Cautionary Tale on Responding To E-Discovery Requests
On January 7, 2008, a Magistrate Judge in California issued a sanctions order imposing over $8.5 million in monetary sanctions on a company for discovery abuses in a case that company lost at trial, in what should be a cautionary tale for companies and their lawyers as they respond to discovery requests. (Qualcomm, Inc. v. Broadcom, Inc., U.S. Dist. Ct., So. Dist. Of Calif., Case No. 05civ958-B (BLM).) Magistrate Judge Barbara Major sanctioned six of Qualcomm's outside counsel -- junior associates through partners. Although she did not impose monetary sanctions on counsel, she referred the sanctioned attorneys to the State Bar and ordered them and Qualcomm’s in-house attorneys to determine how the discovery breaches occurred and to develop a protocol to prevent similar failures in future cases.
Qualcomm v. Broadcom was a patent infringement case tried in the U.S. District Court in 2007. Broadcom filed a counterclaim alleging Qualcomm's patents were not enforceable due to waiver. The waiver defense was predicated on Qualcomm's participation in a Joint Video Team ("JVT") in 2002 and early 2003 when the JVT was setting standards for the technology at issue. Qualcomm's participation in setting the standards would have required it to disclose certain patents and prohibited Qualcomm from suing for infringement of those patents.
Broadcom sent discovery seeking information about Qualcomm's participation in the JVT. Qualcomm's written responses did not raise any issues. However, witnesses produced for deposition as most knowledgeable about Qualcomm's participation in the JVT were not adequately prepared by Qualcomm for their depositions and Qualcomm did not search their computers for relevant emails or documents in preparation for the depositions (or to respond to the written discovery requests). Consequently, the witnesses testified falsely about Qualcomm's involvement in the JVT. One denied any involvement and the other asserted Qualcomm participated only in late 2003 and after.
At Trial, Qualcomm aggressively advocated the position it did not participate in the JVT during a critical period. While preparing one of Qualcomm's witnesses for Trial, a junior associate found 21 emails on the witness' computer that had not previously been produced. Some of the emails were sent to JVT email groups and dated back to 2002. Qualcomm's Trial team discounted the impact these emails, concluding the emails were not responsive to Broadcom's discovery requests, and decided not to produce them. Counsel did not investigate further to determine if other emails had not been produced.
In seeking to avoid admission of certain evidence, Qualcomm's attorneys affirmatively argued there were no emails sent to the JVT email groups. Trial counsel did not elicit from witnesses information that might have revealed the emails. However, during Broadcom’s cross-examination, the witness disclosed the existence of the emails. Thereafter, Qualcomm produced the emails during a lunch break after the witness testified.
During post-Trial proceedings, the Judge found Qualcomm and its counsel had acted inequitably by concealing its patents from the JVT and later concealing its involvement in the JVT from Broadcom, the Court, jury and opposing counsel during litigation. Finding the case was “exceptional” within the meaning of the patent laws, the Trial Judge granted Broadcom's motion for attorneys' fees and court costs, awarding Broadcom $8.5 million in fees and costs, plus interest.
Qualcomm's attorneys continued to argue post-Trial that the 21 emails were not responsive to Broadcom’s discovery requests. However, eventually, Qualcomm agreed to search the current and archived emails of five Trial witnesses, and thereafter admitted there were thousands of responsive documents that had not been produced. Qualcomm conceded some of the documents contained facts inconsistent with Qualcomm's position at Trial and in the post-Trial proceedings. Qualcomm later expanded its search to the email accounts of 21 employees and found a total of 46,000 emails (over 300,000 pages) that had been requested by Broadcom but not produced.
Broadcom brought a motion for discovery sanctions against Qualcomm and its attorneys that was referred to Magistrate Judge Major. Judge Major concluded there was "clear and convincing" evidence Qualcomm "intentionally" engaged in conduct designed to prevent Broadcom from learning about Qualcomm’s participation in the JVT. Judge Major imposed over $8.5 million in attorneys fees and costs as sanctions on Qualcomm, subject to a credit for amounts paid on the attorneys fee award issued by the trial court. Judge Major sanctioned six attorneys. In sanctioning a junior attorney, the Judge suggested that a junior attorney with concerns about a client’s search for responsive documents should take his or her concerns to a more senior attorney who, in turn, would ultimately be obligated to withdraw if the client refused to conduct an adequate search for responsive documents. The Judge also noted that junior attorneys need to be properly supervised and trained for the tasks to which they are assigned.
Judge Major ordered the sanctioned attorneys and several Qualcomm in-house attorneys to participate in a comprehensive Case Review and Enforcement of Discovery Obligations program. This process is to identify, with a "detailed analysis," what went wrong, craft alternatives that will prevent problems in the future, and prepare a protocol for other situations, including where the client does not have corporate counsel or has only a single in-house attorney, or where multiple law firms are involved, and other scenarios.
