Following Trial in Patent Infringement (Not Class Action) Lawsuit, California Federal Court Grants Defense Post-Trial Motion for Sanctions because of Plaintiff’s Misconduct in Intentionally Withholding Relevant Documents and Affirmative Misrepresentations to the Court and Opposing Party
In a decision important in class action and non-class action cases alike, a California federal court imposed sanctions yesterday on plaintiff and 6 of plaintiffs’ lawyers for failing to provide discovery and referred plaintiffs’ lawyers to the California State Bar. Qualcomm Inc. v. Broadcom Corp., ___ F.Supp.2d ___ (S.D.Cal. January 7, 2007) [Slip Opn., at 1-3]. The underlying lawsuit was not a class action but a patent infringement case filed by Qualcomm against Broadcom in October 2005; Broadcom filed a counterclaim in December 2006 and pleaded as an affirmative defense that the patents were not enforceable “due to waiver” and predicated its waiver claim “on Qualcomm’s participation in the Joint Video Team (‘JVT’) in 2002 and early 2003.” Id., at 3. Defense attorneys sought discovery concerning the JVT, id., but at trial testimony from a Qualcomm witness revealed that certain emails had not been produced as requested, id., at 1. At the conclusion of the trial, defense attorneys moved to sanction Qualcomm and its counsel for “fail[ing] to produce tens of thousands of documents that Broadcom had requested in discovery.” Id. The district court granted the motion in part, sanctioning Qualcomm and 6 of its lawyers and referring those 6 attorneys to the California State Bar for disciplinary proceedings.
While this case does not involve a class action lawsuit, the lessons to be learned from it are applicable equally to class action and non-class action lawsuits. In summarizing the factual background underlying the motion, the federal court noted that defense attorneys had used “a variety of discovery devices” to obtain information on Qualcomm’s participation in the JVT, including requests for production, interrogatories, and “multiple Rule 30(b)(6) deposition notices.” Slip Opn., at 3-4. The court observed at page 4 that “[o]n their face, Qualcomm’s written discovery responses did not appear unusual,” and provided examples thereof, see id., at 4-5. Qualcomm’s responses to the deposition notices, however, “were more troubling.” Id., at 5. For example, Qualcomm’s “most knowledgeable person” about the JVT was prepared for her deposition by plaintiff’s lawyers, but “Qualcomm did not search her computer for any relevant documents or emails or provide her with any information to review,” and she “testified falsely that Qualcomm had never been involved in the JVT.” Id., at 6 (italics added). After defense attorneys impeached the witness with documents showing Qualcomm’s involvement in the JVT, plaintiff’s lawyers “agreed to provide another Rule 30(b)(6) witness.” Id. Once again, however, Qualcomm failed to search the deponent’s computer for relevant documents and failed to “take any other action to prepare him,” id., and like the first witness, the new deponent “testified falsely that Qualcomm only began participating in the JVT in late 2003,” id. (italics added).
Defense attorneys relied on a single document – a December 2002 email that included the email address of Qualcomm employee Viji Raveendran – as evidence that Qualcomm was receiving JVT reports in 2002; the district court characterized this document as “critical” in that “it was the only evidence in Broadcom’s possession indicating the truth – that Qualcomm had been actively involved in the JVT and the development of the H.264 standard in 2002.” Slip Opn., at 6 n.2. The document was particularly important because during the course of the litigation “Qualcomm became increasingly aggressive in its argument that it did not participate in the JVT during the time the JVT was creating the H.264 standard.” Id., at 7. The federal court noted, by example, an expert declaration prepared by Qualcomm and its outside counsel, Heller Ehrman and Day Casebeer, “confirm[ed] the absence of any corporate records indicating Qualcomm’s participation in the JVT.” Id., n.3. The district explained at pages 7 and 8 that “[t]his argument was vital to Qualcomm’s success in this litigation because if Qualcomm had participated in the creation of the H.264 standard, it would have been required to identify the patents that reasonably may be essential to the practice of the H.264 standard,” including the patents in dispute.
Throughout the trial, Qualcomm maintained that it had not participated in the JVT in 2002 and early 2003, but while preparing Raveendran for her trial testimony, Qualcomm’s attorney found an August 2002 email to firstname.lastname@example.org and a subsequent search of her laptop computer “discovered 21 separate emails, none of which Qualcomm had produced in discovery.” Slip Opn., at 8. Importantly, “[t]he email chains bore several dates in November 2002 and the authors discussed various issues relating to the H.264 standard.” Id. Qualcomm’s counsel did not produce these emails to Broadcom, “claiming they were not responsive to Broadcom’s discovery requests.” Id., at 9. The district court explained at page 9: “[Qualcomm’s] attorneys ignored the fact that the presence of the emails on Raveendran’s computer undercut Qualcomm’s premier argument that it had not participated in the JVT in 2002…. The Qualcomm trial team failed to conduct any investigation to determine whether there were more emails that also had not been produced.” More troubling is the fact that Qualcomm’s counsel continued to affirmatively represent to the court and to defense counsel that “there are no emails” and “no evidence of anything being sent” to Qualcomm concerning the JVT in 2002 or early 2003. Id.
On cross examination, Raveendran she had received emails, which Broadcom promptly requested. Slip Opn, at 9-10. Despite knowledge of the contents of the emails, Qualcomm’s attorneys continued to represent to the court that the emails were “[not] responsive to anything,” and falsely represented to the court that he had not seen the emails. Id., at 10. The emails were ultimately produced, id. Broadcom prevailed, see id., at 10-11, and the district court awarded it $9.2 million in attorney fees based on “clear and convincing evidence [of] Qualcomm’s litigation misconduct, id., at 11. In conjunction with Broadcom’s post-trial motion for sanctions, “Qualcomm continued to dispute the relevancy and responsiveness of the 21 Raveendran emails,” and “resisted Broadcom’s efforts to determine the scope of Qualcomm’s discovery violation.” Id., at 11-12. Qualcomm’s counsel also continued to claim that Qualcomm had “performed a reasonable search” for relevant documents, id., at 12. Eventually, Qualcomm’s general counsel advised the court that Qualcomm had discovered “thousands of relevant unproduced documents and that [a] 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.'” Id. Specifically, when in June 2007 Qualcomm finally performed a search of email archives, it discovered more than 46,000 documents consisting of more than 300,000 pages that had not been produced previously. Id., at 13.
Based on the above factual summary, the court’s ruling is predictable. In essence, the district court concluded that “there is clear 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. 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.” Slip Opn., at 13. A few points are worth particulate note.
First, the federal court held that in “this age of electronic discovery,” “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.” Slip Opn., at 17-18. Accordingly, “Attorneys must take responsibility for ensuring that their clients conduct a comprehensive and appropriate document search.” Id., at 18.
Second, the federal court found that Qualcomm “intentionally withheld tens of thousands of decisive documents” from Broadcom, and that “Qualcomm could not have achieved this goal without some type of assistance or deliberate ignorance from its retained attorneys.” Slip Opn., at 18. Accordingly, the court sanctioned Qualcomm and its counsel, id.
Third, the district court found that Qualcomm presented no “substantial justification” for failing to discover and produce the 46,000 documents at issue, particularly as it failed to conduct any search of “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.” Slip Opn., at 19. Notably, “it is inexplicable that Qualcomm was able to locate the post-September 2003 JVT documents that either supported, or did not harm, Qualcomm’s arguments but were unable to locate the pre-September 2003 JVT documents that hurt its arguments.” Id., at 20. Moreover, “[i]t is inconceivable that Qualcomm was unaware of its involvement in the JVT and of the existence of these documents.” Id., at 20-21.
Fourth, in analyzing the misconduct of Qualcomm’s attorneys, “the finds it likely that … 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.” Slip Opn., at 26. The district court then singled out six of Qualcomm’s retained counsel for individual sanctions, finding them responsible for Qualcomm’s “monumental discovery violation.” See id., at 26-31. Importantly, the federal court further referred these 6 attorneys to the California State Bar “for an appropriate investigation and possible imposition of sanctions.” Id., at 37.
The district court concluded at page 41: “While no one can undo the misconduct in this case, this process, hopefully, will establish a baseline for other cases. Perhaps it also will establish a turning point in what the Court perceives as a decline in and deterioration of civility, professionalism and ethical conduct in the litigation arena. To the extent it does so, everyone benefits – Broadcom, Qualcomm, and all attorneys who engage in, and judges who preside over, complex litigation. If nothing else, it will provide a road map to assist counsel and corporate clients in complying with their ethical and discovery obligations and conducting the requisite ‘reasonable inquiry.'”
NOTE: The federal court further ordered Qualcomm’s in-house and retained counsel to participate in a “comprehensive Case Review and Enforcement of Discovery Obligations” program. See Slip Opn., at 38-40.