Plaintiff was entitled to discovery of documents relating to an arbitration proceeding involving similar claims, even though the legal issues were not identical, and also notwithstanding a confidentiality agreement entered by the arbitrator in the arbitration case.
The Court made this comment on the standard of relevancy for discovery purposes:
A fundamental requirement of Rule 26, and the focus of the Court’s analysis here, is that the information sought to be discovered must be “relevant” to the pending action. The test of relevancy under Rule 26 is not the same as the more stringent relevancy requirement of Rule 401 of the North Carolina Rules of Evidence. See N.C. R. Evid. 401 (“‘Relevant evidence’ means evidence having any tendency to make the existence of any fact that is of consequence to the determination of the action more probable or less probable than it would be without the evidence.”); see also Adams v. Lovette, 105 N.C. App. 23, 29, 411 S.E.2d 620, 624 (1992), aff’d, 332 N.C. 659, 422 S.E.2d 575 (1992). Moreover, a determination that information is relevant for discovery purposes does not necessarily mean that the information is admissible at trial. The latter determination is made according to Rule 401 of the Rules of Evidence. Shellhorn v. Brad Ragan, Inc., 38 N.C. App. 310, 314, 248 S.E.2d 103, 106 (1978). To be relevant for discovery purposes, the information sought need only be “reasonably calculated” to lead to the discovery of relevant evidence admissible at trial. See N.C. R. Civ. P. 26(b)(1).
The Court also held that there might be circumstances where an arbitrator’s ruling on confidentiality might be enforced:
The Court emphasizes the narrow and fact-specific nature of this ruling. There may be instances in which recognition of an arbitration panel’s confidentiality order is warranted. This Court recently acknowledged the strong state and federal public policy in favor of resolving disputes through arbitration. See, e.g., State v. Philip Morris USA, Inc., 2006 NCBC 22 ¶ 35 (N.C. Super. Ct. Dec. 4, 2006), http://www.ncbusinesscourt.net/opinions/2006%20NCBC%2022.htm. Confidentiality is an important part of the settlement process and is perceived as a clear advantage of arbitration. See, e.g., Richard C. Reuben, Constitutional Gravity: A Unitary Theory of Alternative Dispute Resolution and Public Civil Justice, 47 UCLA L. Rev. 949, 1086 (2000) (noting that “privacy can be an important consideration in the decision to waive full-blown trial rights in favor of the arbitral forum). However, in this case, the arbitration involves facts and witness that are also relevant to cases before this Court. Disclosure of the reinsurance arbitration information will be protected by the confidentiality order in place in this case and will promote the efficient resolution of these cases by streamlining the discovery process and refining the issues to be determined at trial.