Lummus Company v. Commonwealth Oil Refining Company, Inc., (Three Cases)

Defendant-appellant’s motion to delay discovery until after the decision of its pending appeal from the order of the district court staying arbitration is properly before us. Bernhardt v. Polygraphic Co. of America, Inc., 2 Cir., 1956, 235 F.2d 209; Mesabi Iron Co. v. Reserve Mining Co., 8 Cir., 1959, 268 F.2d 782. We believe it should be granted. We do not rest this decision on the ground that proceeding with discovery may involve lost motion. Rather, we feel appellee makes no satisfactory answer to appellant’s contention that a court order of discovery would be affirmatively inimical to appellee’s obligation to arbitrate, if this court determines it to have such obligation. It seems clear that if arbitration is to be had of the entire dispute, appellee’s right to discovery must be far more restricted than if the case remains in a federal court for plenary trial of the *614 issue of fraud. Application of Katz, 1957, 3 A.D.2d 238, 160 N.Y.S.2d 159; Stiller Fabrics, Inc. v. Michael Saphier Associates, Inc., 1956, 1 Misc.2d 787, 148 N.Y.S.2d 591; Commercial Solvents Corp. v. Louisiana Liquid Fertilizer Co., D.C.S.D.N.Y.1957, 20 F.R.D. 359 (United States Arbitration Act, 9 U.S.C.A. § 1 et seq.); American Arbitration Association, Commercial Arbitration Rules § 30. We cannot avoid the thought that the principal reason appellee has for not awaiting discovery until the decision of this court is the fear that that course will be unavailable if such ruling proves to be adverse. Until it is determined whether this action has been properly brought, appellee should not receive any unnecessary fruits thereof.

An order will enter allowing defendant-appellant’s motion for stay of discovery.