Welcome to Module 4-N.

Team Ethics and the Qualcomm Saga.

This class presents the Qualcomm ethics case as a series of reports made while this cases was taking place between August 2007 and April 2010. These contemporaneously written reports also draw upon the thoughts and opinions of other leaders in the Bar interpreting Qualcomm. This is one of the most important cases on legal ethics of our time, and the setting just happens to be e-discovery. Learn from these mistakes.

The Saga Begins: Heavy Sanctions Loom Against Attorneys for e-Discovery and other Aggravated Litigation Abuses.

The other shoe has dropped in a case that many California attorneys were already talking about, Qualcomm Inc. v. Broadcom Corp.; it hit with such a loud thud that attorneys all over the country will now take notice. Qualcomm Inc. v. Broadcom Corp., No. 05-CV-1958-B(BLM) Doc. 599 (S.D. Cal. Aug. 13, 2007). This is an Order to Show Cause directed against all attorneys who represented the plaintiff, Qualcomm, in a patent infringement case it brought against Broadcom. The Order specifically names 14 attorneys from two prominent law firms, one local and one national, but also includes “any and all other attorneys who signed discovery responses, signed pleadings and pre-trial motions, and/or appeared at trial on behalf of Qualcomm.” The Order requires these attorneys to appear in the District Court in San Diego on August 29, 2007, at 9:30 a.m. to show cause why sanctions should not be imposed against them for failure to comply with the Court’s orders. The court granted a subsequent motion for continuance by the 14 attorneys and the hearing date was moved to Friday, October 12, 2007 at 9:30 a.m. The motion states the Order raises “serious issues that potentially impact the legal careers” of the attorneys.

Judge_Barbara-MajorThe Order to Show Cause by Magistrate Judge Barbara Lynn Major comes on the heels of the 54-page Order on Remedy for Finding of Waiver, entered August 6, 2007, by District Court Judge Rudi M. Brewster (1932-2012). Qualcomm Inc. v. Broadcom Corp., No. 05-CV-1958-B(BLM) Doc. 593 (S.D. Cal. Aug. 6, 2007). There, the District Judge found “by clear and convincing evidence that Qualcomm[‘s] counsel participated in an organized program of litigation misconduct and concealment throughout discovery, trial, and post-trial before new counsel took over lead role in the case on April 27, 2007.” Among other things, this first-shoe-to-drop opinion highlighted Qualcomm’s production of over 200,000 pages of relevant emails and other electronic documents four months after the jury trial (that Qualcomm lost). Judge Brewster impugned Qualcomm’s counsel and their claims that they carried out their discovery obligations in good faith, explaining:

Qualcomm counsel’s discovery responses demonstrate that they were able to locate with alacrity company records from December 2003 forward and find four or more Qualcomm employees participating in proceedings of the [Joint Video Team (“JVT”)]. Yet inexplicably, they were unable to find over 200,000 pages of relevant emails, memoranda, and other company documents, hundreds of pages of which explicitly document massive participation in JVT proceedings since at least January 2002. These examples of Qualcomm counsel’s indefensible discovery conduct belie counsel’s later implied protestation of having been “kept in the dark” by their client.

Judge_BrewsterThe late, great Judge Brewster’s 54-page opinion detailed the actions of Qualcomm and its counsel, concluding that these facts demonstrate “aggravated litigation abuse.” The court found “constant stonewalling, concealment, and repeated misrepresentations concerning existing corporate documentary evidence.” In spite of such discovery tactics, Qualcomm lost the jury trial, and then the full extent of its abuses was revealed. Qualcomm then fired its lead counsel, and its substitute counsel tried unsuccessfully to explain it all away. In the words of the court, the substitute lead counsel “adamantly denied the obvious and then, when the truth was discovered and exposed by the document production, sequentially contended denial of relevance, justification, mistake, and finally non-awareness.”

The end result of the 54-page opinion was to hold and order that Qualcomm had completely waived its rights to enforce the two video compression patents (5,452,104 and 5,576,767) at issue in the case. The waiver applies not only against Broadcom, but against anyone. The waiver was caused by Qualcomm’s prior inequitable conduct before the Patent Office, conduct that Qualcomm tried to cover up in this litigation.

On August 6, 2007, Judge Brewster also entered an Order Granting Broadcom Corporation’s Motion for Exceptional Case Finding and for an Award of Attorneys’ Fees (35 U.S.C. § 285). Qualcomm Inc. v. Broadcom Corp., No. 05-CV-1958-B(BLM) Doc. 594 (S.D. Cal. Aug. 6, 2007). Judge Brewster there held that: “the enumerated misconduct of Qualcomm establishes the entitlement of Broadcom to all attorneys’ fees, expenses, and costs incurred in the defense of this case.” If the parties are unable to agree on a reasonable number, an evidentiary hearing is to be held before the Magistrate. I would anticipate a very large fee and costs award in this case. It was filed in 2005, and tried before a jury for over two weeks in early 2007.

Back to the Show Cause Order of August 13, 2007, against Qualcomm’s many outside counsel; the Magistrate advised these attorneys that is was considering a host of possible sanctions against them for the egregious conduct the Court had observed:

As such, this Court is inclined to consider the imposition of any and all appropriate sanctions on Qualcomm’s attorneys, including but not limited to, monetary sanctions, continuing legal education, referral to the California State Bar for appropriate investigation and possible sanctions, and counsel’s formal disclosure of this Court’s findings to all current clients and any courts in which counsel is admitted or has litigation currently pending. (emphasis added)

A mandatory disclosure notice like that would be a serious blow to most law firms. Many will be watching to see what sanctions are actually imposed.

Qualcomm’s in-house legal counsel have not been immune from consequences either. For instance, Qualcomm’s General Counsel suddenly resigned the same day the Show Cause Order issued.

First Update on Qualcomm.

The Show Cause hearing date was originally set for August 29, 2007; upon a motion by the 14+ lawyers facing sanctions, it was postponed until October 12, 2007.

The attorneys accused of wrong doing are from two prominent law firms, Day Casebeer, a small IP boutique firm in Cupertino California, and Heller Ehrman, a 700 attorney firm founded in 1890 in San Francisco (the firm later filed for bankruptcy and no longer exists). They advised the court that they could not defend themselves without revealing attorney client-privileges, and Qualcomm refused to waive the privilege. They asked the court for permission to reveal secret, privileged communications with Qualcomm under the “self-defense” exception. Their motion stated that they have “very compelling exonerating evidence,” but it involves privileged communications. Apparently they plan to defend themselves by blaming the misconduct on their client.

On September 28, 2007, Magistrate Judge Barbara Major heard oral argument on the privilege issues and ruled from the bench as to what the attorneys could and could not do to defend themselves. She held that the self-defense exception to the attorney-client privilege did not apply. This means the former Qualcomm attorneys cannot reveal their secret communications with Qualcomm. But, Magistrate Major also held that the work product privilege could be waived without the client’s consent. According to the Law.com report, this means that “attorneys can describe how various duties in the case were allocated, and possibly other insights.” Magistrate Major also stated that if the information the attorneys can provide does not fully explain how the discovery abuses occurred, and Qualcomm still refuses to waive the privilege, then she will consider imposing sanctions against Qualcomm itself.

This situation is highly reminiscent of another recent case, Exact Software v. Infocon, 479 F.Supp.2d 702 (N.D. Ohio, Dec. 5, 2006). In Exact Software, the court decided that sanctions were appropriate, but could not decide whether to impose sanctions against the plaintiff, or the plaintiff’s attorneys. The attorneys blamed the client, and the client, through its new attorneys, blamed the prior attorneys.

Is the “blame-game” the new litigation sport of e-discovery? If so, it is not a game anyone can win. No matter what the final outcome, the message of these cases to the legal community is clear. Your duties as an officer of the court, to be honest and truthful to the court and follow the rules of procedure, must be fulfilled. This duty trumps the duty to zealously represent your client. If a client requires you to depart from that duty, then you must decline, and, if necessary, withdraw from representation. There is no special exception allowed for complicated e-discovery issues. If you do not know what is going on, you had better figure it out. The integrity of the justice system is at stake, and so too is your reputation and career.

Qualcomm’s Monumental Discovery Violations Provokes Only Wimpy Sanctions.

The Qualcomm e-discovery saga of lying and cheating finally ended, not with a bang of severe sanctions as most hoped and expected, but with a whimper. The federal court in Qualcomm’s home town talked tough, and spelled out “monumental discovery violations,” including lying and fraud on a grand scale. But in the end it was just empty talk, and, despite the headlines you might have read to the contrary, no serious sanctions were imposed.

The 48 page Sanctions Order dated January 7, 2008, by Magistrate Judge Barbara L. Major does a good job of summarizing the truly incredible litigation misconduct by Qualcomm and its attorneys. Most of the malfeasance discussed there had already been described by the trial Judge, Rudi M. Brewster, in his Order on Remedy for Finding of Waiver of August 6, 2007, Qualcomm Inc. v. Broadcom Corp., No. 05-CV-1958-B(BLM) Doc. 593 (S.D. Cal. Aug. 6, 2007).

Although most of the lawyer and litigant misconduct was described in the prior Waiver Order, Judge Major’s Sanctions Order does include a few new and noteworthy facts which reveal the bold enormity of their ways. The Sanctions Order also provides good perspective on how our discovery system of justice depends upon the good faith of the parties and active, honest participation of their attorneys. This dependence on the integrity of lawyers, who are supposed to act advocates for their client, and as officers of the court, underscores the vulnerability of the system is to unethical lawyers:

The Federal Rules of Civil Procedure require parties to respond to discovery in good faith; the rules do not require or anticipate judicial involvement unless or until an actual dispute is discovered. As the Advisory Committee explained, “[i]f primary responsibility for conducting discovery is to continue to rest with the litigants, they must be obliged to act responsibly and avoid abuse.” Fed. R. Civ. P. 26(g) Advisory Committee Notes (1983 Amendment). The Committee’s concerns are heightened in this age of electronic discovery when attorneys may not physically touch and read every document within the client’s custody and control. For the current “good faith” discovery system to function in the electronic age, attorneys and clients must work together to ensure that both understand how and where electronic documents, records and emails are maintained and to determine how best to locate, review, and produce responsive documents. Attorneys must take responsibility for ensuring that their clients conduct a comprehensive and appropriate document search. Producing 1.2 million pages of marginally relevant documents while hiding 46,000 critically important ones does not constitute good faith and does not satisfy either the client’s or attorney’s discovery obligations. Similarly, agreeing to produce certain categories of documents and then not producing all of the documents that fit within such a category is unacceptable. Qualcomm’s conduct warrants sanctions.

Qualcomm had opposed the entry of any sanctions against it, by arguing that it was all their attorneys fault. The nineteen accused attorneys argued just as vigorously that it was all Qualcomm, that they were hoodwinked by their client. The Judge did not believe either side, and decided sanctions were appropriate against both.

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.

Qualcomm’s misconduct was fairly obvious, it intentionally withheld over 46,000 emails and documents that were requested in discovery, and that Qualcomm agreed to produce. Moreover, these 46,000 documents were key to Qualcomm’s entire case, and they knew they would lose if they were discovered by the other side. The court found that Qualcomm, the plaintiff, filed the suit with the intention of secreting this key evidence so that they would have a chance of winning. They did succeed in hiding the 46,000 until trial, which they lost anyway, and then their fraud was discovered. The court called this a “monumental and intentional discovery violation.” I am sure that everyone who litigates for a living, like I do, agrees.

The court could not believe that Qualcomm and its in-house attorneys could have carried out this kind of massive conspiracy to conceal eviedence without the knowledge and participation of its outside counsel. If they truly knew nothing, then it was only because they acted like the three moneys who did not want to know. It was gross negligence on their part not to know.

Qualcomm protected both itself, and its outside counsel, by refusing to waive its attorney client privilege. Since all of the communications between Qualcomm and its attorneys were secret, it was impossible to find direct evidence of outside counsel’s involvement in the conspiracy, and so the evidence against the attorneys was circumstantial.

Neither party nor the attorneys have presented evidence that Qualcomm told one or more of its retained attorneys about the damaging emails or that an attorney learned about the emails and that the knowledgeable attorney(s) then helped Qualcomm hide the emails. While knowledge may be inferred from the attorneys’ conduct, evidence on this issue is limited due to Qualcomm’s assertion of the attorney-client privilege.

Thus, the Court finds it likely that some variation of option four occurred; that is, one 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 warning 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. This conduct warrants the imposition of sanctions.

The court goes into great detail as to the wrongs committed by each attorney, including intentional lying to the trial Judge, and then summarizes the attorneys’ malfeasance as follows:

. . . the evidence establishes that Qualcomm intentionally withheld tens of thousands of emails and that the Sanctioned Attorneys assisted, either intentionally or by virtue of acting with reckless disregard for their discovery obligations, in this discovery violation.

You may question how wimpy sanctions could possibly have been entered after reading those quotes. You may also wonder why I say this, if you have read the news headlines saying Qualcomm was sanctioned with an $8,568,633.24 attorney fee award. That is a pretty stiff sanction you might think. But these headlines, like the sanctions, are smoke and mirrors. In fact, the Sanctions Order imposed no new monetary penalties on anyone. Qualcomm had already been ordered to pay $8,568,633.24 in fees in the underlying case in Judge Brewster’s Order Granting Broadcom Corporation’s Motion for Exceptional Case Finding and for an Award of Attorney’s Fees. All the Sanctions Order did was provide another basis for the same award. The court makes clear that Qualcomm will not have to pay twice. So the real effect is a zero sanctions fee award against Qualcomm. No fines or other penalties were imposed on Qualcomm. So much for harsh sanctions against Qualcomm. Judge Major no doubt realized that eyebrows would be raised by this decision, and so she attempted to explain her rationale in footnote 17 as follows:

Because the attorneys’ fees sanction is so large, the Court declines to fine Qualcomm. If the imposition of an $8.5 million dollar sanction does not change Qualcomm’s conduct, the Court doubts that an additional fine would do so.

Hmm, not quite sure I follow that logic, but I am sure Qualcomm and its shareholders were relieved.

But what about their attorneys? Nineteen attorneys had been ordered by Judge Brewster to show cause to Judge Major why severe sanctions should not be imposed for their misconduct in this case. Qualcomm Inc. v. Broadcom Corp., No. 05-CV-1958-B(BLM) Doc. 599 (S.D. Cal. Aug. 13, 2007). The sanctions Judge Brewster asked Judge Moody to consider included requiring “counsel’s formal disclosure of this Court’s findings to all current clients and any courts in which counsel is admitted or has litigation currently pending.” Now that would have been a severe penalty. But it was not imposed by Judge Moody, it was not even discussed.

Instead, all but six of the nineteen attorneys ordered to show cause got off with no penalties at all. Five attorneys were sanctioned from Day Casebeer, a small IP firm, and only one from Heller Ehrman, a large firm based in San Francisco. The two law firms themselves were not sanctioned at all.

Two of the attorneys in the Heller Ehrman firm successful defended themselves by arguing they were just acting as local counsel. I am surprised this defense was accepted. Yet here are Judge Major’s own words:

These attorneys primarily monitored the instant case for its impact on separate Qualcomm/Broadcom litigation. However, for logistical reasons, both attorneys signed as local counsel pleadings that contained false statements relating to Qulacomm’s non-participation in the JVT. Given the facts of this case as set forth above and in the declarations, the limitations provided by the referral, and the totality of the circumstances, the Court finds that it was reasonable for these attorneys to sign the pleadings, relying on the work of other attorneys more actively involved in the litigation.

The judge’s words may seem reasonable, but I am surprised because it is completely contrary to anything I have ever previously heard a federal judge say about acting as local counsel. Judge Major again recognizes her unusual leniency and tries to explain it in footnote 14:

The Court is declining to sanction these attorneys for their role in signing and filing false pleadings, but the Court notes that sanctioning local counsel for such conduct is possible and may be imposed in another case under different circumstances. Attorneys must remember that they are required to conduct a reasonable inquiry into the accuracy of the pleadings prior to signing, filing or arguing them.

The sanctions against the six lawyers were, in my opinion, relatively mild. No fees were taxed, nor fines imposed. They were just ordered to provide a copy of the orders to the state Bar for “appropriate investigation.” Of course the Bar in California already knew about this case. Bar investigations were probably inevitable anyway. All this Sanctions Order did was let most of the attorneys off the hook. Moreover, I am told that under the California Bar Ethics Code, a Judge is required to report lawyer misconduct that they witness. So the judge was already required to turn them in. Bar investigations will be conducted, to be sure, and there will be some penalties imposed, but I doubt they will amount to much. They will certainly be far less than the ultimate penalty of disbarment imposed against President Clinton for purportedly failing to understand what “sex” is. It will also be far less that the client and judge letter writing penalties that Judge Brewster suggested.

The final sanction was to order the six outside attorneys, along with five Qualcomm in-house counsel that the court found complicit in the fraud, to participate in what the court called a CREDO program (“Case Review and Enforcement of Discovery Obligations”). It requires the eleven lawyers to meet and prepare a memorandum on how to avoid this kind of incredible e-discovery fraud from reoccurring in the future. Judge Major really seems to think that these discredited attorneys will somehow be redeemed by studying what went wrong and writing a great memo. In her words:

While no one can undo the misconduct in this case, this process, hopefully, will establish a baseline for other cases. Perhaps it also will establish a turning point in what the Court perceives as a decline in and deterioration of civility, professionalism and ethical conduct in the litigation arena. To the extent it does so, everyone benefits – Broadcom, Qualcomm, and all attorneys who engage in, and judges who preside over, complex litigation. If nothing else, it will provide a road map to assist counsel and corporate clients in complying with their ethical and discovery obligations and conducting the requisite “reasonable inquiry.”

Sorry, but I think this is naive. In my opinion, it is like catching the fox in the hen house, and then “punishing” it by asking for a memo on how to improve hen house security. These are not the right attorneys to turn to for advice on how to fix e-discovery. They might as well have been ordered to write “I will not cheat and lie” on the blackboard a thousand times.

The lawyers should have been sanctioned with high monetary fines and ordered to write the client and judge letters a thousand times, not a CREDO memo. Then a strong message would have been sent to the Bar. Then the very small minority of attorneys who commit these types of wrongs might think twice. They might act like the vast majority of lawyers in this country do every day, they might choose honor and integrity over the temptations of the fast buck from an unscrupulous client. This was an opportunity missed.

Sanctions Have Been Lifted Against the “Qualcomm Six” and a New Trial Ordered Where They May Now Speak Freely to Defend Themselves.

Just when you thought the Qualcomm case was finally over, it’s back with a vengeance. In an Order dated March 5, 2007, Judge Rudi Brewster vacated Magistrate Barbara Major’s Sanctions Order of January 8, 2007, but, as will be explained, the Sanctions Order was only vacated as to the attorneys sanctioned, and not as to Qualcomm. Qualcomm v. Broadcom, 2008 WL 638108 (S.D.Cal., March 05, 2008). This may seem like a bad deal for Qualcomm, but actually it is a great result for them.

Judge Brewster has ordered a new trial for the Qualcomm Six, the attorneys who were previously sanctioned: Messrs. Batchelder, Bier, Leung, Mammen, Patch, and Young. He held that their rights to due process had been violated in the first Show Cause trial. They were violated because they were not allowed to testify as to what their client, Qualcomm, had said and done concerning the e-discovery issues underlying the sanctions motion. Judge Brewster held that they had a right to defend themselves in that proceeding, and not be silenced by the secrecy restraints of the attorney-client privilege.

Their figurative gag was released when Judge Brewster reversed the magistrate’s earlier order that the self-defense exception to the attorney-client privilege did not apply. In the new trial the secrets of Qualcomm may be revealed. Their former attorneys can give a full explanation of how “over 200,000 pages of relevant emails, memoranda, and other company documents” were hidden from disclosure to the other side. Qualcomm Inc. v. Broadcom Corp., No. 05-CV-1958-B(BLM) Doc. 593 (S.D. Cal. Aug. 6, 2007). If even worse behavior on Qualcomm’s part is revealed in the second trial, Qualcomm will, thanks to clever defense work by their new lawyers, be immune from further punishment. Hard to believe, but true, as I will explain at the end.

The Sanctions Order

The first Show Cause trial, where outside counsel were restrained in what they could say, resulted in the referral of the Qualcomm Six for an ethics investigation by the California Bar. Here is Judge Major’s words in the January 7, 2008, Sanction Order:

As set forth above, the Sanctioned Attorneys 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. The Sanctioned Attorneys then used the lack of evidence to repeatedly and forcefully make false statements and arguments to the court and jury. As such, the Sanctioned Attorneys violated their discovery obligations and also may have violated their ethical duties. See e.g., The State Bar of California, Rules of Professional Conduct, Rule 5-200 (a lawyer shall not seek to mislead the judge or jury by a false statement of fact or law), Rule 5-220 (a lawyer shall not suppress evidence that the lawyer or the lawyer’s client has a legal obligation to reveal or to produce). To address the potential ethical violations, the Court refers the Sanctioned Attorneys to The State Bar of California for an appropriate investigation and possible imposition of sanctions.

Judge Major had requested this investigation because of what she called the Six’s “monumental discovery violations.” The reversal and remand for a new trial provides an opportunity for these lawyers to salvage their careers and tarnished reputations. When they do speak, lawyers from all over the country will be listening; not only the California Bar. It could become a polite attempt to whitewash, but will more likely result in serious mudslinging. In any event, the previously muzzled speech will be interesting.

Judge Brewster’s March 5, 2008 Order vacating sanctions against the Qualcomm Six reveals a clever defense strategy by Qualcomm to Judge Brewster’s earlier Order to Show Cause. The Show Cause Order was directed against all fourteen of Qualcomm’s outside counsel, not just the six who were eventually sanctioned, and it was directed against Qualcomm itself. Qualcomm knew that the attorney-client privilege would be an issue in this hearing. It also knew that it owned this privilege, not the attorneys, and that only Qualcomm could waive the secrecy constraints that otherwise silenced its attorneys. Qualcomm refused to waive. This meant that its former attorneys could not divulge the information they learned from Qualcomm. The original fourteen attorneys ordered to show cause could not defend themselves from the court’s allegations by disclosing the confidential communications with their client.

In a situation like this where one person in effect gags another, it is natural to assume that the person gagged would, if they could, say something harmful about the “gaggor.” Otherwise, why else would they be silenced? But, the right of a client to maintain their secrets is so strong in the law that this natural presumption is not permitted when a client asserts this right. Qualcomm knew this, and thus knew it could assert its right to keep its lawyer communications secret, and this could not be used against it in its defense of the Show Cause Order.

I suspect that the party pushing the sanctions against Qualcomm, namely Broadcom, which was its adversary in the underlying patent case, argued against Qualcomm on this point. Broadcom would naturally try to convince the court to hold Qualcomm’s assertion of its secrecy rights against it. In other words, they would ask the court to impose an adverse inference against Qualcomm wherein the court would infer that the hidden communications were detrimental to Qualcomm. Judge Major would not do that, even though she was obviously displeased that she was not hearing the whole truth, and that key facts were being withheld by Qualcomm’s assertion of the privilege. This is explained in footnote 8 at page 25 of her sanctions order:

Recognizing that a client has a right to maintain this privilege and that no adverse inference should be made based upon the assertion, the Court accepted Qualcomm’s assertion of the privilege and has not drawn any adverse inferences from it. October 12, 2007 Hearing Transcript at 4-5. However, the fact remains that the Court does not have access to all of the information necessary to reach an informed decision regarding the actual knowledge of the attorneys.

Qualcomm also knew that its former attorneys were likely to raise the self-defense exception to the attorney-client privilege. This exception frees an attorney from a secrecy vow when necessary to defend him or herself from accusations of wrongdoing by the client. The problem with this defense was that the accusations were being made by Broadcom and the Court, not Qualcomm. The self-defense exception would only apply if Qualcomm tried to defend itself with accusations against its former attorneys. Qualcomm clearly wanted to do this, so it was in something of a quandary. Judge Brewster’s recent order reveals a particularly clever strategy on Qualcomm’s part to overcome that quandary, a strategy which allowed them to both have their cake and eat it too. This desire is, by the way, hardly unique to Qualcomm; most every party in litigation wants this all of the time.

At the commencement of the Show Cause proceedings, Qualcomm was very careful not to make any direct accusations of wrongdoing on the part of the fourteen attorneys accused in the Show Cause Order. Although the implication was clear in Qualcomm’s defense that it did nothing wrong, that the blame should instead fall on its outside counsel, they made no specific allegations against them. Qualcomm’s former lawyers, in turn, defended by arguing it was their client’s fault, and they could prove it, if only they were released from the attorney-client privilege gag. Again, footnote 8 of the sanctions order explains what happened:

Qualcomm asserted the attorney-client privilege and decreed that its retained attorneys could not reveal any communications protected by the privilege. Doc. No. 659; October 12, 2007 Hearing Transcript at 38. Several attorneys complained that the assertion of the privilege prevented them from providing additional information regarding their conduct. See, e.g., Young Decl. at 12; Leung Decl. at 3-5; Robertson Decl. at 14-16.

The latest Order by Judge Brewster fills in the rest of the story, wherein some of the accused attorneys argued that the self-defense exception should apply:

The retained attorneys thereafter filed the above-referenced motion for a finding of a self-defense exception to Qualcomm’s asserted attorney-client privilege. The self-defense motion was unopposed by Qualcomm, if the hearing could be sealed, and with Broadcom excluded, which was not acceptable to Broadcom. Broadcom did not oppose the motion. The court’s order denying the motion is supported primarily because Qualcomm had not presented any evidence, such as declarations, against its attorneys. Thus, no adversity between Qualcomm and its attorneys was presented by Qualcomm.

The motion to apply the self-defense exception was denied. Qualcomm was thus able to keep its confidences secret by carefully limiting its declarations (affidavits) against its attorneys at that point in the proceedings. This prevented the former attorneys from making a showing of adversity necessary to support the self-defense exception.

Here is where clever defense strategy comes in, and shows the importance of timing and the impact of appeals. After the ruling denying the self-defense exception, a ruling which the attorneys appealed, Magistrate Judge Major went ahead with the Show Cause proceeding with partially silenced attorneys. But then, as part of the proceeding Qualcomm filed several new declarations that were directly adverse to its attorneys. The new statements clearly blamed their attorneys as part of their own defense. Among other things, Qualcomm alleged that its lawyers had failed to ask Qualcomm for discoverable documents, had inadequately prepared witnesses, and failed to advise Qualcomm employees of the company’s defenses prior to their testimony at trial. Still, even though the allegations had changed, the Qualcomm Six remained bound by the prior order, pending appeal. They still could not defend themselves against Qualcomm’s allegations.

In my view, this defense strategy worked spectacularly. In the sanctions order that followed, there were no new sanctions imposed upon Qualcomm whatsoever. Although they were found to have withheld evidence and engaged in misleading conduct, there was no real punishment imposed upon them. It was equivalent to losing on liability, but getting a zero verdict. I know, all the headlines say Qualcomm was punished by a brutal $8,568,633.24 fee award. But as I pointed out before, that was just for show. Qualcomm had already been ordered to pay these same fees in the underlying case. All the Sanctions Order did was provide another basis for the same award. The court makes clear that Qualcomm will not have to pay twice. So the real effect was a zero sanctions fee award against Qualcomm.

That was an excellent result for Qualcomm. It was thus to be expected that Qualcomm would comply with the Sanctions Order as soon as possible, and pay the $8,568,633.24 fee award to Broadcom. It did so soon after the Sanctions Order was entered, and thus also complied at the same time with the earlier fee award. This meant that the sanctions order was now final as to Qualcomm, and would stand regardless of whether the Qualcomm Six attorneys won their appeal on the right to testify against Qualcomm. Obviously this appeal was now very strong since, in the meantime, Qualcomm had taken off the gloves and was clearly adverse to these attorneys. Qualcomm was thus able to have their cake – the attorney client privilege – and eat it to, because they were able to blame and accuse their attorneys and still keep them silent. Then, before the cake could be taken away, they paid for it.

In the appeal of Judge Major’s decisions by the Qualcomm Six, Judge Brewester considered the new gloves-off declarations of Qualcomm against its attorneys. These new facts established the necessary predicate of adversity to allow the self-defense exception to apply. For that reason Judge Brewster reversed Judge Major’s earlier ruling on this issue. This error is, in turn, the sole reason the sanctions award against the Qualcomm Six was vacated and a new trail ordered. This new trial will only be against the attorneys, not Qualcomm, because the order is final as to Qualcomm. It has already complied with the order, so for them it is too late for a re-do. So now when the attorneys return, unmuzzled, and reveal the secrets of Qualcomm, no matter how damaging these secrets may be to Qualcomm, it will be too late for the Court or Broadcom to do anything about it. Now you see how clever the defense has been.

Here is how Judge Brewster explains it at pages 5-6 of his March 5, 2008 order:

This introduction of accusatory adversity between Qualcomm and its retained counsel regarding the issue of assessing responsibility for the failure of discovery changes the factual basis which supported the court’s earlier order denying the self-defense exception to Qualcomm’s attorney-client privilege. Meyerhofer v. Empire Fire & Marine Ins. Co., 497 F.2d 1190, 1194-95 (2d Cir. 1974); Hearn v. Rhay, 68 F.R.D. 574, 581 (E.D. Wash. 1975); First Fed. Sav. & Loan Ass’n v. Oppenheim, Appel, Dixon & Co., 110 F.R.D. 557, 560-68 (S.D.N.Y. 1986); A.B.A. Model Rules of Prof. Conduct 1.6(b)(5) & comment 10.

Accordingly, the court’s order denying the self defense exception to the attorney-client privilege is vacated. The attorneys have a due process right to defend themselves under the totality of circumstances presented in this sanctions hearing where their alleged conduct regarding discovery is in conflict with that alleged by Qualcomm concerning performance of discovery responsibilities. See, e.g., Miranda v. So. Pac. Transp. Co., 710 F.2d 516, 522-23 (9th Cir. 1983).

The exception applying, the communications and conduct relevant to the topic area of records (electronic or other) discovery pertaining to JVT and its parents, its ad-hoc committees, and any other topic regarding the standards setting process for video compression technology is not privileged information. Weil v. Investment/Indicators, Research & Mgmt., Inc., 647 F.2d 18, 24 (9th Cir. 1981).

Now we wait to hear what the Qualcomm Six have to say. It will probably be interesting and informative, but will pale in drama to Bobby Seale’s statements. He is shown in the picture above, which is a court room artist drawing of an event that actually occurred in Chicago in 1969. Seal, who was then a leader of the Black Panther movement, is the most famous litigant in the U.S. to have been bound and gagged during a trial. This incident occurred near the beginning of what was then known as the trial of the Chicago Eight. They were students and political activists accused of instigating the riots at the 1968 Democratic Convention in Chicago, including then famous “yippies” Abbie Hoffman and Jerry Rubin. After numerous outbursts, Seale was gagged in court, and then sentenced to fours years in prison for his contempt of court. The trial continued for over a year without him in what was thereafter known as the trial of the Chicago Seven. The jury acquitted the Seven of most charges, and the rest were overturned on appeal. No doubt the Six would like a similar result, but I have my doubts.

ABA Litigation Section Reacts to the Qualcomm Case and Recommends e-Discovery Checklists.

The Litigation Section of the American Bar Association has published an online article on Qualcomm v. Broadcom. Written by Kristine L. Roberts, Litigation News Associate Editor, the article is significant for its glimpse into the thinking of ABA leaders on electronic discovery abuses. Essentially the ABA litigation leaders remind practitioners of the importance of discovery, and recommend e-discovery checklists as a good way to stay on top of the process and avoid another Qualcomm. While I agree that checklists can be useful, they have their limits, and in my view must be supplemented with expert advice, not to mention a strong sense of ethics and professional responsibility.

Erica Calderas

Erica L. Calderas is the Co-chair of the Section of Litigation’s Pretrial Practice and Discovery Committee. Erica is quoted in the article as saying:

The Qualcomm decision reminds all litigators—in a very forceful way—of the serious obligations we undertake in responding to discovery.

She is right on there. Discovery, especially complex e-discovery, is not something you can just delegate to a first year associate and forget about it. It is critical to the outcome of most cases, and can be easily messed up if not done right.

Erica recommends that attorneys use standard form e-discovery checklists in every case to make sure they cover all of the bases and avoid e-discovery violations. Good advice. This is especially important for a general litigator who does not have the assistance of an e-discovery specialist in a small case. Erica specifically recommends that attorneys:

[Use checklists to] ensure that you apply a consistent protocol in any new matter—for example, that you routinely instruct your client to preserve evidence, that you identify witnesses with knowledge, that you determine how the client maintains its documents, that you ask the right questions regarding where potential documents may be located, and that you ask about additional relevant documents and potential witnesses in every witness interview.

Checklists and Specialists

Law firms are now beginning to create and employ such checklists as a routine matter in all litigated matters. For instance, many already follow Erica’s advice and routinely instruct their clients on preservation duties at the beginning of a case. This is not a mere CYA exercise. For many clients, even otherwise very sophisticated ones, it can be a real wake up call. Many in-house counsel are, for instance, unaware of automatic ESI deletion programs, PC and backup tape recycling, forensic collection, and the like. They may need significant help to implement an effective preservation hold and collection program.

A few law firms are taking this a step further and recommending to their litigation attorneys that an e-discovery specialist be included in any significant case. This is not a hard and fast rule; merely a recommendation. In some firms, this advice is often not followed until after there is a problem, instead of at the commencement of the firm’s representation when their input could do the most good.

One large firm, Hunton & Williams, has gone beyond mere recommendation. They have promulgated a rule requiring e-discovery attorney involvement. In their words, they have begun “implementing requirements that an e-discovery specialist be assigned to all significant matters involving ESI.” Hunton & Williams has 1,000 attorneys in 18 offices, and, of course, many e-discovery specialists. They are, to my knowledge, the first law firm to explicitly make this a requirement, not just a recommendation. Hunton’s Sherry Harris, whom I met last week at the Harvard Club CLE, brought this to my attention and obtained permission for me to share this. This is an important step and the management of Hunton should be congratulated. I expect that other law firms will follow in their footsteps, and eventually this will be commonplace. This is far more effective a solution than just distributing checklists to all litigators and hoping that everything gets done right.

The participation of e-discovery specialists can work seamlessly if the law firm requires it, and if the firm actually has such attorneys to carry it out. But at this point very few law firms actually have specialists like that, and, of course they do not require what they cannot deliver. Today most law firms, especially small to medium size firms, do not have these specialists. They must look to outside entrepreneurs for assistance when there is a significant matter involving ESI. Of course, I am not saying that every litigated case needs that kind of input. The principles of proportionality and economics must always be followed, and many cases today still do not have a large e-discovery component.

From what I have seen, although there are many e-discovery vendors, there are still only a few attorneys who specialize in e-discovery. Their numbers are, however, beginning to increase, especially among younger lawyers. The few who are full time e-discovery lawyers typically operate as independent entrepreneurs, or in small groups, or are employed by large vendors and consulting companies. This allows them to consult and be retained by other firms. A few e-discovery attorneys are shareholders, or of counsel, to some of the nation’s largest law firms, such as Hunton & Williams. Over half of the top 50 firms have e-discovery lawyers, but even then with varying levels of expertise. These big firm attorneys are usually fully occupied serving the litigators in their own firm, and are only rarely retained by other law firms as co-counsel.

Instead, the e-discovery lawyers who are on their own, or with consulting firms, are the specialists usually retained by law firms, both big and small, who lack attorneys with such arcane skills. As mentioned, they are usually called in to assist on projects after there is trouble of some kind. It is always challenging to bring in an outside attorney as an expert to assist in a case, but it is particularly difficult when it occurs after a problem develops. For one thing, how do you explain “the cleaner” to the client? No doubt it is the fault of the other side, or perhaps the judge. There can also be relationship issues when new attorneys from different firms work together for the first time. This is especially difficult when the trial attorney in charge has made a mistake and does not want to hear about it, nor understand the complexities involved. Yet, this is typically how and when most e-specialists get involved in litigation.

David Soley

Also quoted in Kristine Robert’s article was David A. Soley, of Bernstein Shur, Co-chair of the Section’s Trial Practice Committee:

We should not be surprised by the ruling, [the opinion] reflects what day-to-day practice ought to be. Attorneys are professionals and have professional standards to uphold, including a duty of good faith and reasonable inquiry in responding to discovery.

I assume David was referring to the sanctions imposed against Qualcomm and its attorneys for not upholding professional standards by trying to hide over 30,000 emails critical to the outcome of the case. David goes on to say that:

because lawyers will be held responsible for their clients’ production of documents, lawyers must go to the site where documents are kept. . . . the lawyer must understand what the client did and then verify it.

Once again, this comment (in my opinion) verifies the need for trial lawyers to obtain the assistance of e-discovery specialists in any large case involving complex computer systems. Counsel must not only understand what the client did, they must be sure their actions complied with the Rules and met the minimum forensic standards for admissibility as evidence. Also, they need to have the backbone to correct a client who screws up, or, as in the Qualcomm case, wants to hide the ball.

David, who is himself a trail lawyer specializing in real estate litigation, does not talk about retaining e-discovery experts, but again suggests use of checklists. Here is Kristine Roberts’ report of his comments:

Calderas recommends that to avoid e-discovery violations, attorneys should use checklists to “ensure that you apply a consistent protocol in any new matter—for example, that you routinely instruct your client to preserve evidence, that you identify witnesses with knowledge, that you determine how the client maintains its documents, that you ask the right questions regarding where potential documents may be located, and that you ask about additional relevant documents and potential witnesses in every witness interview.” Calderas also suggests that litigators enter into agreements with opposing counsel regarding what search terms will be used, the places at which relevant evidence may be found, and the persons whose files will be searched.

This is all good advice to be sure, but is it sufficient in a complex case involving large amounts of ESI?

ABA’s Checklist to Avoid Qualcomm’s Fate

The article concludes with a checklist summarizing the recommendations of the ABA leaders on how, as they put it, “to avoid Qualcomm’s fate.”

1. Use checklists and develop a standard discovery protocol.

2. Understand how and where your client maintains paper files and electronic information, as well as your client’s business structures and practices.

3. Go to the location where information is actually maintained—do not rely entirely on the client to provide responsive materials to you.

4. Ensure you know what steps your client, colleagues, and staff have actually taken and confirm that their work has been done right.

5. Ask all witnesses about other potential witnesses and where and how evidence was maintained.

6. Use the right search terms to discover electronic information.

7. Bring your own IT staff to the client’s location and have them work with the client’s IT staff, employ e-discovery vendors, or both.

8. Consider entering into an agreement with opposing counsel to stipulate to the locations to be searched, the individuals whose computers and hard copy records are at issue, and the search terms to be used.

9. Err on the side of production.

10. Document all steps taken to comply with your discovery protocol.

Once again, all good advice, so long as you understand the limitations of such general advice. Further, if the point is to avoid another Qualcomm, mandatory ethical training should be included, along with the admonishment to walk away from any client who would have you hide evidence or lie to the court. There is no price on a sound night’s sleep.

Limitations of Checklists

The above ten step checklist is, in my view, only helpful as a general starting point. Law firms should establish much more detailed forms and procedures to do e-discovery right. I know I have personally spent weeks doing just that. My firm, like a few others who have made such efforts, naturally holds such information as a trade secret. You can of course find many checklists online from a variety of sources, but they will all be generalized, and serve only as a starting point for further research, or teaser for retention of services. The same essentially holds true for form-books and commentaries. No complex area of law can be solved with simple forms and checklists, although again they can be helpful as a starting point. See for example, Electronic Discovery and Records Management Guide: Rules, Checklists and Forms 2008 ed. by Jay E. Grenig, Browning E. Marean and Mary P. Poteet, and Arkfeld’s Best Practices Guide for ESI Pretrial Discovery-Strategy and Tactics (2008-2009) by Michael Arkfeld. This is especially true of e-discovery which is a combination of the fields of law and technology. In e-discovery, the facts are always different and rapid changes in technology quickly makes yesterday’s solution obsolete.

Even if the detailed forms and checklists developed by a few experts for private use were no longer confidential, these checklists would not, by themselves, do that much good. They are meant to be used with the assistance of the experts who created them. Forms and checklists require background knowledge and team work with experts to function properly. They work best as a general guide, and reminder not to overlook necessary steps. They also let you know when and how to call for help. Sometimes just knowing what you do not know is half the battle. Step 7 in the above ABA checklist recognizes this in recommending employment of an e-discovery vendor. But be careful in relying too much on some vendors, especially those who are little more than copy-shops and have no in-house legal input.

The truth is, without experience and occasional guidance, simple checklists alone can be counter-productive. They can easily be misunderstood and provide a false sense of confidence. Sometimes it pays to be a little worried and concerned. I am sure that is one of the lessons Qualcomm’s former lawyers have learned. Perhaps the great poet Alexander Pope, whom I have quoted before, said it best in his An Essay on Criticism (1709):

A little learning is a dangerous thing; drink deep, or taste not the Pierian spring: there shallow draughts intoxicate the brain, and drinking largely sobers us again.

The Lessons of Qualcomm: A Wake Up Call for the Legal Profession

Qualcomm v. Broadcom is much more than another e-discovery case gone bad. It is an integrity wakeup call for the entire legal profession, much like Enron and Arthur Anderson were for business and accounting. Qualcomm shows what can happen when the profession strays too far from its roots, and the pursuit of profits takes precedence over the pursuit of justice. Some law firms may well be big businesses, but that is never all that they are. They are first and foremost professional associations. If they act like businesses, then it should be in the tradition of the London Stock Exchange, whose motto since 1801 has been: “dictum meum pactum.” All of the top attorneys I have ever known have practiced this motto religiously. It means “my word is my bond.” When a real lawyer tells you something, you can take it to the bank. Isn’t that the kind of lawyer you want? Isn’t that the kind of lawyer society needs? But See: Qualcomm, Inc. v. Broadcom Corp., 2008 WL 66932 (S.D. Cal. Jan. 7, 2008) (one of several relevant decisions in this case).

At the West Legalworks A-Z E-Discovery CLE, John M. Barkett of Shook, Hardy & Bacon started the event with a very good explanation of the facts of Qualcomm v. Broadcom. Every presenter in this day and a half event had something to say about Qualcomm. The only exception was the chair of this CLE, Browning E. Marean, a good friend whose law firm DLA Piper now represents Qualcomm in that case. His lips were sealed as ethics require, and he said nothing, but still squirmed mightily. Everyone who spoke agreed that Qualcomm is the major case of the year, not just for e-discovery practitioners, but for all litigators.

Factual Summary of Qualcomm

I will not recite all of the details of the case again, but a very brief summary of the amazing facts of this case may be helpful. Qualcomm sued its rival Broadcom claiming infringement of two of its key patents. Broadcom defended by claiming the patents were invalid because they were developed at the time Qualcomm was participating in an international standards setting group called the “Joint Video Team.” Qualcomm denied participating in this team. Numerous discovery requests were made for Qualcomm to produce documents related to this defense. Qualcomm repeatedly denied having any such documents, consistent with their position that they never participated.

After years of discovery, where that party line was consistently upheld by all Qualcomm witnesses, and all responses to discovery requests, the case went to trial. After weeks of trial a Qualcomm witness, Viji Raveendran, admitted on cross exam to having 21 emails related to Qualcomm’s participation in the standards setting team. It was later discovered that Raveendran had told Qualcomm’s lawyers about these 21 emails as part of final preparation for her trial testimony, and Qualcomm’s outside counsel had seen the emails, but decided to hide them, and hope it would not come up on cross. According to the trial judge, the direct exam questions of this honest witness by Qualcomm’s attorney were carefully designed to avoid asking Raveendran any question that might cause her to reveal the existence of those 21 emails.

Right after the surprise admission by Raveendran to 21 emails, Broadcom’s attorney immediately complained to the judge. The judge summoned counsel to a sidebar conference. Qualcomm’s attorneys assured the court that they had looked at these emails, and they were not responsive, and that there was no cover-up as Broadcom was now alleging. The judge accepted these assurances by the prominent and senior trial attorney conducting the case, dictum meum pactum, and the trial continued. Days later the jury found for the defendant. The jury foreman later explained that they all knew Qualcomm employees were lying and it was an easy decision.

After trial, at Broadcom’s urging, the judge ordered a complete investigation into whether there had been an email cover-up. Turns out, there had been, big time! Also, that sidebar representation by prominent counsel was, according to the presiding trial judge, a lie. After trial, Broadcom proved that Qualcomm had not only lied about and hid 21 emails, they had hidden over 46,000 emails with attachments comprising over 200,000 pages of relevant evidence! Naturally, both the court and defendant were astonished and upset, to say the least.

It is one thing to hide the ball, but to hide 200,000 balls and almost get away with it; that’s pretty impressive in a twisted Dr. Evil sort of way. Still, in this case at least, they were caught and crime did not pay. Qualcomm was stripped of it patents and ordered to pay $8,568,633.24 in fees to the prevailing defendant, Broadcom. By the way, patent litigation between these two companies continues in other courts around the country, and I do not have to tell you what kind of credibility Qualcomm now has with the courts.

This post trial discovery of a cover-up led to sanctions motions against Qualcomm and it attorneys. The District Court referred them to the Magistrate. Of course, Qualcomm had by now fired their former attorneys, and now they were each blaming the other for the massive fraud on the court. Qualcomm then asserted its attorney-client privilege, and the Magistrate agreed, effectively gagging Qualcomm’s outside counsel from testifying about what their client had told them. Six of the many outside counsel representing Qualcomm were then sanctioned by the Magistrate, and referred to the California Bar for further action. On appeal this sanction was reversed by the District Court Judge who held that Qualcomm’s attorney-client privilege was subject to the self-defense waiver.

The case has now been remanded for a new trial where outside counsel, and in-house counsel, can now freely testify as to who told who to hide what. John characterized the upcoming proceedings as a “circular firing squad.” As an aside, John has just written an article on e-Discovery ethics that he handed out to the A-Z participants. It will be published by the ABA Litigation Section later this year and provides a much needed overview of the subject.

Lessons of Qualcomm

The faculty of the A-Z CLE all agreed that the moral of the Qualcomm story is not only that hide the ball is prohibited by the rules and all governing ethics, but so too is never even look for the ball to begin with. You should instead make a reasonable inquiry and disclose all responsive evidence that this inquiry uncovers. Moreover, you should develop methodologies and lists to help make sure your search and disclosure duties are properly discharged. It is never in the client’s best interests to lie or break the rules, even if some of your client’s employees may sometimes think so. If the client does not want you to reveal evidence that will ruin the client’s case, then you must counsel with them and persuade them otherwise. As the Judge clearly states in Qualcomm, if the client will still not comply, you must resign. Also See United States v. Johnson, 2008 WL 2060597 (E.D.Va. May 15, 2008) (Defense attorney resigns midtrial when he discovers that his client has produced forged emails. After a mistrial the court applied the crime-fraud privilege exception and required the attorney to explain why he resigned. The defendant was later convicted of obstruction of justice, along with the original charges. Interestingly, the emails were forged to try and hide information in connection with a fraud investigation into the defendant’s company, PurchasePro.com, led by Arthur Anderson and Heller Ehrman.)

Kevin McBride has also written on the steps you should take to avoid the mistakes of Qualcomm. Aside from the obvious, but sometimes elusive, advice to tell the truth, Kevin recommends, as do I, to form an e-discovery team and establish a “discovery plan” at the beginning of a case. According to Kevin the plan should include at least ten items:

  1. A detailed inventory and map of the client’s ESI and IT infrastructure.
  2. A description of retention policies and practices.
  3. Identification of the key players to the dispute.
  4. A “litigation hold” notice interrupting deletion practices of key players and resources.
  5. A list of all resources searched for relevant ESI, plus a list of potentially relevant sources not searched not searched because of accessibility problems.
  6. A list of all search terms and methodologies used to identify relevant ESI.
  7. “A list of all persons to whom discovery requests were circulated for review in advance of production.”
  8. “Policies to periodically monitor preservation compliance by the client and client’s agents.”
  9. “Policies to supplement discovery searches (and productions) when “red flag” information becomes known over the course of litigation that suggests new document resources or custodians need to be included in document production.”
  10. “A policy for counsel to re-check the current state of discovery plan compliance before signing additional discovery responses or pleadings or making important arguments in court.

Alan Cohen, a writer for Corporate Counsel magazine, has also recently examined the lessons of Qualcomm from an in-house perspective. He draws five important lessons:

  • Outside counsel should know that they won’t be penalized for pursuing the evidence.
  • Keep asking questions [about whether more documents exist, etc.].
  • Don’t outsource e-discovery — oversee it closely, at the very least.
  • Don’t annoy the judge.
  • Document the document collection.

The lessons of Qualcomm were also recently explored by Gregory D. Shelton in his excellent article for the ABA’s Litigation Section discovery committee. Gregory D. Shelton, Qualcomm v. Broadcom: Lessons for Counsel and a Road Map to E-Discovery Preparedness, 16 A.B.A. Sec. Pub. PP&D 3, at 13 (Spring 2008). Here are Greg’s conclusions and advice.

Outside counsel, at all levels of authority, who rely on a client’s search and retrieval of electronically stored information, are obligated to ask probing questions, audit the search and retrieval, and confirm that all potential sources of information have been investigated. To paraphrase the court in Qualcomm, if a junior attorney who is unable to get a client to conduct the type of search he or she deems necessary to verify the adequacy of the document search and production, then he or she should obtain the assistance of a supervising or senior attorney. If the supervising or senior attorney is not able to get the client to perform a competent and thorough document search, he or she would withdraw from the case or take other action to ensure production of the evidence. [Qualcomm, Inc. v. Broadcom Corp., No. 05cv1958-B (BLM), 2008 WL 66932 (S.D. Cal. Jan. 7, 2008) at *13, n.10.]. Another solution may be to insist that in-house counsel appear in the case and sign the discovery responses if the client is not providing sufficient verification of the search and retrieval process. Although outside counsel may also consider some sort of indemnification agreement with the client, such an agreement does not relieve counsel from his or her ethical obligations.

I am not sure I understand what Greg had in mind about an indemnity agreement, but do not think anything like that is a good idea. What kind of attorney client relationship would that be? How exactly would a client indemnify an attorney from disregarding their duties to the court? Would such an agreement be enforceable? Do we really want opposing counsel and the courts to wonder if our representations on discovery are mere empty promises emboldened by secret hold-harmless agreements? No, I certainly hope the profession does not go in that direction. Ethics and professionalism are not something that can be papered over with clever agreements.

But Greg’s other suggestion to have in-house appear of record and sign discovery responses is practical and could work. Still, outside counsel would have to beware of falling into a trap of the three “no evil” monkeys and a conspiracy of silence. “Turning a blind eye” may have worked for Admiral Horatio Nelson, but will not work for lawyers. The attorney-client relationship must be built on full and open communications. It must be built on trust

Mary Mack, Technology Counsel of Fios, Inc., was interviewed recently about Qualcomm:

One effect of the Qualcomm v. Broadcom case is that it has introduced distrust and suspicion into relationships. It has adversely impacted the relationship between inside and outside counsel in a profound way.

Mary concludes her comments on this topic with a similar suggestion to Greg’s, that in-house attorneys may want to protect themselves with indemnity agreements and insurance:

Finally, inside counsel may experience a greater demand from law firms for an agreement that the client will waive the privilege if they need to defend themselves. And, inside counsel will have to consider their own liability in such matters and may wish to consider protecting themselves with insurance and/or a company indemnification agreement.

I do not think carriers will insure for the kind of behavior evidenced in Qualcomm. Some companies may go in that direction, but I think it is a mistake. The only viable solution is client education and counseling. The relationships of attorneys, both internal and external, must be built on honesty and trust.

We must all remember and follow the motto of the London Stock Exchange: dictum meum pactum. This is not an outdated concept. It is the bedrock of the American system of justice. I am not saying to avoid written agreements. That is not at all what it means. Dictum meum pactum means to be honest, truthful, and keep your commitments. It is the essence of trust and good reputation.

In the world of litigation, dictum meum pactum means that if an attorney makes a representation in Court to the Judge about discovery, or anything for that matter, it must be true, it must be substantial. There is no room for half truths and partial disclosure buttressed by secret indemnity agreements. If, for instance, you tell the court you made reasonable efforts to find relevant email, mean it, and be prepared to prove it. People may differ on what is reasonable under the circumstances. That is to be expected. If the court sees a good faith effort, albeit not diligent enough in their eyes, the response should be mild. But if you have found email and are hiding it, it is not a matter of a difference of opinion, it is a matter of honesty. If you compound the error with lies to the court and opposing counsel, the sanctions should be harsh.

Qualcomm “No Sanctions” Order Issued

The long-awaited lawyer sanctions order was just entered in the Qualcomm case by U.S. Magistrate Judge Barbara L. Major, copy attached. Thanks to a good friend behind the scenes for getting this to me so quickly. Those hoping for a strong sanctions order against the attorneys caught hiding the ball will be disappointed by this decision. The title of the order says it all: ORDER DECLINING TO IMPOSE SANCTIONS AGAINST THE RESPONDING ATTORNEYS AND DISSOLVING THE ORDER TO SHOW CAUSE.

Here is Judge Major’s concluding paragraph:

It is undisputed that Qualcomm improperly withheld from Broadcom tens of thousands of documents that contradicted one of its key legal arguments. However, the evidence presented during these remand proceedings has established that while significant errors were made by some of the Responding Attorneys, there is insufficient evidence to prove that any of the Responding Attorneys engaged in the requisite “bad faith” or that Leung failed to make a reasonable inquiry before certifying Qualcomm’s discovery responses. Accordingly, the Court declines to impose sanctions on the Responding Attorneys and hereby dissolves the order to show cause that initiated these proceedings.

Judge_Barbara-MajorIt is hard to believe this is the same judge who in earlier opinions provided excruciating details of the discovery misconduct of these same attorneys. It kind of makes you wonder who the prosecutor was here? Who can or will appeal the Magistrate’s order?

Judge Major tries to explain her turn-about with the following initial comments in the order, saying that she has:

… thought long and hard about this case. There still is no doubt in this Court’s mind that this massive discovery failure resulted from significant mistakes, oversights, and miscommunication on the part of both outside counsel and Qualcomm employees. The new facts and evidence presented to this Court during the remand proceedings revealed ineffective and problematic interactions between Qualcomm employees and most of the Responding Attorneys during the pretrial litigation, including the commission of a number of critical errors. However, it also revealed that the Responding Attorneys made significant efforts to comply with their discovery obligations. After considering all of the new facts, the Court declines to sanction any of the Responding Attorneys.

So now Judge Major concludes the attorneys “made significant efforts to comply with their discovery obligations” and this causes her to do a complete 180. The rest of her opinion contains a list of all of the errors made by counsel, errors that she ultimately forgives because of the “significant efforts” they made. She summarizes the Qualcomm errors with language that harks back to Zubulake’s famous Cool Hand Luke quote and other language found in the Zubulake saga.

The fundamental problem in this case was an incredible breakdown in communication. The lack of meaningful communication permeated all of the relationships (amongst Qualcomm employees (including between Qualcomm engineers and in-house legal staff), between Qualcomm employees and outside legal counsel, and amongst outside counsel) and contributed to all of the other failures. The Court was not presented with any evidence establishing that either in-house lawyers or outside counsel met in person with the appropriate Qualcomm engineers (those who were likely to have been involved in the conduct at issue and who were likely to be witnesses) at the beginning of the case to explain the legal issues and discuss appropriate document collection. Moreover, outside counsel did not obtain sufficient information from any source to understand how Qualcomm’s computer system is organized: where emails are stored, how often and to what location laptops and personal computers are backed up, whether, when and under what circumstances data from laptops are copied into repositories, what type of information is contained within the various databases and repositories, what records are maintained regarding the search for, and collection of, documents for litigation, etc. Finally, no attorney took supervisory responsibility for verifying that the necessary discovery had been conducted (including ensuring that all of the correct locations, servers, databases, repositories, and computers were correctly searched for potentially relevant documents) and that the resulting discovery supported the important legal arguments, claims, and defenses being presented to the court. These fundamental failures led to the discovery violations.

In other words, the attorneys completely ignored their Zubulake duties. But wait, there’s more. Judge Major essentially found this was a discovery project with no leader and no management, and yet they supposedly made reasonable efforts:

Another factor that contributed to the discovery failure was a lack of agreement amongst the participants regarding responsibility for document collection and production. … Qualcomm paralegals advised Leung that they believed there was no need to search the witnesses’ individual files or laptops because the information was likely to duplicate information and documents contained in other corporate repositories that already were being searched.

No one was in charge. Who’s on first? It appears as if Qualcomm’s legal department was in charge, the paralegals no less, who said there was no need to look at the files on witness computers. Reminds me of a Jedi mind trick: These are not the droids you’re looking for.

But wait, there is still more:

These failures were exacerbated by an incredible lack of candor on the part of the principal Qualcomm employees.

Judge Major than goes on to examine the language of Rule 26(g), the Rule 11 of discovery, and somehow concludes that these attorneys made reasonable efforts, including a reasonable inquiry, and thus should not be sanctioned. I certainly agree with the analysis, and indeed have said recently, that the law does not demand perfection, only reasonable efforts. It is also true that you can make reasonable efforts and still lose, or in this case, not find electronic evidence. Still, in view of all of the errors delineated here, and the several previous opinions in Qualcomm, I cannot see how Judge Major could conclude that the efforts made by these attorneys were reasonable. Apparently the reasonable man standard is very malleable and varies considerably from court to court, and state to state. I would not count on leniency like that outside of California, or even outside of San Diego.

Congratulations to defense counsel here for their good lawyering. They successfully painted the accused lawyers as innocents, who tried and made some blunders, but always acted in good faith and reasonably. These are not the droids you’re looking for. But if they are not, who is?

I suppose the judge may have thought that the Qualcomm Six had already been punished enough. Still, the message here is risky. You could assume from this holding that the Zubulake duty will not be enforced, even when it nearly results in a fraud on the court, with “over 200,000 pages of relevant emails, memoranda, and other company documents” hidden from pretrial disclosure. Qualcomm Inc. v. Broadcom Corp., No. 05-CV-1958-B(BLM) Doc. 593 (S.D. Cal. Aug. 6, 2007). It is true that the lawyers for Qualcomm violated the Zubulake duty of diligent inquiry and were not sanctioned, but you should not let this lull you into a false sense of security. I could cite dozens, if not hundreds of other cases where lesser misconduct in fact did lead to sanctions against attorneys.

Anyone else have any ideas as to how to reconcile this latest opinion with all of the others in the Qualcomm saga? Is it just much easier to act reasonably in e-discovery in California than in New York? Is the bar lower? What is the message here to the Bar on the Zubulake duty of diligence? What happened to Rule 26(g)? Has a low standard for reasonability once again made it irrelevant? What about the ethical duties of competence, candor toward the tribunal, and fairness to opposing party and counsel? Who was the prosecutor here anyway? Qualcomm? Did the court appoint anyone to fill that role objectively? I think not, but could be wrong. All of your comments are welcome to help explain the Qualcomm puzzle.

SUPPLEMENTAL READING: In case you think I’m exaggerating about what happened here, read some of the Qualcomm opinions. If you are really interested in this nightmare case read some of the  many articles linked in this module.

EXERCISE: What facts in the Qualcomm opinions do you find most amazing? What facts or law might explain the final outcome of the Qualcomm saga. What is your overall view of this case? The final outcome? Did you know that the new Qualcomm legal team is now active in e-discovery education? Dig around the Net and see if you find out what they are currently doing.

Students are invited to leave a public comment below. Insights that might help other students are especially welcome. Let’s collaborate!

Copyright Ralph Losey 2015

Friend of AI. Tech lawyer by day since 1980 with special skills and experience using legal technology, especially AI. Also an Arbitrator (AAA) and legal tech writer. By night an electronic meditation musician-composer since 1973 using computers and synthesizers.

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