Monday, January 07, 2008

2008-01-07 Qualcomm v Broadcom Sanctions Order - 6 Attorneys Referred to California State Bar

In a harshly worded 48 page opinion issued today by United States Magistrate Judge Barbara Major in the Qualcomm v Broadcom patent matter Case 3:05-cv-01958-B-BLM ( (SD CA), 6 Qualcomm attorneys/outside counsel were sanctioned for discovery abuses and referred to to the California State Bar for possible disciplinary action.

The Court summarized the issue as follows:

"In a nutshell, the issue of whether Qualcomm participated in the JVT in 2002 and early 2003 became crucial to the instant litigation."

As I read the opinion (and blog) here are the salient facts:

1. Qualcomm 30(b)6 deponent Viji Raveendran testified that Q had not been involved in the development of the MPEG-4 video standard, even though Broadcom had obtained "reflector email" showing participation in the standards workgroup by one" That deponent's computer was not searched for discoverable material prior to her deposition.

2. Qualcomm's attorneys filed a motion for summary adjudication on the issue of it's participation in the MPEG-4 standards group, dismissing the presence of the 30(b)6 deponent's Qualcomm email in the reflector list of the ad-hoc working group for the MPEG-4 standard, and stating again that Qualcomm did not participate in the standards development process. The Motion and memorandum in support of that motion was signed by both in-house Qualcomm attorneys and it's outside counsel.

3. [Excerpt from Opinion] " While preparing Qualcomm witness Viji Raveendran to testify at trial, attorney Adam Bier discovered an August 6, 2002 email to welcoming her to the avc_ce mailing list. Decl. of Adam Bier at 4, Ex. A. 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. Id. at 7. The email chains bore several dates in November 2002 and the authors discussed various issues relating to the H.264 standard. (Blognote --- not good).

4. [Order Excerpt] "The Qualcomm trial team decided not to produce these newly discovered emails to Broadcom, claiming they were not responsive to Broadcom’s discovery requests."
(Blognote --- looking worse...)

5. [Order Excerpt] "Four days later, during a sidebar discussion, Stanley Young argued against the admission of the December 2002 avc_ce email reflector list, declaring: “Actually, there are no emails -- there are no emails ... there’s no evidence that any email was actually sent to this list. This is just a list of email ... addresses. There’s no evidence of anything being sent.” Trial Tr. vol. VII at 91-92; Young Decl. at 25-29. None of the Qualcomm attorneys who were present during the sidebar mentioned the 21 avc_ce emails found on Raveendran’s computer a few days earlier."

So, what was the denouement? Well, the Magistrate Judge Major recounts what trial Judge Brewster had to say:

"Judge Brewster further found 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.” Id. at 32. Based on “the totality of the evidence produced both before and after the jury verdict,” and in light of these findings, Judge Brewster concluded that “Qualcomm has waived its rights to enforce the ‘104 and ‘767 patents and their continuations, continuations-in-part, divisions, reissues, or any other derivatives of either patent.” Id. at 53." (Blognote --- this is very bad patent juju --- for Qualcomm). Judge Brewster eventually awarded $9,259,985.09 in attorneys fees and related costs as sanctions.

But, we're not done, not by a long shot. Here's a recounting of post-trial misconduct by Qualcomm.

1. [Order Excerpt] By letter dated February 16, 2007, (Qualcomm counsel) Bier told Broadcom “[w]e continue to believe that Qualcomm performed a reasonable search of Qualcomm’s documents in response to Broadcom’s Requests for Production and that the twenty-one unsolicited emails received by Ms. Raveendran from individuals on the avc_ce reflector are not responsive to any valid discovery obligation or commitment...” Despite repeated requests, the Order continues "[T]hroughout the remainder of March 2007, Bier repeatedly declined to update Broadcom on Qualcomm’s document search." (Blognote: Umm. Sounds like a story line stolen from the "Wizard of Oz")

2. The Money Shot:
[Order Excerpt] "But, on April 9, 2007, James Batchelder and Louis Lupin, Qualcomm’s General Counsel, submitted correspondence to Judge Brewster in which they admitted Qualcomm had thousands of relevant unproduced documents and that their review of these documents “revealed facts that appear to be inconsistent with certain arguments that [counsel] made on Qualcomm’s behalf at trial and in the equitable hearing following trial.” Saxton Decl., Exs. H & I. Batchelder further apologized “for not having discovered these documents sooner and for asserting positions that [they] would not have taken had [they] known of the existence of these documents.” Id., Ex. H. As of June 29, 2007, Qualcomm had searched the email archives of twenty-one employees and located more than forty-six thousand documents (totaling more than three hundred thousand pages), which had been requested but not produced in discovery. Broadcom’s Reply Supp. Mot. for Sanctions at 1 n.2. Qualcomm continued to produce additional responsive documents throughout the summer. Doc. No. 597 (Qualcomm’s August 7, 2007 submission of three additional avc_ce emails it had not produced to Broadcom).

What Judge Major found:

1. "[C]lear and convincing evidence that Qualcomm intentionally engaged in conduct designed to prevent Broadcom from learning that Qualcomm had participated in the JVT during the time period when the H.264 standard was being developed.

2. "To this end, Qualcomm withheld tens of thousands of emails showing that it actively participated in the JVT in 2002 and 2003 and then utilized Broadcom’s lack of access to the suppressed evidence to repeatedly and falsely aver that there was “no evidence” that it had participated in the JVT prior to September 2003.

3. Qualcomm’s misconduct in hiding the emails and electronic documents prevented Broadcom from correcting the false statements and countering the misleading arguments.

Here's where the first interesting argument comes in. Broadcom never filed a motion to compel against Qualcomm, apparently lulled into non-action by Qualcomm's false interrogatory responses and by what documents it did receive. The Court notes that Broadcom's remedies were restricted because it had not filed a motion to compel:

"If Broadcom had filed a motion to compel, it could have obtained sanctions against Qualcomm and its attorneys. Fed. R. Civ. P. 37(a) & (b). Because Broadcom did not file a motion to compel, it may only seek Rule 37 sanctions against Qualcomm. Fed. R. Civ. P. 37(c). Thus, Qualcomm’s
suppression of documents placed its retained attorneys in a better legal position than they would have been in if Qualcomm had refused to produce the documents and Broadcom had filed a motion to compel."

(Blognote) --- This exposes the nasty underside of eDiscovery. It is extremely easy to "bury" digital evidence. Even if Broadcom *had* filed a motion to compel, the denial by Qualcomm that it had any additional evidence would in all likelihood have been taken as a truthful representation by the Court. The game? Destroy/alter evidence, then aver that either nothing exists, that you haven't altered it, or that you've produced whatever does exist. Most courts will then deny a motion to compel on the basis that one "cannot produce what does not exist."

In a brilliantly insightful piece of wordsmithing, the Court picks up on the idea of "gaming" the system ---

[Court Excerpt] "This dilemma highlights another problem with Qualcomm’s conduct in this case. 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. [Emphasis Added] (We had a name for this game when I was growing up. Not bloggable)

Judge Major then reveals the potentials (and imposes consequences for) imposing sanctions in what I may become "the famous" Footnote 4:

"Qualcomm attempts to capitalize on this failure, arguing “Broadcom never raised any concern regarding the scope of documents Qualcomm agreed to produce in response to Request No. 50, and never filed a motion to compel concerning this request. Accordingly, there is no order compelling Qualcomm to respond more fully to it.” Mammen Decl. at 9. Qualcomm made the same argument with regard to its other discovery responses. Id. at 9-11; see also Bier Decl., Ex. C. This argument is indicative of the gamesmanship Qualcomm engaged in throughout this litigation. Why should Broadcom file a motion to compel when Qualcomm agreed to produce the documents? What would the court have compelled: Qualcomm to do what it already said it would do? Should all parties file motions to compel to preserve their rights in case the other side hides documents?" [Emphasis added].

The Ruling:

[Court Excerpt] "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."

In Footnote 5 (also noteworthy) the Court depiction of this litigation is nothing short of, well, an unmitigated disaster: "The Court is limited in its review and analysis of the debacle that occurred in this litigation because Judge Brewster only referred the discovery violation to this court." (Blognote --- the failure to produce more than 46,000 emails, and repeatedly averring that none exist, *is* gaming the system)

So. What *didn't Qualcomm do? Here's what the Court says:

"Qualcomm has not established “substantial justification” for its failure to produce the documents. In fact, Qualcomm has not presented any evidence attempting to explain or justify its failure to produce the documents. Despite the fact that it maintains detailed records showing whose computers were searched and which search terms were used (Glathe Decl. at 3 (identifying the individuals whose computers were not searched for specific types of documents)), Qualcomm has not presented any evidence establishing that it searched for pre-September 2003 JVT, avc_ce, or H.264 records or emails on its computer system or email databases. Qualcomm also has not established that it searched the computers or email databases of the individuals who testified on Qualcomm’s behalf at trial or in depositions as Qualcomm’s most knowledgeable corporate witnesses; in fact, it indicates that it did not conduct any such search. Id.; Irvine Decl. at 2; Ludwin Decl. at 3; Decl. of Viji Raveendran at 1, 4. The fact that Qualcomm did notperform these basic searches at any time before the completion of trial indicates that Qualcomm intentionally withheld the documents. " (Emphasis in original -- Blognote: Note the Court's use of bolding *and* italics to make a point).

Thinking about designating a person with less-than-adequate knowledge as a Fed.R.Civ.P. 30(b)6 witness? Think again. Qualcomm tried this and, in retrospect, will no doubt regret it's decision, a point this Court makes abundantly clear:

[Order Excerpt] "If a witness is testifying as an organization’s most knowledgeable person on a specific subject, the organization has an obligation to conduct a reasonable investigation and review to ensure that the witness does possess the organization’s knowledge. 6 Fed. R. Civ. P. 30(b)(6); In re JDS Uniphase Corp. Sec. Litig., 2007 WL 219857, *1 (N.D. Cal. 2007)."

Okay, another notable footnote, for those mindful of ethics obligations on the part of both in-house as well as outside counsel:

[Order Excerpt] " Qualcomm’s self-serving statements that “outside counsel selects ... the custodians whose documents should be searched” and the paralegal does not decide “what witnesses to designate to testify on behalf of the company” (Glathe Decl. at 1) does not relieve Qualcomm of its obligations. Qualcomm has not presented any evidence establishing what actions, if any, it took to ensure it designated the correct employee, performed the correct computer searches, and presented the designated employee with sufficient information to testify as the corporation’s most knowledgeable person. Qualcomm also has not presented any evidence that outside counsel knew enough about Qualcomm’s organization and operation to identify all of the individuals whose computers should be searched and determine the most knowledgeable witness. And, more importantly, Qualcomm is a large corporation with an extensive legal staff; it clearly had the ability to identify the correct witnesses and determine the correct computers to search and search terms to use. Qualcomm just lacked the desire to do so."

The Role of Qualcomm's Outside Counsel -- The Options Game

Judge Major sets out four possible "options" scenarios involving potential attorney misconduct by Qualcomm's retained counsel:

[Order Excerpt] "
The next question is what, if any, role did Qualcomm’s retained lawyers play in withholding the documents? The Court envisions four scenarios.

First, Qualcomm intentionally hid the documents from its retained lawyers and did so so effectively that the lawyers did not know or suspect that the suppressed documents existed.

Second, the retained lawyers failed to discover the intentionally hidden documents or suspect
their existence due to their complete ineptitude and disorganization.

Third, Qualcomm shared the damaging documents with its retained lawyers (or at least some of them) and the knowledgeable lawyers worked with Qualcomm to hide the documents and all evidence of Qualcomm’s early involvement in the JVT."

...[F]ourth, while Qualcomm did not tell the retained lawyers about the damaging documents and evidence, the lawyers suspected there was additional evidence or information but chose to
ignore the evidence and warning signs and accept Qualcomm’s incredible assertions regarding the adequacy of the document search and witness investigation."

On with the analysis:

Was is option Number One or Two? No:

[Court Excerpt] "Given the impressive education and extensive experience of Qualcomm’s retained lawyers (see exhibit A7), the Court rejects the first and second possibilities. It is inconceivable that these talented, well-educated, and experienced lawyers failed to discover
through their interactions with Qualcomm any facts or issues that caused (or should have caused) them to question the sufficiency of Qualcomm’s document search and production. Qualcomm did not fail to produce a document or two; it withheld over 46,000 critical documents that extinguished Qualcomm’s primary argument of non-participation in theJVT. In addition, the suppressed documents did not belong to one employee, or a couple of employees who had since left the company; they belonged to (or were shared with) numerous, current Qualcomm employees, several of whom testified (falsely) at trial and in depositions. Given the volume and importance of the withheld documents, the number of involved Qualcomm employees, and the numerous warning flags, the Court finds it unbelievable that the retained attorneys did not know or suspect that Qualcomm had not conducted an adequate search for documents." (Blognote --- unbelievable is an even better term than the more commonly used "strains credulity")

Was it Option Three? No.

[Court Excerpt] "The Court finds no direct evidence establishing option three. 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."

Option Four --- "Chose Not to Look" --- Intent Rules.

[Court Excerpt] "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.

The Court's six word conclusion:

"This conduct warrants the imposition of sanctions."

The Court's reasoning for its ability to sanction 19 attorneys: Inherent Power. And another memorable footnote (5)

[Order Excerpt] "The applicable discovery rules do not adequately address the attorneys’
misconduct in this case. Rule 26(g) only imposes liability upon the attorney who signed the discovery request or response. Fed. R. Civ. P. 26(g). Similarly, Rule 37(a) authorizes sanctions against a party or attorney only if a 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; and, Rule 37(c) only imposes liability upon a party for the party’s failure to comply with various discovery obligations. Fed. R. Civ. P. 37. Under a strict interpretation of these rules, the only attorney who would be responsible for the discovery failure is Kevin Leung because he signed the false discovery responses. Doc. No. 543-3, Exs. W, X & Y; Robertson Decl., Ex. 2. However, the Court believes the federal rules impose a duty of good faith and reasonable inquiry on all attorneys involved in litigation who rely on discovery responses executed by another attorney. See Fed. R. Civ. P. 26 Advisory Committee Notes (1983 Amendment) (Rule 26(g) 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); Fed. R. Civ. P. 11 (by signing, filing, submitting or advocating a pleading, an attorney is certifying that the allegations have factual, evidentiary support). Attorneys may not utilize inadequate or misleading discovery responses to present false and unsupported legal arguments and sanctions are warranted for those who do so. Id. The facts of this case also justify the imposition of sanctions against these attorneys pursuant to the Court’s inherent power. See, Fink, 239 F.3d at 993-94 (“an attorney’s reckless misstatements of law and fact, when coupled with an

improper purpose ... are sanctionable under a court’s inherent power”). "

One last notable footnote (13): the failure to have documents reviewed by a senior attorney does not excuse discovery misconduct; it amplifies it.

[Order Excerpt] " Several declarations state or imply that senior lawyers failed to review or comment on pleadings prepared by junior lawyers and sent to them prior to filing. If this is true, it constitutes additional evidence that the senior lawyers turned a blind eye to Qualcomm’s discovery failures."

The Court's conclusion:

"For the reasons set forth above, the Court GRANTS IN PART and DENIES IN PART Broadcom’s sanction motion and ORDERS Qualcomm to pay Broadcom $8,568,633.24. Qualcomm will receive credit toward this sanction for any amount it pays to Broadcom to satisfy the Exceptional Case sanction. The Court also REFERS to The State Bar of California for an investigation of possible ethical violations attorneys James R. Batchelder, Adam A. Bier, Kevin K. Leung, Christian E. Mammen, Lee Patch and Stanley Young. The Court ORDERS these six attorneys and Qualcomm in-house attorneys Alex Rogers, Roger Martin, William Sailer, Byron Yafuso, and Michael Hartogs to appear 9:00 a.m. on Tuesday, January 29, 2008, in the chambers of the Honorable Barbara L. Major, United States Magistrate Judge, 940 Front Street, Suite 5140, San Diego, California, 92101 to develop the comprehensive Case Review and Enforcement of DIscovery Obligations protocol in accordance with this Order."

What this case underscores is the electronic discovery/digital evidence gamesmanship (nay, brinksmanship) currently ongoing. The script: hide/alter/delete/ and then claim that evidence does not exist. A Court will in all likelihood look askance at a motion to compel, and hold that it cannot compel what a party says it does not have. The trouble is, what a party does not have can be easily created after the fact, and creates a veil most courts are loathe to pierce. This one did, but only with the help of a single "email reflector" that gave rise to the misconduct.