in Re Methodist Primary Care Group & TMH Physician Organization

Petition for Writ of Mandamus Conditionally Granted and Opinion filed June
21, 2018.
In The
Fourteenth Court of Appeals
NO. 14-18-00191-CV
IN RE METHODIST PRIMARY CARE GROUP AND TMH PHYSICIAN
ORGANIZATION, Relators
ORIGINAL PROCEEDING
WRIT OF MANDAMUS
234th District Court
Harris County, Texas
Trial Court Cause No. 2015-35424
OPINION
This discovery mandamus arises from litigation surrounding two doctors who
left one medical practice to join another.
Relators and defendants below are Methodist Primary Care Group
(“Methodist Primary Care”) and TMH Physician Organization d/b/a Houston
Methodist Specialty Physician Group (“Methodist Specialty”). The real party-in-
interest and plaintiff below is Associates in Medicine, PA (“Associates”).
The underlying litigation involves allegations that relators stole trade secrets,
tortiously interfered with patient relationships, and committed other actionable
conduct when two doctors left Associates and moved their medical practices to
Methodist Primary Care. The discovery fight focuses on the propriety of a March 8,
2018 discovery order authorizing a third-party expert, paid for by Associates, to
search electronic practice management systems used by relators and other entities
for certain data stored in the cloud and accessible via the internet. See Riley v.
California, 134 S. Ct. 2473, 2491 (2014) (“Cloud computing is the capacity of
Internet-connected devices to display data stored on remote servers rather than on
the device itself.”). The data at issue pertains to relators—and to more than 200 other
entities affiliated with the Methodist System, which are not parties to this litigation.
Relators filed a petition for writ of mandamus asking this court to compel the
presiding judge of the 234th District Court, Harris County, to vacate the March 8
order granting Associates’s motion to compel. The March 8 order appoints Pathway
Forensics LLC to conduct, at Associates’s expense, a data search of internet-
accessible electronic practice management systems used by Methodist Primary Care,
Methodist Specialty, and the other Methodist System entities. Associates contends
this order is necessary to obtain evidence relevant to proving the damages it seeks.
Resolution of this mandamus turns on the standards governing discovery of
electronic data under Texas Rule of Civil Procedure 196.4 and In re Weekley Homes,
L.P., 295 S.W.3d 309 (Tex. 2009) (orig. proceeding).
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We conclude that partial mandamus relief is warranted because the March 8
order (1) runs afoul of Rule 196.4 and In re Weekley Homes, and (2) encompasses
certain electronic data that Associates has not requested in discovery and has not
shown to be within relators’ possession, custody, or control.
I. FACTUAL AND PROCEDURAL BACKGROUND
Methodist Primary Care is an independently-managed Texas non-profit
organization comprised of primary care physicians affiliated with the Methodist
System. In turn, this system encompasses approximately 209 different entities.
Methodist Primary Care has clinics throughout the greater Houston area. Payments
for services performed by Methodist Primary Care are billed and collected by
Methodist Specialty under a Billing Services Agreement.
The dispute underlying this mandamus proceeding began in May 2015 when
Drs. Shari Rubin and Joshua Septimus joined Methodist Primary Care after having
practiced medicine with Associates. About a month after their move, Associates
sued the two doctors; it later filed an amended petition adding Methodist Primary
Care and Methodist Specialty as defendants.
Associates alleges that Drs. Rubin and Septimus gave confidential
information and trade secrets to Methodist Primary Care in connection with moving
their practices. Associates asserts causes of action against Drs. Rubin and Septimus
for misappropriation of trade secrets, breach of fiduciary duty, fraud, and breach of
contract. Associates asserts causes of action against Methodist Primary Care for
misappropriation of trade secrets, conspiracy to breach fiduciary duty and to commit
fraud, tortious interference with prospective business relations, and common law
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unfair competition. Associates asserts an “alter ego” theory against Methodist
Specialty. Associates seeks actual damages and the disgorgement of all sums
obtained through the alleged theft of trade secrets.
Associates served relators with 17 requests for production of documents
reflecting the revenues and profits generated by Drs. Rubin’s and Septimus’s
referrals of patients, along with documents reflecting “ancillary services” billed and
collected by Methodist Specialty from May 2015 to the present.
In its requests for production, Associates defined “ancillary services” as “all
Designated Health Services as identified in 42 C.F.R. § 411.351.” According to
relators’ petition, ancillary services are services ordered by a physician to be
performed by others such as lab services and x-rays.
These requests for production defined “documents” to include “electronic
information which shall be produced in their native format.”
Methodist Primary Care responded to these requests by producing profit and
loss statements for Drs. Rubin and Septimus, summaries of charges and collections
for both physicians, and profit and loss information for an x-ray machine operated
at a Bellaire clinic. Relators responded to the requests for documents reflecting
revenues generated in connection with referrals of patients and ancillary services by
stating that they had “None.”
Associates filed a motion to compel and amended motion for sanctions,
arguing that relators possessed but refused to produce documents or data responsive
to the requests at issue. It further asserted that a search of relators’ computer systems
would recover responsive documents and information. Associates asked the trial
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court to appoint a forensic expert to search the electronic databases of relators for
several categories of information. Associates argued that it was entitled to this relief
under the standard established in In re Weekley Homes for allowing direct access to
another party’s computer hard drives. Relators filed a response arguing that the
motion should be denied because Associates had not satisfied the In re Weekley
Homes standard.
At the conclusion of a hearing on March 5, 2018, the trial court found that
Methodist Primary Care and Methodist Specialty had defaulted on their obligation
to search for and produce data and documents requested by Associates. The trial
court signed an order granting the motion on March 8, 2018.
The March 8 order contains the following determinations.
• Methodist Primary Care and Methodist Specialty “have
defaulted on their obligation to search [their] . . . records and
produce data and documents that have been requested by
[Associates] . . . in discovery.”
• The production of Methodist Primary Care and Methodist
Specialty “has been inadequate.”
• “A search of [Methodist Primary Care’s] . . . and [Methodist
Specialty’s] . . . practice management systems, EPIC and
ATHENA would likely lead to the recovery of relevant and
material documents.”
• “Thus, the Court GRANTS the motion in part and ORDERS the
appointment of an independent expert . . . to perform an
independent examination of [Methodist Primary Care’s] . . . and
[Methodist Specialty’s] . . . practice management systems as
outlined below . . . .”
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The order appoints Pathway Forensics LLC to search the electronic data of all 209
Methodist System entities using their practice management systems (EPIC, and, if
necessary, their previous system, Athena). Pathway Forensics is required to search
for documents or data, if any, evidencing (1) revenues generated by Drs. Rubin and
Septimus arising from the Methodist System from May 15, 2015 to the present, (2)
physician ancillary and professional services performed by or on behalf of Drs.
Rubin and Septimus, and (3) physician ancillary and professional services performed
by other physicians or on behalf of other physicians within the Methodist System for
all patients referred to those physicians by Drs. Rubin and Septimus. The order
directs that “[t]he [e]xpert’s costs shall be borne by” Associates.
After relators filed their petition for writ of mandamus on March 14, 2018, we
asked Associates to file a response and stayed the March 8 order.
II. MANDAMUS STANDARD
To obtain mandamus relief, a relator generally must show both that the trial
court clearly abused its discretion and that relator has no adequate remedy by appeal.
In re Prudential Ins. Co., 148 S.W.3d 124, 135–36 (Tex. 2004) (orig. proceeding).
A trial court clearly abuses its discretion if it reaches a decision so arbitrary and
unreasonable as to amount to a clear and prejudicial error of law or if it clearly fails
to analyze the law correctly or apply the law correctly to the facts. In re Cerberus
Capital Mgmt., L.P., 164 S.W.3d 379, 382 (Tex. 2005) (orig. proceeding) (per
curiam). The appellate court reviews the trial court’s application of the law de novo.
See Walker v. Packer, 827 S.W.2d 833, 840 (Tex. 1992) (orig. proceeding). The
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relator must establish that the trial court could reasonably have reached only one
conclusion. Id. at 840.
“A discovery order that compels production beyond the rules of procedure is
an abuse of discretion for which mandamus is the proper remedy.” In re Nat’l Lloyds
Ins. Co., 507 S.W.3d 219, 223 (Tex. 2016) (orig. proceeding) (per curiam).
“Mandamus relief is available when a trial court compels production of electronic
data and information beyond the permissible bounds of discovery.” In re Pinnacle
Eng’g, Inc., 405 S.W.3d 835, 847 (Tex. App.—Houston [1st Dist.] 2013, orig.
proceeding) (citing In re Weekley Homes, 295 S.W.3d at 322). The harm that a party
will suffer from being required to relinquish control of its data for forensic
inspection, and the harm that might result from revealing private conversations, trade
secrets, and privileged or otherwise confidential communications, cannot be
remedied on appeal. In re Weekley Homes, 295 S.W.3d at 322–23.
III. ANALYSIS
Relators’ petition presents four principal arguments.
• First, relators argue that Associates did not adequately request
electronic data under Rule 196.4, and even if such a request had
been made, they had no duty to create a document or report that
does not currently exist.
• Second, relators argue that the March 8 order is subject to the In
re Weekley Homes standard. They contend this standard was not
met because Associates produced no evidence that (1) relators
defaulted on their discovery obligations, and (2) a further search
of relators’ systems would retrieve responsive documents.
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• Third, relators argue that the order compels discovery Associates
did not request.
• Fourth, relators argue that the order improperly grants access to
the electronic data of more than 200 Methodist System entities
that are not parties to this litigation.
We discuss each of these arguments in turn, as well as the requirements of Rule
196.4 and In re Weekley Homes.
A. Associates Requested Electronic Data
The discovery of electronic data is governed by Rule 196.4, which states:
To obtain discovery of data or information that exists in electronic or
magnetic form, the requesting party must specifically request production of
electronic or magnetic data and specify the form in which the requesting
party wants it produced. The responding party must produce the electronic
or magnetic data that is responsive to the request and is reasonably available
to the responding party in its ordinary course of business. If the responding
party cannot--through reasonable efforts--retrieve the data or information
requested or produce it in the form requested, the responding party must state
an objection complying with these rules. If the court orders the responding
party to comply with the request, the court must also order that the requesting
party pay the reasonable expenses of any extraordinary steps required to
retrieve and produce the information.
Tex. R. Civ. P. 196.4. This rule’s focus on production of data that is “reasonably
available” in the “ordinary course of business” with “reasonable efforts” reflects a
policy underlying discovery in general—and electronic discovery in particular—to
achieve an appropriate balance between discoverability and accompanying burdens.
See, e.g., Tex. R. Civ. P. 192.4, 192.6(b); see also In re State Farm Lloyds, 520
S.W.3d 595, 599 (Tex. 2017) (orig. proceeding) (“[A]ll discovery is subject to the
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proportionality overlay embedded in our discovery rules and inherent in the
reasonableness standard to which our electronic-discovery rule is tethered.”).
Relators argue that they had no duty under Rule 196.4 to search for and
produce responsive electronic data because none of Associates’s requests
specifically request electronic data from the EPIC or Athena systems.
Although Associates did not reference Rule 196.4 in its requests for
production, the requests define “document” as including “all other electronic
information which shall be produced in their native format.” Associates’s motion to
compel made it clear that it was seeking the production of electronic data.
Accordingly, Associates sufficiently invoked Rule 196.4. See In re Shipman, 540
S.W.3d 562, 565–67 (Tex. 2018) (orig. proceeding) (per curiam) (“Like the deleted
emails sought in Weekley, it became ‘abundantly clear’ throughout the course of
litigation and before trial-court intervention that Jamie sought financial records she
believed were relevant to this case, whether they exist in a physical file cabinet or
on an electronic device. . . . Regardless of the specificity of Jamie’s initial requests,
she argued in her second motion to compel that ‘Shipman should be required to
produce all paper and electronic records he can locate using diligent efforts, and to
make his computer[s] available for forensic examination.’ If Jamie’s discovery
requests did not technically meet Rule 196.4’s specificity requirement, Shipman
cannot argue Jamie’s intent was not ‘clearly understood.’”) (citation omitted).
Based on this record, relators had a duty to undertake “reasonable efforts” to
produce electronic data responsive to Associates’s requests that is “reasonably
available” to relators in their “ordinary course of business,” and to object if they
contended that requested data was not reasonably available. Tex. R. Civ. P. 196.4.
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B. Relators Had a Duty to Produce Electronic Data That is Responsive
and Reasonably Available
Relators assert that “[u]nder Texas Rule of Civil Procedure 192.3, Relators
are only required to produce documents within their ‘possession, custody, or
control.’” They further assert that “[a] document that does not exist is not within a
party’s ‘possession, custody, or control’” and “a party may not be compelled to
reduce raw data into a specific requested form.” These contentions miss the mark
because they conflate two different inquiries: (1) do physical documents already
exist, and (2) regardless of whether physical documents already exist, is the
requested data retrievable under Rule 196.4’s standard?
Relators rely on In re Family Dollar Stores of Tex., LLC, No. 09-11-00432-
CV, 2011 WL 5299578 (Tex. App.—Beaumont Nov. 3, 2011, orig. proceeding) (per
curiam), to support these arguments. In that case, the trial court ordered Family
Dollar to “produce a list of all incidents and lawsuits relating to falling merchandise
in the Family Dollar stores located in the county in which I–45 runs and all stores
east to the Texas border of the store at issue in this lawsuit [located in Beaumont,
Texas] for the five (5) years prior to September 11, 2009.” The court of appeals held
that Family Dollar did not have a duty to reduce raw data from an electronic database
into the form of a paper report or list that did not currently exist. Id. at *2. The court
of appeals cited Rule 196.1, which pertains to requests for production of documents.
The court of appeals also cited McKinney v. Nat’l Union Fire Ins. Co., 772 S.W.2d
72, 73 n.2 (Tex. 1989). McKinney states that former Rule 167(1)(a), the predecessor
to Rule 196.1, deals with the discovery and production of existing documents and
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cannot be used to force a party to make lists or reduce information to tangible form.
Id.
In re Family Dollar Stores is distinguishable because the discovery at issue in
that case requested production of a “‘printout’ of ‘the computerized report(s) and/or
other record(s) generated in the ordinary course of [Family Dollar’s] business [.]’”
Id. at *1 n.1. Here, in contrast, the request for production requested “documents”
and then defined “documents” to include “electronic information” in “native
format.” More fundamentally, the potentially challenging issues arising in
connection with electronic data disputes under Rule 196.4 are not necessarily
resolved solely by invoking case law addressing limits under Rule 196.1 on
compelling litigants to “create” physical documents printed on paper. See In re State
Farm Lloyds, 520 S.W.3d at 599 (“[E]lectronic discovery concerns manifest in
variable shades and phases. In this dispute, the parties are at odds over the form in
which [electronically stored information] . . . must be produced . . . . The requesting
party seeks [electronically stored information] . . . in native form while the
responding party has offered to produce in searchable static form . . . .”).
Associates did not request only physical documents; it also requested
“electronic information” in “native format.” Rule 196.4 is clear that when a specific
request for electronic data has been made, the responding party is required to
produce responsive electronic data that is reasonably available in the ordinary course
of business. See Tex. R. Civ. P. 196.4.
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C. In re Weekley Homes Governs Discovery of Electronic Data
In re Weekley Homes, L.P., 295 S.W.3d at 315–22, sets forth the procedures
for obtaining discovery of electronic information under Texas Rule of Civil
Procedure 196.4 and the standard for granting an expert access to data on another
party’s computer hard drives.
The supreme court summarized the proper procedures under Rule 196.4 as
follows.
• “When a specific request for electronic information has been
lodged, Rule 196.4 requires the responding party to either
produce responsive electronic information that is ‘reasonably
available to the responding party in its ordinary course of
business,’ or object on grounds that the information cannot
through reasonable efforts be retrieved or produced in the form
requested.” Id. at 315.
• “Once the responding party raises a Rule 196.4 objection, either
party may request a hearing at which the responding party must
present evidence to support the objection. Tex. R. Civ. P.
193.4(a).” Id.
• “To determine whether requested information is reasonably
available in the ordinary course of business, the trial court may
order discovery, such as requiring the responding party to sample
or inspect the sources potentially containing information
identified as not reasonably available.” Id.
• “Should the responding party fail to meet its burden, the trial
court may order production subject to the discovery limitations
imposed by Rule 192.4.” Id.
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• “If the responding party meets its burden by demonstrating that
retrieval and production of the requested information would be
overly burdensome, the trial court may nevertheless order
targeted production upon a showing by the requesting party that
the benefits of ordering production outweigh the costs. Tex. R.
Civ. P. 192.4.” Id.
• “To the extent possible, courts should be mindful of protecting
sensitive information and should choose the least intrusive
means of retrieval.” Id. at 316.
The supreme court also discussed the standard for allowing an expert access to a
litigant’s computer hard drives. The supreme court recognized that “[p]roviding
access to information by ordering examination of a party’s electronic storage device
is particularly intrusive and should be generally discouraged, just as permitting open
access to a party’s file cabinets for general perusal would be” and that “the rules are
‘not meant to create a routine right of direct access.’” Id. at 317.
“As a threshold matter, the requesting party must show that the responding
party has defaulted in its obligation to search its records and produce the requested
data.” Id. A court may not rely on “mere skepticism or bare allegations that the
responding party has failed to comply with its discovery duties.” Id. at 317–18.
The requesting party also should show that the responding party’s production
has been inadequate and that a search of its computer could recover relevant
materials. Id. at 317. Specifically, the requesting party should show that there is a
reasonable likelihood that a search of the computers will reveal the information that
the requesting party seeks. Id. at 319–21. “Finally, when determining the means by
which the sources should be searched and information produced, direct access to
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another party’s electronic storage devices is discouraged, and courts should be
extremely cautious to guard against undue intrusion.” Id. at 322.
We now turn to the application of these standards.
D. The March 8 Order Runs Afoul of In re Weekley Homes
1. In re Weekley Homes applies to this dispute
Associates argues that In re Weekley Homes does not apply because the March
8 order does not compel access by a litigation opponent or expert to a computer hard
drive in the possession of relators. Instead, the order directs an expert paid by
Associates to search electronic practice management systems for certain data stored
remotely and accessible via the internet.
According to Associates, the March 8 order “does not involve the type of
direct access to a party’s electronic storage device that is ‘particularly intrusive.’”
Associates emphasizes that “Methodist specifically advertises that EPIC is a ‘web-
based service that requires no installation on your servers or computers.’ Moreover,
to access EPIC, ‘all that is needed is a PC or Macintosh computer, a high speed or
DSL internet connection . . . and current browser edition of Internet Explorer or
Mozilla Firefox.’” Associates asserts as follows: “Clearly, accessing these databases
is not akin to a forensic search of a computer hard drive, but, in using an example
from the legal field, is more analogous to using a web-based service like Westlaw or
LexisNexis.”
The distinction proffered by Associates is not persuasive. Allowing direct
access by a litigation opponent or a third-party expert acting for the opponent to
relators’ data via an internet-accessible practice management system raises
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significant concerns regarding undue intrusion. Those concerns are just as
significant as the concerns that animated the analysis of providing third-party access
to data on a hard drive in the litigant’s physical possession. See In re Weekley Homes,
L.P., 295 S.W.3d at 317 (“Providing access to information by ordering examination
of a party’s electronic storage device is particularly intrusive and should be generally
discouraged, just as permitting open access to a party’s file cabinets for general
perusal would be”). In re Weekley Homes did not focus on the technical details of
how, or where, a party stores its data; it focused instead on addressing undue burden
and placing specific limits on a highly intrusive form of discovery involving direct
access to one litigant’s data by a litigation opponent or an expert paid by the
opponent. See id at 315–22. The supreme court’s intrusion concerns apply regardless
of whether the responding party stores its data on a hard drive in its possession or
instead stores its data in a database that can be accessed remotely. The focus is access
to data and the circumstances under which access will be allowed.
2. The trial court acted within its discretion in determining that
relators did not fully comply with their obligation to search
for electronic data, and that a further search likely would
recover responsive data
The trial court found that Methodist Primary Care and Methodist Specialty
defaulted on their obligation to search records and produce data and documents that
have been requested by Associates in discovery. The trial court also found that
relators’ production was inadequate and that a search of Methodist Primary Care’s
and Methodist Specialty’s practice management systems, EPIC and Athena, likely
would lead to the recovery of relevant and material documents. Relators contend that
no evidence supports these findings.
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Relators did not object to Associates’s requests for electronic data on the
ground that this data is not “reasonably available” in the “ordinary course of
business” and cannot be retrieved “through reasonable efforts” as provided by Rule
196.4. Relators responded “None” to each request, which indicates “no items have
been identified—after a diligent search—that are responsive to the request.” See
Tex. R. Civ. P. 196.2.
As support for the trial court’s findings, Associates points to the deposition
testimony of Adrienne Moeller. She is the Director of Physician Strategic Services
for Methodist Primary Care; she was involved with evaluating Drs. Rubin’s and
Septimus’s practices and generating their compensation packages. Moeller was
asked about Exhibit 5 to her deposition, which appears to be a document that was
created by Methodist Primary Care.
Exhibit 5 shows a breakdown of monies collected for ancillary services versus
collections that are not ancillary services for each of Methodist Primary Care’s
primary care physicians in 2012.1 The last page of Exhibit 5 shows the amount of
revenues that Methodist Primary Care collected for ancillary services for each of its
physicians. According to Associates, Moeller’s testimony and Exhibit 5 demonstrate
that relators can retrieve data from their EPIC or Athena management systems
showing ancillary revenues generated by individual physicians.
Relators argue that there is no evidence Methodist Primary Care has generated
such reports for Drs. Rubin or Septimus, or that revenue information for procedures
1
Exhibit 5 uses the term “designated health services,” which Moeller testified was another
name for ancillary services.
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performed outside of Methodist Primary Care by non-party entities or non-party
physicians is accessible on EPIC or Athena. Relators argue that Exhibit 5 shows only
that Moeller generated a one-time report to compare Dr. Septimus’s practice at
Associates against a group of Methodist Primary Care physicians before making an
offer of employment to Dr. Septimus.
At a minimum, this record supports findings that (1) responsive electronic
data for individual physicians was reasonably available to Methodist Primary Care
and/or Methodist Specialty; and (2) this data can be retrieved with reasonable effort,
including information concerning revenues collected for ancillary services referred
or ordered by individual physicians. Relators’ contention that they have not
generated a report or retrieved this information specifically for Drs. Rubin or
Septimus does not address the operative standard under Rule 196.4. This contention
falls short because it does not explain why this requested information concerning
Drs. Rubin and Septimus is not “reasonably available” to relators in the “ordinary
course of business” and cannot be retrieved “through reasonable efforts” even if this
information previously has not been retrieved for Drs. Rubin and Septimus.
This record is sufficient under In re Weekley Homes to show that relators
defaulted at least in part on their obligation under Rule 196.4 to produce responsive
electronic data; that their production has been inadequate; and that a further search
of their electronic data could recover relevant materials. See 295 S.W.3d at 317.
However, and as discussed below in section E, neither Exhibit 5 nor any of
the other evidence that Associates presented to the trial court in support of its motion2
2
In addition to Moeller’s deposition testimony, Associates points to (1) the deposition testimony
of Jeff Carr in both this proceeding and another proceeding, only a portion of which was presented to the
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shows that relators have possession, custody, or control of electronic data showing
the revenues (if any) that the other Methodist System entities, which are not parties
to this litigation, have collected for patients or ancillary services referred by Drs.
Rubin and Septimus. In this regard, Associates did not show that relators defaulted
on their discovery obligation.
3. The March 8 order runs afoul of In re Weekley Homes
because it does not consider whether less intrusive means will
suffice
In re Weekley Homes admonished that “when determining the means by which
the sources should be searched and information produced, direct access to another
party’s electronic storage devices is discouraged, and courts should be extremely
cautious to guard against undue intrusion.” 295 S.W.3d at 322. It also stated that, to
the extent possible, courts “should choose the least intrusive means of retrieval.” Id.
at 316. It recognized that significant harm can result from granting direct access
when direct access is not warranted; this harm arises from the risk of revealing
private conversations, trade secrets, and privileged or otherwise confidential
communications. Id. at 322–23. This harm is not remedied by requiring the party
seeking discovery to pay for the intrusion.
trial court, (2) a Billing Services Agreement between relators, (3) documents that one of Associates’s
doctors obtained from EPIC, which were not offered into evidence, and (4) financial records of relators
derived from EPIC or Athena. We may not consider much of this evidence because the record does not
show that it was presented to the trial court or admitted into evidence at the hearing. An appellate court
reviews the actions of the trial court based solely on the record before the court at the time it makes its
ruling. See Axelson, Inc. v. Mcllhany, 798 S.W.2d 550, 556 n.9 (Tex. 1990). To the extent that this additional
evidence was presented to the trial court, we conclude that it does not show that relators defaulted on their
discovery obligations.
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Not every situation involving a party’s failure to produce requested electronic
data under Rule 196.4 requires granting direct access to all of the defaulting party’s
electronic data; whether direct access should be ordered depends on the
circumstances of each case. The supreme court noted that “the rules are ‘not meant
to create a routine right of direct access.’” Id. at 317. The supreme court also has
emphasized that “the discovery rules imbue trial courts with the authority to limit
discovery based on the needs and circumstances of the case, including electronic
discovery.” In re State Farm Lloyds, 520 S.W.3d at 599.
Here, the March 8 order directs an expert paid by Associates to search
electronic practice management systems for data stored on remote servers and
accessible via the internet. Before resorting to this extreme and highly intrusive
measure, In re Weekley Homes and State Farm Lloyds teach that consideration
should be given to whether less intrusive means will suffice—for example, by first
ordering relators themselves to search electronic data within their possession,
custody, or control, and to produce responsive data, regardless of whether the data
already exists in a document on the system or has been printed in hard-copy form.
Consideration of this less intrusive step comports with In re Weekley Homes
and its admonition to exercise “extreme caution” and, to the extent possible, “choose
the least intrusive means of retrieval” that is appropriate under the circumstances. It
also would allow the trial court to evaluate the adequacy of relators’ search and
production in response to such an order before deciding whether the extreme
intrusion of direct access should be ordered. Cf. In re Weekley Homes, 295 S.W.3d
at 315 (“To determine whether requested information is reasonably available in the
ordinary course of business, the trial court may order discovery, such as requiring
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the responding party to sample or inspect the sources potentially containing
information identified as not reasonably available.”).
E. The March 8 Order Authorizes Discovery That Associates Did Not
Request And Has Not Shown to be Within Relators’ Possession,
Custody, or Control
“[A]n essential prerequisite to filing a motion to compel production (or for
sanctions) is that another party has failed to permit discovery as requested in
response to a request submitted under TRCP 196.” In re Lowe’s Cos., Inc., 134
S.W.3d 876, 880 n.7 (Tex. App.—Houston [14th Dist.] 2004, orig. proceeding). “It
logically follows that a party cannot be compelled to produce (or sanctioned for
failing to produce) that which it has not been requested to produce.” Id. It is an abuse
of discretion for the trial court to order discovery that has not been requested or that
is broader that what has been requested. See In re Master Flo Valve Inc., 485 S.W.3d
207, 218–19 (Tex. App.—Houston [14th Dist.] 2016, orig. proceeding).
The requests for production that were the subject of Associates’s motion
request “documents and communications reflecting all profits, revenues and/or
losses generated by Rubin and/or Septimus” from patient referrals and ancillary
services (including x-rays and lab or draw services) “billed and collected by
[Methodist Specialty] from May 2015–present.” The order authorizes discovery that
is significantly broader than was requested by Associates in two respects.
First, the order is not limited to documents reflecting profits, revenues and/or
losses; it also includes “records that reflect all physician ancillary and professional
services” regardless of whether they reflect profits, revenues and/or losses.
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Second, the order is not limited to patient referrals and ancillary services billed
and collected by Methodist Specialty; it also includes physician professional and
ancillary services performed by any physician or employee within the Methodist
System (which encompasses approximately 209 different entities) referred by Drs.
Rubin and/or Septimus, regardless of whether the these services were billed and
collected by Methodist Specialty and regardless of whether the physician or service
provider was employed by relators.3
Additionally, a party is required to produce only those documents within its
“possession, custody, or control.” Tex. R. Civ. P. 192.3(b); In re U–Haul Int’l, 87
S.W.3d 653, 656 (Tex. App.—San Antonio 2002, orig. proceeding) (per curiam). A
party may not be compelled to produce documents that are not within its “possession,
custody, or control” as set forth in Texas Rule of Civil Procedure 192.7(b). In re
Fairway Methanol LLC, 515 S.W.3d 480, 495 (Tex. App.—Houston [14th Dist.]
2017, orig. proceeding). That a party may have access to the documents is
insufficient; the party must have a legal right to possession of the documents. Id.
(citing In re Kuntz, 124 S.W.3d 179, 184 (Tex. 2003) (orig. proceeding)).
3
Associates argues that its Second Request for Production requested documents and
communications reflecting revenue generated by Drs. Rubin and/or Septimus from patient referrals and for
referral of ancillary services to Houston Methodist, which it defined as including any of associated entities,
parent companies, subsidiaries, affiliates, agents and employees or all other natural persons, businesses, or
legal entities acting or purporting to act on its behalf. However, our court may not consider the Second
Request for Production because the record does not show that it was presented to the trial court as part of
the motion to compel. See Axelson, Inc., 798 S.W.2d at 556 n.9. Additionally, arguments not presented to
the trial court will not be considered in the review of a petition for writ of mandamus. See In re Am. Optical
Corp., 988 S.W.2d 711, 714 (Tex. 1998) (orig. proceeding) (per curiam); In re RH White Oak, LLC, No.
14-15-00789-CV, 2016 WL 3213411, at *9 (Tex. App.—Houston [14th Dist.] June 9, 2016, orig.
proceeding) (mem. op.).
21
“Possession, Custody, or Control of an item means that the person either has
physical possession of the item or has a right to possession of the item that is equal
or superior to the person who has physical possession of the item.” Tex. R. Civ. P.
192.7. Associates has not produced evidence that relators have possession, custody,
or control of documents reflecting physician professional and ancillary services that
were performed or billed for by other entities within the Methodist System. That
entities are related is not sufficient by itself to establish that an entity has possession
of the related entity’s documents.4 Associates has not produced any evidence that
relators have a right to possess revenue information of other Methodist System
entities that is equal or superior to that of those entities, even assuming that such
information is available to relators on the EPIC or Athena systems. See Tex. R. Civ.
P. 192.7.
4
The right to obtain possession is a legal right based upon the relationship between the party from
whom a document is sought and the person who has actual possession of it.” GTE Commc’ns Sys. Corp. v.
Tanner, 856 S.W.2d 725, 729 (Tex. 1993) (orig. proceeding). The party seeking production has the burden
of proving that the relator has constructive possession or the right to obtain possession of the requested
documents. Id. at 729; In re U–Haul Int'l, 87 S.W.3d at 656. In Tanner, 856 S.W.2d at 729, the Texas
Supreme Court held that there was no evidence that GCSC had constructive possession of the document at
issue or a right to compel its production because plaintiffs adduced no evidence regarding the corporate
relationship between GTFL and GCSC, or any right of the latter to control the former. Similarly, in In re
U–Haul Int'l, 87 S.W.3d at 656–57, the court of appeals held, in a product liability action, that the trial
court abused its discretion for sanctioning UHI for failing to produce accident files and other documents
within the possession of UHI's insurer (Republic) despite common ownership by a parent corporation
because plaintiff failed to prove that UHI had the ability to compel Republic to provide the responsive
documents or that UHI and Republic form a single business enterprise.
22
Accordingly, the trial court also abused its discretion by ordering certain
discovery that Associates neither requested nor proved is within relators’ possession,
custody, or control.5
IV. CONCLUSION
We conditionally grant the petition for writ of mandamus. We are confident
the trial court will act in accordance with this opinion. The writ of mandamus will
issue only if the trial court fails to do so. 6
/s/ William J. Boyce
Justice
Panel consists of Justices Boyce, Donovan, and Jewell.
5
Associates argues that this court may not consider these arguments because the record does not
show that relators filed their objections regarding these errors before the trial court signed its March 8 order.
Generally, mandamus is not available to compel an action which has not first been demanded and refused.
Terrazas v. Ramirez, 829 S.W.2d 712, 723 (Tex. 1991) (orig. proceeding). But such requirement is excused
when the request would have been futile and the trial court’s refusal little more than a formality. Id. “To
determine whether a request would have been futile, appellate courts examine whether the request would
have added anything for the court’s consideration.” In re RH White Oak, LLC, 442 S.W.3d at 503. At the
hearing, relators’ counsel argued that discovery should be limited to the defendants Methodist Primary Care
and Methodist Specialty. The trial court responded by stating that it also wanted to know the income
generated by all related entities inside the EPIC system. This statement indicates that further objection by
relators to the trial court including non-party Methodist System entities in its order would have been futile.
6
Relators also filed a motion asking this court to strike and disregard the documents included in
Tabs A–F of Associates’s appendix because the record does not show that these documents were presented
to the trial court before it issued its March 8 order. We grant relators’ request to disregard these documents
and accordingly, do not consider them.
23