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).
I have written on Qualcomm many times already, and am now resigned to doing so for a long time to come. Yes, I now think it is that important. See Eg. the following prior blogs:
- ABA Litigation Section Reacts to the Qualcomm Case and Recommends e-Discovery Checklists
- Sanctions Have Been Lifted Against the “Qualcomm Six” and a New Trial Ordered Where They May Now Speak Freely to Defend Themselves
- Qualcomm’s “Monumental Discovery Violations” Provokes Only Wimpy Sanctions;
- Update of Two Prior Sanctions Blogs: Qualcomm and Morgan Stanley,
- Heavy Sanctions Loom Against Attorneys for e-Discovery and other “Aggravated Litigation Abuses”
At the West Legalworks A-Z E-Discovery CLE that I recently wrote about, 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, whose law firm DLA Piper now represents Qualcomm in that case. His lips were sealed, 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 trail, 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. For a good explanation of this, see Kevin McBride’s blog e-Discovery LA.
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:
- A detailed inventory and map of the client’s ESI and IT infrastructure.
- A description of retention policies and practices.
- Identification of the key players to the dispute.
- A “litigation hold” notice interrupting deletion practices of key players and resources.
- A list of all resources searched for relevant ESI, plus a list of potentially relevant sources not searched not searched because of accessibility problems.
- A list of all search terms and methodologies used to identify relevant ESI.
- “A list of all persons to whom discovery requests were circulated for review in advance of production.”
- “Policies to periodically monitor preservation compliance by the client and client’s agents.”
- “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.”
- “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.
- 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
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.