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Qualcomm Lives! Lawyers Beware

By Charles S. Fax, Litigation News Associate Editor

Judges are fallible, which is why we have appellate courts. I was pondering that the other day while reviewing Rule 26(g) of the Federal Rules of Civil Procedure. Rule 26(g) requires that an attorney (or pro se party) sign all discovery requests, responses, and objections. The signature certifies, to the best of the attorney’s “knowledge, information, and belief formed after a reasonable inquiry,” that, inter alia, discovery responses “are not interposed for any improper purpose, such as to harass, cause unnecessary delay, or needlessly increase the cost of litigation.” Under Rule 26(g)(3), the court “must” impose sanctions for violation of the rule. That is as it should be—but consider the impact on the litigation lawyer when the court errs in its imposition of sanctions against him or her.


In recent memory, one of the most notorious incidents of mistaken sanctions for discovery misconduct arose in Qualcomm v. Broadcom. In Qualcomm, a U.S. magistrate judge imposed $8.5 million in sanctions and referred six attorneys to California Bar Counsel for possible disciplinary action. Their offense consisted of “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.” As an exhibit to her opinion, the magistrate judge attached a list of the 19 lawyers whom she deemed “involved” to one degree or another, including the six referred to bar counsel. The list detailed their academic credentials and a summary of their involvement in the case. The opinion exploded like a bomb before the nationwide federal civil trial bar, and the reputations of the lawyers and their law firms were severely tarnished.


On appeal, however, the district judge vacated the order. The magistrate judge—based on Qualcomm’s invocation of attorney-client privilege—had improperly barred the accused attorneys from disclosing their communications with, and taking discovery from, Qualcomm, thus preventing them from fully defending themselves. On remand, based on the complete record after extensive discovery, the magistrate judge concluded that, in fact, Qualcomm had stonewalled its own lawyers. The six attorneys, while not blame-free, had not acted in bad faith, and there were no grounds for sanctions. She dissolved her prior order.


By then, of course, the damage to the six attorneys and their two law firms had been done. One firm merged into Howrey Simon (which later disbanded for unrelated reasons), and the other firm collapsed. Several of the lawyers abandoned Big Law and opened solo practices. Given the career-altering consequences for lawyers whose conduct was ultimately deemed to be non-sanctionable, to characterize the magistrate judge’s erroneous decision as “unfortunate” is a gross understatement. The most that can be salvaged from this sorry tale is cautionary advice to judges: Tread carefully when considering arguable misconduct by lawyers under Rule 26(g), as your words will have consequences even though your opinion may later be reversed on appeal.


Perhaps you will be as astonished as I was to learn that courts, even today, rely on the vacated 2008 Qualcomm sanctions opinion. In 2013 and 2014, no fewer than seven district court opinions cited it favorably, albeit acknowledging that it was “reversed on other grounds.” In Laukus v. Rio Brands, Inc., for example, the court, citing Qualcomm (among other cases), imposed on the plaintiff the ultimate sanction of dismissal of its lawsuit for discovery subterfuge in which, the court found, the plaintiff’s counsel played an integral role. Likewise, in Knickerbocker v. Corinthian Colleges, the court, citing Qualcomm, found that counsel’s failure of oversight led to the client’s spoliation of evidence and merited sanctions.


Managing e-discovery in a comprehensive manner is a difficult enough challenge under the best of circumstances, as the task is complex and the pitfalls are many. The difficulties are needlessly compounded, however, when one realizes that a court, in scrutinizing counsel’s behavior in discovery, could choose to rely, in support of its imposition of sanctions, on the 2008 Qualcomm decision, which was erroneously decided and did so much damage to lawyers’ reputations. If that does not send a chilling message to the civil trial bar, nothing will. And it should be equally disturbing to the bench.


Keywords: sanctions, discovery, Rule 26(g), document search, e-discovery


 

Resources


  • » Fed. R. Civ. P. 26(g).
  • » Qualcomm v. Broadcom, 2008 U.S. Dist. LEXIS 911 (S.D. Cal. Jan. 7, 2008), vacated in part by 2008 U.S. Dist. LEXIS 16897 (S.D. Cal. Mar. 5, 2008).
  • » Laukus v. Rio Brands, Inc., 292 F.R.D. 485 (N.D. Ohio 2013.
  • » Knickerbocker v. Corinthian Colls., 298 F.R.D. 670 (W.D. Wash. 2014).
  • » Gabriel Techs. Corp. v. Qualcomm Inc., 2013 U.S. Dist. LEXIS 14105 (S.D. Cal. Feb. 1, 2013).
  • » Montoya v. Orange Cnty. Sheriff’s Dep’t, 2013 U.S. Dist. LEXIS 180682 (C.D. Cal. Oct. 15, 2013).
  • » Western Convenience Stores, Inc. v. Suncor Energy U.S.A., Inc., 2014 U.S. Dist. LEXIS 42443 (D. Colo. Mar. 27, 2014).
  • » Gen. Steel Domestic Sales, LLC v. Chumley, 2014 U.S. Dist. LEXIS 91814 (D. Colo. July 7, 2014).
  • » Witt v. GC Servs. Ltd. P’ship., 2014 U.S. Dist. LEXIS 170751 (D. Colo. Dec. 9, 2014).
 
 
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