Qualcomm, Inc. v. Broadcom Corp., Case No. 3:05-cv-01958 (S. D. Cal. January 7, 2008)
In the continuation of the case initially discussed here, Magistrate Judge Barbara Major has issued her opinion on the sanction motion filed by Broadcom after Qualcomm was found by District Judge Rudi Brewster to have intentionally withheld some 46,000 documents later found to be directly relevant to the main issue in the case. The gist of the court’s findings can be found in this quote:
The Court's review of Qualcomm's declarations, the attorneys' declarations, and Judge Brewster's orders leads this Court to the inevitable conclusion that Qualcomm intentionally withheld tens of thousands of decisive documents from its opponent in an effort to win this case and gain a strategic business advantage over Broadcom. Qualcomm could not have achieved this goal without some type of assistance or deliberate ignorance from its retained attorneys. Accordingly, the Court concludes it must sanction both Qualcomm and some of its retained attorneys.
Despite the severity of these conclusions, the sanctions imposed by the court are already being questioned by some commentators as far too light. See, e.g., here.
The genesis of at least some of these questions stems from the obviously premeditated nature of the discovery abuse. Qualcomm sued Broadcom for patent infringement. One of the chief defenses in the case was that Qualcomm had waived the enforceability of the patents by participating in a standard setting organization known as the Joint Video Team (“JVT”), which was responsible for the H.264 standard covering video coding, without disclosing its patents to the JVT. From the inception of the case, Qualcomm took the position that it had not participated in the JVT, and it did not deviate from this position throughout trial. Meanwhile, Qualcomm’s lawyers were discovering that this position might have problems, given some pretty strong indications that Qualcomm employees had received emails from the Advanced Video Coding (“AVC”) Ad Hoc Group:
While preparing Qualcomm witness Viji Raveendran to testify at trial, attorney Adam Bier discovered an August 6, 2002 email to email@example.com welcoming her to the avc_ce mailing list. Several days later, on January 14, 2007, Bier and Raveendran searched her laptop computer using the search term "avc_ce" and discovered 21 separate emails, none of which Qualcomm had produced in discovery. The email chains bore several dates in November 2002 and the authors discussed various issues relating to the H.264 standard. While Raveendran was not a named author or recipient, the emails were sent to all members of two JVT email groups (jvt-experts and avc_ce) and Raveendran maintained them on her computer for more than four years. The Qualcomm trial team decided not to produce these newly discovered emails to Broadcom, claiming they were not responsive to Broadcom's discovery requests. The attorneys ignored the fact that the presence of the emails on Raveendran's computer undercut Qualcomm's premier argument that it had not participated in the JVT in 2002. The Qualcomm trial team failed to conduct any investigation to determine whether there were more emails that also had not been produced.
(Citations omitted). It was only after the existence of the emails came out during cross-examination of this witness that Qualcomm counsel acknowledged their existence.
Indeed, after trial, Qualcomm continued to dispute the relevancy and responsiveness of the emails and resisted further efforts to determine the scope of its discovery violation, strenuously arguing that Qualcomm had performed a reasonable search. It was not until several months later that Qualcomm attorneys acknowledged that Qualcomm had thousands of relevant unproduced documents and that their review of those documents revealed facts inconsistent with the arguments made at trial and thereafter.
It is quite clear from the court’s opinion that Qualcomm and its attorneys had gone their separate ways. Each was clearly pointing the finger at the other. The court acknowledged that it was somewhat hamstrung in trying to determine the degree of culpability of each, because Qualcomm had refused to waive its attorney client privilege, even as it blamed its lawyers for misconduct. Nonetheless, the court was clear in its findings that Qualcomm had engaged in intentional conduct, and at best its attorneys were deliberately ignorant. The court pointed to repeated warning flags that everyone involved ignored.
The court analyzed four potential scenarios for the attorneys’ involvement and concluded that”
[O]ne or more of the retained lawyers chose not to look in the correct locations for the correct documents, to accept the unsubstantiated assurances of an important client that its search was sufficient, to ignore the warnings signs that the document search and production were inadequate, not to press Qualcomm employees for the truth, and/or to encourage employees to provide the information (or lack of information) that Qualcomm needed to assert its non-participation argument and to succeed in this lawsuit. These choices enabled Qualcomm to withhold hundreds of thousands of pages of relevant discovery and to assert numerous false and misleading arguments to the court and jury.
Despite the severity of these findings, the court merely reiterated the sanctions already awarded by Judge Brewster – costs and attorney fees. The court made it clear that there would be no double recovery – Qualcomm was given credit for any payments made under Judge Brewster’s Order.
With respect to the attorneys – specifically six attorneys whom the Judge held had “assisted Qualcomm in committing this incredible discovery violation by intentionally hiding or recklessly ignoring relevant documents, ignoring or rejecting numerous warning signs that Qualcomm's document search was inadequate, and blindly accepting Qualcomm's unsupported assurances that its document search was adequate,” and then using “the lack of evidence to repeatedly and forcefully make false statements and arguments to the court and jury,” the court referred them to the California State Bar for investigation. While I can’t say that they dodged a bullet – an ethical investigation under these circumstances is not something any of us would want to undergo, one cannot help but feel a tad disappointed in the result. Broadcom was forced to spend $8 million to defend this case. The case appears to have been a clear fraud on the court. And the attorneys should have known it and at some point, you would think, should have stood up to their client and said “wait a minute.”
On the other hand, and you all know there’s always another hand, this case is clearly going to be read as a warning to all litigators to do just that, stand up to their clients and say “wait a minute.” When it comes to electronic discovery, the courts are having no problem placing serious obligations to supervise electronic discovery on outside counsel. One cannot help but notice in reading this case that no in-house lawyers were sanctioned. Where were they? Why wasn’t any of their conduct challenged. The court made several in house lawyers participate in the Case Review and Enforcement of Discovery Obligations Program. But that is hardly the equivalent of an ethics referral to the State Bar of California.
The plain fact is that electronic discovery has the potential to drive a wedge between outside counsel and their client. Our clients are understandably interested in controlling expenses in discovery and, in many cases, controlling the actual discovery. There is nothing wrong with that. Indeed, it should be encouraged. In the meantime, however, the courts are placing obligations on outside counsel that will often conflict with the client’s desires. How those conflicts are handled in the future will go a long way toward determining what kinds of relationships will exist between clients and their outside counsel, two groups that cannot exist without cooperating with each other in truly meaningful ways.