Dallas COA Refuses to Seal Arbitration Award Despite Parties’ Agreement

The Dallas Court of Appeals has held that a trial court properly rejected a party’s motion to seal an arbitration award as part of an enforcement petition despite the existence of a confidentiality agreement between the parties.

In McAfee v. Weiss, 05-09-01102-CV (Tex. App. – Dallas, March 16, 2011), Kevin M. Weiss filed a petition to confirm an arbitration award against McAfee in state court. Weiss, a former president at McAfee, Inc. was terminated in 2006. As a result of termination of Weiss’ employment, Weiss and McAfee engaged in an arbitration proceeding. McAfee and Weiss agreed to enter into a protective order which allowed parties to mark exhibits and testimony for the arbitration as “Confidential” or “Attorneys’ Eyes Only.” Additionally, counsel for Weiss assured a number of witnesses that their testimony would remain confidential. The arbitrator ultimately ruled in Weiss’ favor and issued an award that was supported by numerous citations to witness testimony and documentary exhibits.

In June 2009, Weiss filed a petition to confirm the award and attached a copy of the arbitral award to his petition. McAfee filed a motion to seal both the petition and the award and requested a temporary sealing order. The trial court issued a temporary order, and a full hearing was held on August 24, 2009. After the hearing, the judge issued a memorandum order which stated McAfee failed to meet its burden under Texas Rules of Civil Procedure 76a. The temporary sealing order remained in effect, however, until McAfee and Weiss agreed to certain redactions in the award. Next, Weiss “filed a proposed redacted arbitration award” after the parties failed to agree on necessary redactions. After another hearing, a final order denying McAfee’s motion for a sealing order, vacating the temporary sealing order and confirming the arbitration award was issued. Finally, the trial court ordered that the redacted version of the award as submitted by Weiss be substituted into the court record.

After determining that the Dallas Court of Appeals had jurisdiction to hear the appeal, the court considered whether the trial court abused its discretion when it denied McAfee’s motion to seal the petition and award. McAfee argued the trial court erred because arbitration awards are not “court records” within the definition of Texas Rules of Civil Procedure 76a. The court concluded that McAfee failed to preserve the issue on appeal on procedural grounds, but also rejected it on the merits. Looking at the plain language of the rule, the court concluded that an arbitration award submitted by a party in connection with a matter before the court is clearly a court record within the meaning of Rule 76a. Additionally, McAfee’s argument that the confidentially agreement between the parties and enforced by the arbitrator exempted the award from the definition was not persuasive because the facts did not fit one of the specific exceptions defined by the rule.

Next, the Dallas Court held McAfee failed to meet the requirements to overcome the presumption that court records should be open to the public:

We have found no cases recognizing a party’s general interest in a confidentiality agreement – even an agreement reinforced by an arbitrator’s rules and orders – as a specific, serious, and substantial interest within the meaning of 76a(1). The relevant case law indicates that the interest relied on must be more specific than that.

Because an arbitration award submitted by a party in connection with a matter before the court is a court record within the meaning of Rule 76a and McAfee failed to offer evidence of a specific, serious and substantial interest which required sealing the award, the Dallas Court of Appeals affirmed the trial court.

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