Content Page

Qualcomm Inside and Outside Lawyers Sanctioned for E-discovery Misconduct : What Went Wrong?

Concluding that Qualcomm, Inc. withheld tens of thousands of e-mails and other electronic documents with the knowledge and possible assistance of its inside and outside counsel, a federal judge this week imposed severe sanctions on the corporation and six individual outside attorneys , as well as rebuking five inside attorneys. The attorneys are also required to attend a special program designed to reform their misconduct. The outside attorneys are also referred to the State Bar of California for an investigation of possible ethical violations.
Qualcomm Inc. v. Broadcom Corp., S.D. Calif., Case No. 05cv1958-B (BLM) , 2008 U.S. Dist. LEXIS 911 (1/7/08).

What started as a garden-variety patent infringement case ended with a nightmare for Qualcomm and its inside and outside counsel involved with the case. Scared? You should be. Only outside counsel need to worry about sanctions? Wrong. It couldn't happen to you? Don't be so sure. The legal landscape is now littered with parties and attorneys that have been sanctioned for failures in the discovery of electronic data. The Qualcomm case is an especially harsh case in point. If we don't learn from history, it repeats itself. The good news is that we can learn from the unfortunate "tuition" paid by both inside and outside counsel involved in the Qualcomm case.

What happened?

In a nutshell, Qualcomm's attorneys - both inside and outside - failed to diligently pursue and locate what turned out to be critical electronic documents, in this case e-mail. When the existence of a handful of relevant e-mails never produced was uncovered during trial, it led to an investigation finding tens of thousands of other relevant electronically stored documents that had never been revealed. Qualcomm lost the case and was sanctioned over $8.5 million - representing every cent of attorneys fees and costs incurred by opposing party Broadcom during the entirety of the case. The court then turned its attention to Qualcomm's attorneys - both inside and outside. The $8.5 million sanctions against Qualcomm were assessed primarily due to what the court regarded as the intentional failings of Qualcomm's inside counsel. As for outside counsel, the court found that six of them had engaged in attorney misconduct warranting sanctions. The attorneys ranged from a junior associate who helped with discovery all the way to Qualcomm's lead trial counsel who wasn't ever personally involved in discovery. The outside counsel were referred to the State Bar of California for investigation and possible sanctions as a result of the findings of misconduct. The court also imposed a unique additional sanction: the six outside attorneys and five Qualcomm inside attorneys who were deemed to be part of the misconduct have been ordered to come to the judge's chambers and to jointly develop a special program to identify the specific failures of Qualcomm and its lawyers and to create a case management protocol that will prevent such failures in the future. The program must be approved by the court, which reserved the right to send it back for additional work if the court is not satisfied, and each attorney must sign a sworn affidavit specifying the amount of time they spent working on it. Humiliating.

What did the attorneys do wrong?
What was the nature of the misconduct? "The Court finds that these attorneys did not conduct a reasonable inquiry into the adequacy of Qualcomm's document search and production and, accordingly, they are responsible, along with Qualcomm, for the monumental discovery violation." The court also found as follows concerning the misconduct of Qualcomm and its inside counsel:

Qualcomm's inside counsel finger pointing at outside counsel was rejected. Retention of outside counsel did not relieve Qualcomm and its inside counsel of their obligations. The court found that Qualcomm, as a large corporation with an extensive legal staff, "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."

Qualcomm failed to search the computers and email databases of the individuals who testified on Qualcomm's behalf at trial or in depositions as Qualcomm's most knowledgeable corporate witnesses.

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. An adequate investigation should include an analysis of the sufficiency of the document search and, when electronic documents are involved, an analysis of the sufficiency of the search terms and locations.

As for outside counsel's misconduct, the court found as follows:

Qualcomm's outside counsel finger pointing at inside counsel was rejected. The outside attorneys had a duty to make reasonable inquiry into Qualcomm's discovery search and production. The court found they failed that duty by not looking in the correct locations for the correct documents, accepting the unsubstantiated assurances of an important client that its search was sufficient, ignoring warning signs that the document search and production were inadequate, and failing to press Qualcomm employees for the truth.

Because the outside attorneys did not conduct a reasonable inquiry into the adequacy of Qualcomm's document search and production, they were held personally responsible, along with Qualcomm and its inside counsel.

What can you learn from Qualcomm?
Reading the details set out at length in the court's order, one cannot help but feel a sense of "there but for the grace of God go I." Whether you are inside or outside counsel, you will likely see yourself reflected in one of the attorneys whose conduct was under scrutiny here. You should closely read the 1/7/08 Order to get a fuller appreciation for those details that precipitated the disaster. The facts and lessons of Qualcomm are especially important given the trend of many large organizations to create centers of discovery expertise in order to gain operational efficiencies by designating so-called "discovery counsel" that is often different than the trial counsel of record. For example, separating discovery work from the remaining case file work, by hiring Firm A to handle "discovery" only, while Firm B is retained as trial counsel. That was the model used by Qualcomm, with attorneys from one firm (Day Casebeer) handling discovery and attorneys from another firm (Heller Ehrman) involved in only the litigation/trial aspects of the case. While those arrangements have benefits that make the trend likely to continue, Qualcomm revealed the risks for all involved - the client, inside counsel, and the Firm A and Firm B outside counsel - created by those sorts of compartmentalization arrangements. The danger of discovery compartmentalization - which is more and more prevalent - is one of the biggest lessons of Qualcomm. It is a risk that can be managed, but only if first recognized and a protocol is consciously designed and implemented to avoid the communication, planning, and case management problems that combined to lead to devastating effects and tarnished legal careers of both inside and outside counsel in Qualcomm.

Bowman and Brooke can help. If you need help, or would like a copy of the full text of the Qualcomm Order, feel free to contact the author.

--------------------------------------------------------------------------------

Ronald C. Wernette, author, is a partner with the law firm of Bowman and Brooke LLP, where he concentrates on commercial, tort and product liability litigation, and advises clients on electronic discovery, electronic information management, compliance and retention/destruction policies and protocols. Ron can be reached at 248.687.5319 or at ron.wernette@bowmanandbrooke.com.

Bowman and Brooke's E-Discovery newsletter is designed to provide quick, current and newsworthy information to today's legal and discovery professional. This newsletter does not provide legal advice.