Transcript Wachtel v. Health Net., Inc. 239 F.R.D. 81 (D.N.J. 2006)

Wachtel v. Health Net., Inc.
239 F.R.D. 81 (D.N.J. 2006)
Aug. 29, 2006, Argued
December 6, 2006, Decided
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
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Parties
• Plaintiffs:
– Zev & Linda Wachtel
(individually) and
– on behalf of their
minor children, Tory,
Jesse and Brett
Wachtel, and on
behalf of all others
similarly situated.
• Defendant/s:
– HEALTH NET, INC.;
– Health Net of the
Northeast, Inc.
– Health Net of New
Jersey, Inc.
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Facts
• Underlying issue: P alleged Federal
(ERISA) violations for breach of fiduciary
duties stemming from re-imbursement
claims.
• E-discovery issues:
– Non-production of responsive documents
– Failure to preserve and search emails
– Pattern of violation & disregard of Court
discovery orders
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E-discovery Legal Framework
& Rules effected
• FRCP 26(b)(5) –withholding information claiming
privilege
• FRCP 37(B)(2)(A,B,C)-misconduct/imposition of
sanctions
• FRCP 37(C)(1)-failure to disclose
• FRCP 37(d) –failure to respond
• FRCP 53(a)(1)(C)-appointment of special discovery
master
• ERISA, 29 U.S.C. § 1001 et seq.
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Analysis of Case
• Flagrance of non-compliance in discovery
and with court orders forced the Court’s
hand.
• Harmed plaintiffs and the integrity of the
judicial process
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Issues regarding E-discovery
• D improperly withheld responsive
documents: in excess of 20,000
• Spoliation
• Failure to preserve emails
– Deletion of emails > 30 days
• Emails to backup tapes after 90 days
• Lack of litigation hold
• Allowed individual custodians to self-search their
systems
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Conclusion/Outcome
• Health Net repeatedly and systematically
violated court orders
• Sanctions intended to punish/remedy
misconduct
– Ordered to produce
– Monetary sanctions
– Reserved opinion on default judgment as a
sanction until all the class action issues have
been resolved
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Class discussion questions
• What would you guess is the SOP for
insurance companies’ management of ESI
after this case?
• Could anything have been done to contain
the scope of these violations?
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