failure or delay of justice." Fed. R. Civ. P.
27(a)(3) (stating
that the district court "shall make an order" perpetuating
evidence if
it is "satisfied that the perpetuation of the testimony
may prevent a
failure or delay of justice"). We believe that the district
court pre-
vented a failure or delay of justice when it ordered the perpetuation
of the evidence on the Allegra.
To show that Rule 27 perpetuation of testimony may prevent a
fail-
ure or delay of justice, a petitioner "must demonstrate
a need for [the
testimony or evidence] that cannot easily be accomodated by other
potential witnesses." Penn Mut. Life Ins. v. United States,
68 F.3d
1371, 1375 (D.C. Cir. 1995). "[T]he testimony to be perpetuated
must
be relevant, not simply cumulative, and likely to provide material
dis-
tinctly useful to a finder of fact." In re Bay County Middlegrounds
Landfill Site, 171 F.3d 1044, 1047 (6th Cir. 1999). "Evidence
that
throws a different, greater, or additional light on a key issue
might
well `prevent a failure or delay of justice.'" Id. (quoting
Fed. R. Civ.
P. 27(a)(3)).
To establish its arbitration claim for breach of the Charter
Party
agreement, Deiulemar had to secure evidence of the ship's condition.
This evidence was rapidly changing, however, and would soon disap-
_________________________________________________________________
the narrow scope of the district court's action. The district
court pre-
served the evidence; it did not allow Deiulemar to develop or
discover
any information, nor did it rule on its admissibility. The evidence
remains sealed in camera at the district court. Pacific Eternity
has a clear
remedy at hand; it can seek to suppress the evidence in London.
By suc-
cessfully arguing before the arbitrator, Pacific Eternity can
prevent Dei-
ulemar from ever obtaining the evidence.
19
pear when the ship left United States waters. Although the Coast
Guard partially described the ship's condition in its report,
including
the ship's various mechanical defects, a third-party report written
for
a purpose other than litigation is a questionable substitute
for an
expert's firsthand inspection of the ship's reported problems.
For that
reason, Deiulemar's need to perpetuate evidence on the Allegra
could
not "easily be accomodated by other potential[evidence]."
Penn Mut.,
68 F.3d at 1375. Moreover, the evidence preserved from the Allegra
will likely shed "different, greater, or additional light"
on the dispute
beyond the information found in the Coast Guard's brief record
of
deficiencies. Bay County, 171 F.3d at 1047. Accordingly, we con-
clude that the district court did not abuse its discretion.
We recognize, in this shrinking world of increasingly efficient
global communication, that Deiulemar conceivably could have pre-
served the evidence by seeking discovery in London without ever
invoking the district court's jurisdiction. But, Deiulemar did
not
choose this route. Rather, it sought redress in federal court,
and, at the
time, it was permissible for it to do so because there was no
pending
arbitration. Deiulemar's petition, on its face, appeared to be
complete.
It described a situation of obvious exigency based on disappearing
evidence, and it asserted potentially cognizable actions to compel
or
enforce arbitration. It also purported to preserve, rather than
develop
or discover, crucial evidence in aid of arbitration. With limited
time
and information, the district court was forced to balance this
exigency
against the uncertain possibility that Deiulemar might be able
to pre-
serve the evidence in another forum. We have no difficulty holding
that the district court did not abuse its discretion under these
excep-
tional circumstances when it entertained Deiulemar's Rule 27
request.
VI.
Having determined that the district court did not err in considering
Deiulemar's Rule 27 petition, we now must decide whether to unseal
the preserved evidence. For the reasons stated below, we decline
to
unseal the evidence. Rather, we remand with instructions to transfer
the sealed evidence to the pending arbitration proceeding. The
evi-
dence has been gathered, the condition of the ship has changed,
the
ship has sailed out of United States waters, and the arbitration
pro-
ceedings have been initiated. Deiulemar, having successfully
gathered
20
evidence from the Allegra, desires to unseal it before the arbitrator
has an opportunity to rule on its admissibility. If we grant
Deiule-
mar's request, we will effectively place Deiulemar in a better
position
than it held before it filed its Rule 27 petition. Had there
been no pur-
ported "extraordinary circumstances," Deiulemar would
have had to
seek discovery from the arbitrator in London, and the arbitrator
would
have made his decision without first seeing any of the evidence.
Dis-
covery in aid of arbitration is an emergency measure designed
to pre-
serve evidence. See Ash v. Cort, 512 F.2d 909, 911 (3d Cir. 1975).
It is not meant to allow parties to circumvent the discovery
proce-
dures of arbitral forums.
By contrast, Pacific Eternity asks us to "unring the bell"
by requir-
ing the district court to destroy evidence, already gathered,
that can
never be reproduced. This option would suppress evidence that
the
arbitrator may find useful in adjudicating the merits of the
underlying
dispute. The cost and inconvenience associated with gathering
this
information has already been incurred. There is simply no practical
reason to deny the arbitrator the opportunity to make his own
decision
on this matter. This is particularly true where the evidence
is undis-
turbed and unseen and, therefore, does not presently provide
either
party with an unfair advantage.
The Fifth Circuit faced a similar dilemma in In re Price, 723
F.2d
1193 (5th Cir. 1984). In Price, the Fifth Circuit refused to
hear an
appeal from a successful Rule 27 petition where discovery had
already taken place and the underlying action had already begun.
See
id. at 1194-95 (remanding appeal of a Rule 27 petition to district
court
for consolidation with the underlying main action where perpetuation
had already occurred before the parties were able to file the
main
action). In declining to hear the appeal, the court noted that
"we see
no reason to proceed with this appeal... whereby we are asked
to pass
in advance on aspects of the admissibility of evidence -- evidence
that may or may not be offered at the forthcoming trial and,
if offered,
may or may not be admitted."18Id. at 1194. The court noted
the fol-
lowing:
_________________________________________________________________
18 In In re Price, 723 F.2d 1193 (5th Cir. 1984), like the present
case,
the court faced the issue of whether the district court lacked
subject mat-
21
None of the reasons that support
appellate review of a Rule
27 order, favorable or unfavorable,
before the deposition
that it authorizes or declines
to authorize has been taken and
the action for which the deposition
is intended has been filed
continue to obtain after these
events have occurred. What-
ever expense and effort were to
have been occasioned by the
deposition and might have been
avoided have already been
occasioned. Nor, in these circumstances,
need there be fear
that testimony will be lost because
of an incorrect order
unfavorable to deposing a witness.
Finally, a tribunal is
presently available to entertain
a motion to dismiss any
action filed without subject-matter
jurisdiction, terminating
any further unjustified inconvenience
to the moving party.
Id. at 1194-95. The court concluded that"except in unusual
and com-
pelling circumstances not present here and which we do not now
envision, review of Rule 27 orders is better declined when the
deposi-
tion authorized has already been taken and the action for which
it is
intended has been filed." Id. at 1195.
In the present case, the perpetuation of the evidence has already
occurred and Deiulemar has already initiated arbitration in London.
Neither party has seen the evidence gathered from the Allegra,
and,
as a result, the arbitrator will have an opportunity to rule
on Deiule-
mar's discovery request as if Deiulemar had brought it for the
first
time in the arbitral forum. Neither party will be prejudiced
by this
action. To the contrary, the parties are in the exact positions
they
would have held had Deiulemar sought discovery from the arbitrator
_________________________________________________________________
ter jurisdiction over Price's Rule 27 petition because Price
failed to assert
a "cognizable" action that he could not presently bring
in federal court.
See id. at 1194. The court refrained from addressing the merits
of Price's
Rule 27 petition because discovery had already occurred. See
id. at 1195.
The court also declined to address whether the district court
had subject
matter jurisdiction over Price's Rule 27 petition because "such
review
invites the appellate court -- under the rubric of determining
`cogniza-
bility' -- to pass on the subject matter jurisdiction of the
district court
over the pending main action. We think this better done in the
first
instance by the trial court . . . ." Id.
22
in the first place. The arbitrator does not have to admit the
evidence,
nor does he have to suppress it; that choice is left entirely
to the arbi-
trator.
We find no unfairness in returning this issue, preserved in a
pristine
state, to the forum that will ultimately hear the merits of the
underly-
ing dispute. To the contrary, we can think of nothing fairer
than leav-
ing each party where it began. In doing so, we decline Pacific
Eternity's invitation to destroy evidence that is already gathered
and
impossible to regain, and we decline Deiulemar's invitation to
reveal
the evidence in advance of any ruling by the arbitrator.
VII.
In summary, we conclude that the district court did not err in
con-
sidering Deiulemar's Rule 27 petition. In deciding whether to
enter-
tain Deiulemar's Rule 27 petition, the district court had to
balance the
potentially uncertain nature of Deiulemar's asserted cognizable
actions against Deiulemar's need to preserve evidence under "extraor-
dinary circumstances," filtered by the lack of any demonstrable
harm
alleged by Pacific Eternity. Given the knowledge that it had
at the
time of filing, we find that the district court did not abuse
its discre-
tion when it asserted jurisdiction over Deiulemar's Rule 27 petition.
The present dispute involves discovery, already complete, that
may
or may not be admitted in an arbitration that is currently pending.
The
evidence is still sealed, and the parties have already absorbed
any cost
or inconvenience associated with its perpetuation. We decline
to
unseal or destroy the evidence gathered from the Allegra. We
find it
more appropriate to place the unseen evidence where it belongs
--
before an arbitrator who is appointed to resolve undisputedly
arbitra-
ble disputes. For these reasons, we affirm the district court's
exercise
of jurisdiction and remand with instructions to transfer the
sealed evi-
dence to the arbitrator for the now-pending proceeding.
AFFIRMED AND REMANDED WITH INSTRUCTIONS |
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