International Business Machines Corporation v. ACS Human Services, LLC
2013 Ind. App. LEXIS 585
| Ind. Ct. App. | 2013Background
- IBM and the State of Indiana sued each other over the Modernization Project for social services eligibility, with ACS as a non-party subcontractor central to discovery.
- IBM subpoenaed ACS on March 15, 2011 seeking documents including electronically stored information; ACS limited custodians and subject matters at first but IBM indicated more requests could come.
- Discovery ran for months under court supervision; IBM repeatedly moved to compel production from ACS, and the court granted several motions.
- ACS sought costs and attorneys’ fees totaling about $1.67 million for ACS’s document loading, review, redaction, and related activities; the court awarded $709,398.95.
- IBM moved for sanctions against ACS; the court awarded IBM sanctions totaling $425,178.85 for ACS’s discovery misconduct.
- IBM and ACS appealed; the appellate court affirmed the sanctions and the cost award, upholding non-party treatment for ACS.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether ACS, as a non-party, is entitled to costs under Trial Rule 34(C). | IBM argued ACS was symbiotically connected to the State and thus not entitled to costs. | ACS argued it qualified as a non-party under TR 34(C) and should recover costs. | ACS entitled to non-party costs; not abused on non-party status. |
| Whether the amount of ACS’s costs awarded was supported by the record. | IBM contends the award lacked evidentiary support and improperly included some costs. | ACS contends the full amount was justified and that reductions were erroneous. | Evidence supported the award; court did not abuse its discretion in the amount. |
| Whether sanctions against ACS were proper under Trial Rule 37. | IBM asserts sanctions are appropriate against a non-party for discovery misconduct. | ACS argues non-parties cannot be sanctioned under TR 37. | Sanctions against ACS were proper and within the court’s authority. |
| Whether IBM’s sanctions motion was timely. | IBM argued timely motion; ACS argued delay or waiver issues. | ACS argued timeliness should be constrained by earlier precedents. | Timeliness was proper; Witt v. Jay Petroleum supports post-trial sanctions timing. |
Key Cases Cited
- Brown v. Dobbs, 691 N.E.2d 907 (Ind. Ct. App. 1998) (symbiotic relationship can push non-parties toward party-like discovery treatment)
- Vernon v. Kroger Co., 712 N.E.2d 976 (Ind. 1999) (discovery rules promote liberal discovery; abuse of discretion review standard)
- Witt v. Jay Petroleum, Inc., 964 N.E.2d 198 (Ind. 2012) (sanctions timing and abuse-of-discretion review after long-latent violations)
- Carey v. Ind. Physical Therapy, Inc., 926 N.E.2d 1126 (Ind. Ct. App. 2010) (proximate-cause-like analysis in damages; needs some factual determination)
- Nance v. Miami Sand & Gravel, LLC, 825 N.E.2d 826 (Ind. Ct. App. 2005) (burden of proof for fee awards; entitlement proof required)