Production of Archived Backup Tapes Proportional

The Physicians Alliance Corp. v. WellCare Health Ins. of Ariz., Inc., No. 16-203-SDD-RLB (M.D. La. Feb. 27, 2018).

In this breach of contract case, the plaintiff moved to compel the production of archived communications relating to custodians who no longer worked for the defendants. The court granted the motion, agreeing that the archives were within the scope of discovery and proportional to the needs of the case.

The plaintiff, The Physicians Alliance Corporation (“TPAC”), alleged that WellCare Health Insurance of Arizona, Inc. and WellCare Health Plan, Inc. (collectively, “WellCare”) breached their contract.

In September 2016, TPAC requested discovery that included the communications of specific custodians. WellCare responded that it no longer employed some of those custodians; their information was stored on backup tapes. It objected that this archived information was inaccessible and not proportional to the needs of the case.

Initially, WellCare claimed that restoration of the backup tapes would cost over $330,000. When it broke those costs down by year, it revised its estimate. WellCare stated it would cost $211,500 to restore the 2003 to 2004 archives and $372,800 for the year 2011 — a total of $584,300. WellCare told the court it had already recovered and produced the data from other years.

In December 2017, having failed to resolve the dispute over the backup tapes, TPAC filed this motion to compel production. TPAC requested the data from the 2003 to 2004 and 2011 backup tapes at WellCare’s expense. In the alternative, it sought permission for its expert to examine those tapes. TPAC argued that the tapes contained relevant information that was proportional to the needs of the case. WellCare objected that the discovery was cumulative and not reasonably accessible and thus not proportional.

In February 2018, WellCare’s counsel stated that “prior understandings regarding discovery, and consequently certain representations to opposing counsel and the court, were inaccurate.” Specifically:

  • restoration of the 2003 to 2004 backup tapes would cost less than $13,000;
  • the 2005 to 2006 backup tapes had “always been ‘unavailable’”;
  • WellCare “may not have … produced” some of the tapes it had recovered; and
  • “no backup tapes were ever made” for 2011.

The court pointed out that “months of [its] time and efforts have been wasted” by these misrepresentations. Further, WellCare provided “no satisfactory explanation” about how it calculated its earlier estimates for data that “never existed.”

The court found first that the information sought is within the scope of discovery set out by Federal Rule of Civil Procedure 26(b)(1). The court also found the information proportional. The amount in controversy is over $20 million and WellCare has “sole access” to the requested information. Additionally, despite WellCare’s objection that the evidence is cumulative, counsel stated that about 30% of the information recovered so far was not duplicative. Thus, the benefit of production outweighed any burden or expense.

The court ordered WellCare to recover and produce everything possible from the backup tapes. It reserved ruling on allowing an expert examination until that initial production was complete.

Takeaways on Estimating Costs

It’s impossible to tell what happened here with the defendants’ previous cost estimates. Whatever the error, it should not have taken over 16 months for counsel to figure it out and advise the court and opposing counsel. Don’t rely on your IT department or other technical experts to do all the heavy lifting; make sure you understand the state of your data and the source of any cost estimates.

Questions about managing ediscovery? We’re here to help you master ediscovery — so you never have to retract your previous representations to the court.

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