In a recent Southern District of California decision, the court sent a

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1 The Qualcomm Decision: Ethics In Electronic Discovery VICTORIA E. BRIEANT AND DAMON COLANGELO A recent decision reinforces the importance of a comprehensive electronic document management plan. In a recent Southern District of California decision, the court sent a clear message that ethics is at the forefront of the developing realm of electronic discovery. Although their final reckoning has not yet come, the preliminary sanctions order required six attorneys for the plaintiff, Qualcomm, to notify the California State Bar of their violation of the rules of professional responsibility arising from their conduct in the discovery and trial of this matter. Qualcomm itself was hit with $8.5 million in sanctions for its role in egregious discovery violations. BACKGROUND In Qualcomm, Inc. v. Broadcom Corp., 1 Qualcomm alleged that Broadcom infringed on two Qualcomm patents by manufacturing, selling, and offering to sell H.264-compliant products. Broadcom counterclaimed, alleging that one of the patents was unenforceable due to inequitable conduct, and that both patents were unenforceable due to waiver. Broadcom s waiver defense was predicated on Qualcomm s par- Victoria E. Brieant is Of Counsel in the Litigation Practice Group of Stroock & Stroock & Lavan LLP. Damon Colangelo is an associate in the firm s Litigation Practice Group. 363

2 PRIVACY & DATA SECURITY LAW JOURNAL ticipation in a program run by an industry standards-setting body, the Joint Video Team ( JVT ). The JVT created the H.264 standard, which governs video coding, and presented it in May Qualcomm asserted it had not waived its right to maintain the patents because it was not a participant in the program prior to The timing of Qualcomm s participation became the key issue for determination in the case. THE DISCOVERY PROCESS Broadcom sought discovery concerning Qualcomm s participation in the JVT at any time prior to Qualcomm responded through outside counsel, stating that it would produce non-privileged relevant and responsive documents describing Qualcomm s participation in the JVT, if any, which can be located after a reasonable search. 2 Qualcomm further stated through counsel that it first attended a JVT meeting in December 2003 and first submitted a JVT proposal in January As it turned out, these representations were false. Next, Qualcomm produced two Rule 30(b)(6) witnesses; the first incorrectly testified that Qualcomm never had participated in the JVT; the second incorrectly testified that Qualcomm did not participate in the JVT until late Moreover, counsel for Qualcomm failed to adequately prepare either witness or search their computers for relevant documents. Broadcom impeached both witnesses using an reflector list regarding the JVT, listing an address of a Qualcomm employee. Broadcom did not have any other documents in its possession to bolster its arguments on the issue of participation, as Qualcomm had not produced any. TRIAL As trial commenced, Qualcomm continued to maintain that it did not participate in the JVT in 2002 and early 2003 when the H.264 standard was created. While preparing a Qualcomm employee to testify at trial, an outside attorney for Qualcomm discovered an August 6, welcoming that employee to a mailing list designated for JVT participation. The attorney and employee then searched the employee s laptop and 364

3 THE QUALCOMM DECISION: ETHICS IN ELECTRONIC DISCOVERY found 21 separate s regarding this mailing list, none of which had been produced in discovery. Several of these s were from 2002 and related to the H.264 standard. When confronted with the issue of the mailing list during a sidebar, Qualcomm attorneys asserted that it was evidence that was not probative, and concealed from the court the existence of the 21 s that had been discovered just a few days earlier. Then, on cross-examination of the employee, counsel for Broadcom elicited testimony regarding the existence of the 21 s. At a subsequent sidebar, counsel for Qualcomm attempted to minimize the significance of the s, suggesting that they might not have been responsive to Broadcom s discovery requests in the first place. The trial concluded with the court holding in Broadcom s favor, finding that Qualcomm had in fact participated in the JVT prior to 2003 and had therefore waived the right to enforce either patent at issue. Further, the court found that Qualcomm actively organized and participated in a plan to conceal its involvement in the JVT, and thus had perpetrated a fraud on the court at trial. Even after this ruling, Qualcomm continued to dispute the relevance of the s in question and stonewall their production. Eventually, Qualcomm s lead outside counsel and general counsel submitted correspondence to the court in which they apologized and admitted that Qualcomm had uncovered thousands of pages of relevant unproduced documents. LEGAL BASIS FOR SANCTIONS The court cited several provisions of the Federal Rules of Civil Procedure in support of the sanctions imposed, but explained that, under the circumstances presented, the Federal Rules were inadequate to address the breadth of misconduct by Qualcomm attorneys. Rule 26(g) imposes liability only on an attorney who signs the discovery response (in this case, an associate). This provision could not be used to sanction the other outside attorneys who contributed to the concealment of documents or the failure to search for the same. Rule 37(a) authorizes sanctions against a party or attorney only if a 365

4 PRIVACY & DATA SECURITY LAW JOURNAL motion to compel is filed. Rule 37(b) authorizes sanctions against a party or an attorney if the party fails to comply with a discovery order. Rule 37(c) imposes liability on a party for the party s failure to comply with various discovery obligations. The court noted that these provisions also were inadequate to deal with the discovery violations. Broadcom had no reason to file a motion to compel because it was unaware that Qualcomm had failed to produce key documents. The court noted, however, that the Advisory Committee Notes to Rule 26(g) impose a duty of good faith and reasonable inquiry on all attorneys involved in litigation who rely on discovery responses executed by another attorney. Rule 26(g) itself imposes an affirmative duty to engage in pretrial discovery in a responsible manner that is consistent with the spirit and purposes of Rules 26 through 37. As the court explained: 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. 3 Further support for the sanctions comes from Rule 11, which provides that by signing a pleading, an attorney certifies that the allegations set forth therein have factual, evidentiary support. In addition to the foregoing rule-based authorities, federal courts have inherent power to sanction litigants to prevent abuse of the judicial process. 4 Regardless of whether sanctions are imposed under the Federal Rules of Civil Procedure or pursuant to a court s inherent power, the decision to impose sanctions lies within the sound discretion of the court. 5 In Qualcomm, the court exercised its inherent power and discretion in determining that the Federal Rules alone could not adequately address Qualcomm s gross discovery violations. SANCTIONS In sanctioning both Qualcomm and six of its outside counsel, the court noted that even though the discovery misconduct in question was willful in many regards, even negligent failures to provide discovery are sanctionable under the Federal Rules of Civil Procedure. For the monumental discovery failures in the case, the court sanctioned six of 366

5 THE QUALCOMM DECISION: ETHICS IN ELECTRONIC DISCOVERY Qualcomm s attorneys and referred them to the California State Bar for discipline. Further, the court sanctioned Qualcomm for its failure to produce more than 46,000 s and documents that were requested in discovery by ordering it to pay $8,568, to Broadcom an amount that equaled the entire sum of Broadcom s attorneys fees and costs throughout the litigation. THE LESSON How could this situation, involving millions of dollars in sanctions and the damage to two law firms and so many legal careers, have been avoided? The simple and obvious answer would have been for Qualcomm and its counsel, prior to filing the complaint against Broadcom, to have performed a factual investigation that would have exposed the risks to Qualcomm of suing on the patents. If Qualcomm and its counsel had been willing to face the bad facts early, or if counsel had been willing to walk away from the case when the facts did not support the claims made, disaster could have been averted. If counsel had examined the electronic archives of the 21 employees in a timely manner (and not just posttrial for the first time) or met their obligations to produce corporate representatives prepared for deposition as required by Rule 30(b)(6), the bad facts would have surfaced much earlier and counsel could have engaged in damage control. If counsel had not lied to the court, a different outcome could be expected. More simply, if Qualcomm s in-house counsel and information technology personnel had had in place a records management and litigation protocol prior to suit being filed, there might have been no opportunity for questions to arise regarding the existence and location of the 300,000 pages of relevant and damaging documents discovered after trial. With a comprehensive electronic document management plan, in-house counsel, outside counsel, and information technology personnel could have worked together and maintained the integrity of the legal system. No internal document management plan, however, will avert a fraud intended to gain a tactical business advantage. 367

6 PRIVACY & DATA SECURITY LAW JOURNAL NOTES 1 Qualcomm, Inc. v. Broadcom Corp., 2008 WL (S.D. Cal. 2008). 2 Id. at *2. 3 Id. at *9. 4 Id. at *8. 5 Id. 368