Court Sanctions Qualcomm $8,568,633, Orders Certain In-House and Former Outside Counsel to Participate in “Case Review and Enforcement of Discovery Obligations” Program, and Refers Investigation of Possible Ethical Violations to California State Bar

Qualcomm Inc. v. Broadcom Corp., 2008 WL 66932 (S.D. Cal. Jan. 7, 2008)

On Monday, January 7, 2008, United States Magistrate Judge Barbara L. Major issued her Order on Broadcom’s Motion for Sanctions related to Qualcomm’s failure to produce tens of thousands of documents that Broadcom had requested in discovery.  (A copy of the January 7 order downloaded from Westlaw is available here.)  Additional background regarding the sanctions motion is available in our previous posts on the case on September 20, 2007, August 29, 2007 and August 13, 2007.

In this most recent order, the judge ordered Qualcomm to pay Broadcom $8,568,633.24 for its “monumental and intentional discovery violation,” representing all of Broadcom’s attorneys’ fees and costs incurred in the litigation.  (Because the trial judge had already awarded these costs and fees to Broadcom in its Exceptional Case Order, the court directed that Qualcomm receive credit toward this penalty for any money it paid to Broadcom to satisfy the exceptional case award.)

The court also found that six of Qualcomm’s outside attorneys “assisted Qualcomm in committing this incredible discovery violation by intentionally hiding or recklessly ignoring relevant documents, ignoring or rejecting numerous warning signs that Qualcomm’s document search was inadequate, and blindly accepting Qualcomm’s unsupported assurances that its document search was adequate.”  The court observed that these six attorneys “then used the lack of evidence to repeatedly and forcefully make false statements and arguments to the court and jury.”  As such, the court found that the attorneys had violated their discovery obligations and also may have violated their ethical duties.  Accordingly, the court concluded that sanctions against the six named outside attorneys were also warranted.

Declining to impose monetary sanctions against the attorneys, the court ordered six of Qualcomm’s outside counsel (the “Sanctioned Attorneys”) to forward a copy of the order to the State Bar of California for appropriate investigation.  The court also ordered certain of Qualcomm’s in-house lawyers and the Sanctioned Attorneys to participate in a comprehensive Case Review and Enforcement of Discovery Obligations (“CREDO”) program, explaining:

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.”

The court described the “CREDO” program as follows:

This is a collaborative process to identify the failures in the case management and discovery protocol utilized by Qualcomm and its in-house and retained attorneys in this case, to craft alternatives that will prevent such failures in the future, to evaluate and test the alternatives, and ultimately, to create a case management protocol which will serve as a model for the future.  Because they reviewed and approved the false pleadings, the Court designates the following Qualcomm attorneys to participate in this process as Qualcomm’s representatives:  Alex Rogers, Roger Martin, William Sailer, Byron Yafuso, and Michael Hartogs (the “Named Qualcomm Attorneys”).  Qualcomm employees were integral participants in hiding documents and making false statements to the court and jury.  Qualcomm’s in-house lawyers were in the unique position of (a) having unlimited access to all Qualcomm employees, as well as the emails and documents maintained, possessed and used by them, (b) knowing or being able to determine all of the computers and databases that were searched and the search terms that were utilized, and (c) having the ability to review all of the pleadings filed on Qualcomm’s behalf which did (or should have) alerted them to the fact that either the document search was inadequate or they were knowingly not producing tens of thousands of relevant and requested documents.  Accordingly, Qualcomm’s in-house lawyers need to be involved in this process.

At a minimum, the CREDO protocol must include a detailed analysis (1) identifying the factors that contributed to the discovery violation (e.g., insufficient communication (including between client and retained counsel, among retained lawyers and law firms, and between junior lawyers conducting discovery and senior lawyers asserting legal arguments); inadequate case management (within Qualcomm, between Qualcomm and the retained lawyers, and by the retained lawyers); inadequate discovery plans (within Qualcomm and between Qualcomm and its retained attorneys); etc.), (2) creating and evaluating proposals, procedures, and processes that will correct the deficiencies identified in subsection (1), (3) developing and finalizing a comprehensive protocol that will prevent future discovery violations (e.g., determining the depth and breadth of case management and discovery plans that should be adopted; identifying by experience or authority the attorney from the retained counsel’s office who should interface with the corporate counsel and on which issues; describing the frequency the attorneys should meet and whether other individuals should participate in the communications; identifying who should participate in the development of the case management and discovery plans; describing and evaluating various methods of resolving conflicts and disputes between the client and retained counsel, especially relating to the adequacy of discovery searches; describing the type, nature, frequency, and participants in case management and discovery meetings; and, suggesting required ethical and discovery training; etc.), (4) applying the protocol that was developed in subsection (3) to other factual situations, such as when the client does not have corporate counsel, when the client has a single in-house lawyer, when the client has a large legal staff, and when there are two law firms representing one client, (5) identifying and evaluating data tracking systems, software, or procedures that corporations could implement to better enable inside and outside counsel to identify potential sources of discoverable documents (e.g. the correct databases, archives, etc.), and (6) any other information or suggestions that will help prevent discovery violations.

To facilitate development of the CREDO program, the court ordered the attorneys to meet in the court’s chambers at 9 a.m. on January 29, 2008.  The court further ordered that, at the conclusion of the process, the participating attorneys will be required to submit their proposed protocol to the court for approval, at which time the court may require further revisions.  Once the protocol is approved by the court, each of the attorneys will be required file a declaration under penalty of perjury affirming that they personally participated in the entire process that led to the CREDO protocol and specifying the amount of time they spent working on it.