The sanctions judgment in Qualcomm v Broadcomm emphasises for UK lawyers the apparent conflict between their duty to ensure that their clients give full disclosure and their parallel obligation to keep disclosure proportionate. The two duties are not in fact irreconcilable, but it can be hard to see that and harder to achieve it. This article looks at what the judgment actually covered.
My article Predicting Litigation Responsibility for 2008 was written overnight on January 7. Allowing for the 8 hour time difference between Oxford and San Diego, it was written at about the time that Magistrate Judge Barbara Major was delivering the judgment in which she sanctioned Qualcomm Inc. to the tune of $8,568,633.24, and reported several of Qualcomm’s lawyers to the California State Bar. Although it is the sanctions which caught the eye, what the judge said about the responsibility of individuals is perhaps more important.
As its title implies, my article suggested that 2008 would be the year when UK courts would make parties to litigation and their lawyers more personally accountable for disclosure defects which increased the time and costs of cases. That conclusion needed no special gift of prophecy – the Commercial Court Long Trials Report and Recommendations had recently identified the need to involve the parties’ senior decision-makers at critical stages in the management of a case and had also emphasised the need for the lawyers – including leading counsel if engaged – to be actively involved in management decisions relating to disclosure. I suggested that the court might reject the giver of the disclosure statement. “Corporate litigants” I said “do not like that kind of egg on their faces and will want advice as to how to avoid it”.
$8,568,633.24 is an awful lot of egg on face – I particularly relish the 24 cents at the far right of that figure. The judgment runs to 48 pages, including copious footnotes, and has hardly a spare word in it. I can hear you muttering that we don’t do sanctions over here and dismissing the Qualcomm judgment as an example of the US procedural shenanigans which gives edisclosure a bad name. Before you turn away in search of some UK case law on e-disclosure (do let me know if you find any), you might pause to wonder if the saga has any relevance in UK litigation. Well, I am going to, anyway. First, though, what is the judgment about?
Reducing it to its essentials, Qualcomm and Broadcomm had litigated a patent point of great significance to both of them. Qualcomm alleged patent infringement and Broadcomm argued in its counterclaim that the patent was unenforceable through Qualcomm’s inequitable behaviour and waiver. The waiver defence was predicated on Qualcomm’s alleged participation in a standards-setting body called JVT – Joint Video Team. After judgment, it emerged that Qualcomm had failed to produce 46,000 documents which related to involvement in the JVT of exactly the kind which Broadcomm had alleged in their counterclaim. Qualcomm had expressly and aggressively argued that it did not participate in the JVT at the period alleged, a point of crucial significance not only in that litigation but in any similar claims which Qualcomm might bring against other companies.
That clearly established a motive for not producing documents which pointed to participation. It emerged towards the end of the trial that 21 e-mails had been uncovered which clearly pointed to JVT involvement on the part of Qualcomm. The judgment put it thus:
The Qualcomm trial team decided not to produce these newly discovered emails to Broadcom, claiming they were not responsive to Broadcom’s discovery requests….The 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.
These 21 emails were (eventually) produced at trial. The trial judge found against Qualcomm on the waiver point, saying that it
…actively organized and/or participated in a plan to profit heavily by (1) wrongfully concealing the patents-in-suit while participating in the JVT and then (2) actively hiding this concealment from the Court, the jury, and opposing counsel during the present litigation and that Qualcomm’s counsel participated in an organized program of litigation misconduct and concealment throughout discovery, trial, and post-trial
The misconduct, the judge found, justified Qualcomm’s payment of all Broadcomm’s costs on what we would call an indemnity basis. To appreciate what that means, bear in mind that the UK idea of costs being awarded to the victor does not generally happen in US courts – at all, let alone on an indemnity basis.
The row continued, and Qualcomm eventually admitted the existence of several thousand unproduced documents which, they accepted, revealed facts that appear to be inconsistent with certain arguments that [counsel] made on Qualcomm’s behalf at trial.
The Federal Rules require formal discovery documents to be signed by an attorney, the signature amounting to a certification… formed after a reasonable inquiry, as to the contents of the document. Broadcomm accepted what they were told, and did not file a motion to compel production. Qualcomm’s attempts to capitalise on that failure were described as “gamesmanship”, the court adding:
Why should Broadcom file a motion to compel when Qualcomm agreed to produce the documents? What would the court have compelled: Qualcomm to do what it already said it would do? Should all parties file motions to compel to preserve their rights in case the other side hides documents?
The equivalent in the UK courts to the attorney’s certification is the disclosure statement required by Rule 31.10 CPR to be “made by the party”. The Commercial Court Guide, at E3.19(a) says that
the court will normally regard as an appropriate person any person who is in a position responsibly and authoritatively to search for the documents required to be disclosed by that party and to make the statements contained in the disclosure statement concerning the documents which must be disclosed by that party
a legal representative may in certain cases be an appropriate person.
US discovery, like our disclosure, is predicated on good faith as well as formal certification – it is hard to see how it could be otherwise since the only alternative would be a court-led inquisition. One of the reasons why Qualcomm’s lawyers got such a kicking is that their conduct undermined the assumption that, however aggressive the lawyers might be about discovery, their conduct would be underpinned by good faith.
This bites, both here and in the US, in the form of an over-reaction, or at least a collision of principles. The good faith obligations going one way meet the proportionality arguments going the other. Good faith pushes for disclosure of everything which might fall within a definition of a disclosable document; proportionality requires a narrow focus. The clients’ perceived interests may point to yet a different route. The good faith point was addressed in the judgment:
For 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. Attorneys must take responsibility for ensuring that their clients conduct a comprehensive and appropriate document search. Producing 1.2 million pages of marginally relevant documents while hiding 46,000 critically important ones does not constitute good faith and does not satisfy either the client’s or attorney’s discovery obligations. Similarly, agreeing to produce certain categories of documents and then not producing all of the documents that fit within such a category is unacceptable.
The court was led
to the inevitable conclusion that Qualcomm intentionally withheld tens of thousands of decisive documents from its opponent in an effort to win this case and gain a strategic business advantage over Broadcom. Qualcomm could not have achieved this goal without some type of assistance or deliberate ignorance from its retained attorneys.
The judge found that, putting it at its lowest, Qualcomm had turned a blind eye to the probable existence of further JVT documents even after they had “discovered” the 21 Raveendran emails (the quotation marks, with all that they imply, are the judge’s). Instead of conducting a wider search, Qualcomm spent its time opposing Broadcom’s efforts to force such a search and insisting, without any factual basis, that Qualcomm’s search was reasonable. The possibility that this was inadvertence was negated by the massive volume and direct relevance of the hidden documents and by an impressive list of other factors. Qualcomm had the ability to identify the correct witnesses and the search terms to use but it just lacked the desire to do so.
The court considered four possibilities to explain the role of the retained lawyers – Qualcomm’s success in hiding them, the lawyers’ ineptitude in not discovering them, a mutual effort to hide them or the lawyers’ turning of a blind eye to Qualcomm’s incredible assertions regarding the adequacy of the document search and witness investigation.
The impressive education and extensive experience of the lawyers ruled out the first and second of these. There was no direct evidence of the third. Some variant of the fourth must have occurred:
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. These choices enabled Qualcomm to withhold hundreds of thousands of pages of relevant discovery and to assert numerous false and misleading arguments to the court and jury.
The court analysed the conduct of each relevant attorney. The details are less important than the overall conclusion that, given the pointers they had seen and the centrality to the waiver point of Qualcomm’s JVT involvement, the lawyers had at the least failed to make reasonable inquiries. One had affirmatively misled the Court by claiming that he did not know whether the emails were responsive to Broadcom’s discovery requests. Another had been sent for review all of the pleadings containing the lie that Qualcomm had not participated in the JVT in 2002 or early 2003 and he had approved or ignored all of them.
Broadcomm had won the waiver point anyway, so there was no point in re-litigating it with the benefit of the 46,000 additional documents. The sanctions award was the sum already awarded to Broadcomm by way of costs, so its effect was merely to remove room for argument as to the reasonableness of those costs. The attorneys were ordered to lodge a copy of the order with their professional body but the judge declined to add monetary sanctions to their punishment.
There is a strong emphasis in this judgment on the questions of standards and ethics as opposed merely to punishments. The judge ordered Qualcomm and its attorneys to join together in a comprehensive Case Review and Enforcement of Discovery Obligations (“CREDO”) program. This, she said 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.
It is worth setting out in full what she said about this, but not here. I will write about it separately.
It is also worth analysing the likely impact of this judgment on UK lawyers. They are faced with the apparently irreconcilable requirements of their obligation to disclose everything which ought to be disclosed whilst limiting the documents to what is proportionate. These are not, in fact, the mutually exclusive aims they appear to be, but it will take a new approach from both courts and parties for that to become clear. Again, I will write about this in a separate article.