//BY Charles B. Sklarsky and Gabriel A. Fuentes

Just when you thought the discovery phase of complex corporate litigation was dangerous enough, along came Qualcomm v. Broadcom, and with it came plenty of lessons for in-house and retained counsel.

Background

The Qualcomm case, pending in federal court in San Diego, involves allegations by Qualcomm that rival Broadcom infringed certain Qualcomm patents involving the coding of video files. Part of Broadcom’s response was a claim that the patents are unenforceable or waived because they improperly cover industry standards set by a body known as the JVT in a process in which Qualcomm participated.

During discovery, pre-trial summary judgment motions, and at trial, Qualcomm disputed Broadcom’s argument. Qualcomm claimed that it did not participate in the JVT’s standards-setting activities until after May 2003, the month when the JVT issued the relevant video coding standard. But, at trial, a Qualcomm witness admitted that during his pre-trial preparation, 21 emails were pulled from his computer concerning Qualcomm’s JVT participation, and these were not produced in the litigation. This evidence led to the disclosure, four months after the trial, that Qualcomm had withheld as many as 46,000 documents, many of them emails, totaling more than 200,000 pages. These documents indicated that Qualcomm indeed had participated in the JVT standards-setting process as early as 2002.

The Judicial Hammer

The result was a series of notable rulings:

• In August 2007, U.S. District Judge Rudi Brewster found on post-trial motions that, as a result of outside counsel’s “organized program of litigation misconduct and concealment throughout discovery, trial, and post-trial,” Qualcomm had waived its right to enforce two of the key patents in question.
• Judge Brewster ordered Qualcomm to pay $9.2 million to Broadcom in fees and costs.
• Broadcom then brought a sanctions motion against Qualcomm’s attorneys, which was referred to U.S. Magistrate Judge Barbara Major. In January 2008, Magistrate Judge Major referred six of Qualcomm’s outside attorneys to the State Bar of California for discipline.
• At this writing, the six attorneys are litigating their objections to the magistrate’s disciplinary referral, and in March 2008, Judge Brewster ruled that they would be permitted to defend their conduct by breaking the attorney-client privilege under the “self-defense” exception triggered by their adversity to Qualcomm, whose fault it was that the emails were not initially located.

Truth and Consequences

Magistrate Judge Major’s January 2008 order set off alarms in law firms and in-house legal departments across the country. Her opinion indicated that a negligent failure to comply with discovery could lead to more than losing a case and paying the other side’s fees. Noncompliant attorneys now also run the risk of a state disciplinary referral.

Exposure for negligent failure to comply with discovery was not terribly new, as Magistrate Judge Major cited various precedents to that effect, as well as Federal Rule of Civil Procedure 26(g)(2), under which attorneys certify that to the best of their knowledge, information and belief, “formed after a reasonable inquiry” (a phrase that the magistrate put in bold), the discovery response is “consistent with the rules and law, not interposed for an improper purpose, and not unreasonable or unduly burdensome or expensive.” The magistrate also cited U.S. Supreme Court authority that a trial court may impose sanctions proportionate with the harm caused by the discovery violation, and she relied heavily on the court’s inherent supervisory power over discovery.

Yet the dramatic sweep of adverse consequences in Qualcomm, both to the client and counsel, seemed extreme to some lawyers, who perhaps had become accustomed to seeing courts require a willful violation before imposing sanctions. Magistrate Judge Major’s opinion in Qualcomm offers a reminder of how far judicial discretion might reach in a case where the discovery violation itself is perceived by the court as having significant magnitude.

As for Qualcomm, the magistrate concluded that its failure to find the 21 emails and 46,000 other documents could not have been inadvertent and resulted from Qualcomm’s failure to conduct a proper search. Moreover, the magistrate criticized Qualcomm for spending its resources opposing Broadcom’s post-trial motions instead of conducting an internal investigation to find the unproduced documents and discover why they had not been located.

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Charles B. Sklarsky is a partner in Jenner & Block’s Chicago office and is a member of the Firm’s Litigation Department. He is also Co-Chair of Jenner & Block’s White Collar Criminal Defense and Counseling Practice. Gabriel A. Fuentes is a partner in Jenner & Block’s Chicago office and is a member of the Firm’s Litigation Department. Messrs. Sklarsky and Fuentes are former Assistant United States Attorneys for the Northern District of Illinois.

 

Join Chuck and Gabe on Tuesday, June 24 at 1 PM EDT for an hour-long webcast event as they dig deeper into the ramifications of the Qualcomm case. //click here to find out more and register

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