Onate v. AHRC Health Care, Inc.

Background

Antonio Onate Jr., on behalf of himself and a proposed collective and class, sued AHRC Health Care, Inc. The plaintiffs, who were current and former hourly, non-exempt employees, alleged violations of the Fair Labor Standards Act and New York Labor Law. Another defendant, Care Design NY, LLC, had already settled.

After discovery closed, the parties disputed whether AHRC had to produce materials concerning BKD, LLP’s audit of AHRC’s payroll processes and practices. The court had previously ordered AHRC to produce BKD’s final audit and had requested information about the burden of producing related communications and employee schedules.

Communications Related to the BKD Audit

AHRC argued that Federal Rule of Evidence 407 protected communications about the audit and that searching for them would be unduly burdensome. AHRC identified at least 15 custodians over an 18-month period and estimated that the search and production could result in up to $500,000 in additional electronic-discovery vendor charges.

The plaintiffs argued that AHRC had not provided concrete evidence supporting that estimate. They also argued that the communications could be relevant to issues such as whether AHRC acted willfully and could be used for purposes allowed by Rule 407.

The court ruled that Rule 407 concerns the admissibility of evidence at trial and does not protect documents from discovery. The court also found that AHRC had not adequately shown an undue burden because it provided no concrete vendor costs or price estimates, and the requested period was shorter than the period covered by earlier discovery. The court found the communications at least potentially relevant and ordered AHRC to produce them. The parties were ordered to file a joint letter by August 4, 2022, concerning the status of that production.

Employee Schedules

AHRC argued that employee schedules were created and modified within individual departments. Producing schedules for approximately 80 current and former employees in the sample group would therefore require about 80 separate investigations. AHRC also argued that the plaintiffs already had the employees’ time and pay records.

The plaintiffs argued that AHRC had not analyzed the actual time and cost of producing the schedules and that the schedules would provide information beyond the time and pay records.

The court ruled that producing the schedules was disproportionate to the needs of the case and unduly burdensome. It found that the burden of the separate investigations outweighed the schedules’ minimal potential relevance. AHRC therefore was not required to produce the schedules of employees in the sample group.

BKD’s Final Audit

The court had previously ordered AHRC to produce BKD’s final audit. Because AHRC had provided no reason for not producing it, the court required AHRC to produce the final audit by July 11, 2022.

Disposition

The court ordered production of communications related to BKD’s audit, ruled that AHRC need not produce the schedules of employees in the sample group, and required production of BKD’s final audit by July 11, 2022.