Free Pass for Attorneys when it comes to “Monumental” E-Discovery Violations?

The E-Discovery Team (courtesy of Mr. Losey) reported that the Qualcomm Order concerning whether six attorneys would be personally sanctioned for discovery misconduct relating to their defense of their corporate client came down (click here for Mr. Losey’s post). Here is a link to the April 2, 2010 Order. If you’re short on time, read the image that accompanies this post – it reaches the same conclusion.

For those that have not followed or forgotten about this e-discovery saga, it arose out of an order sanctioning Qualcomm and a number of its outside attorneys for failing to produce tens of thousands of relevant and responsive documents during its patent suit against Broadcom.

These documents also consisted of emails and documents that undercut Qualcomm’s position at trial (I hate it when the facts get in the way). Taking a page from the Watergate playbook, Qualcomm then attempted to cover up these documents after they emerged at a critical point in the trial. But at the end of the day, Qualcomm was ordered to pay Broadcom $8,568,633.24 and found that six attorneys personally contributed to what the Court described as a “monumental discovery violation.” See Qualcomm Inc. v. Broadcom Corp. 2008 WL 66932, 13 (S.D.Cal. 2008).

Around March 2008, the case was remanded to the Magistrate Judge for additional consideration and, specifically, to provide the sanctioned attorneys an opportunity to defend their actions. With the benefit of this second-go-around, the finding that these attorneys contributed to a “monumental discovery violation” might have been a little harsh. Or in the words of the Court’s Order declining to hold those six attorneys responsible:

There still is no doubt in this Court’s mind that this massive discovery failure resulted from significant mistakes, oversights, and miscommunication on the part of both outside counsel and Qualcomm employees. The new facts and evidence presented to this Court during the remand proceedings revealed ineffective and problematic interactions between Qualcomm employees and most of the Responding Attorneys during the pretrial litigation, including the commission of a number of critical errors. However, it also revealed that the Responding Attorneys made significant efforts to comply with their discovery obligations. After considering all of the new facts, the Court declines to sanction any of the Responding Attorneys.

While the Qualcomm attorneys were eventually exonerated (although, this may be a quintessential Pyrrhic victory for the attorneys and law firm involved – see this article) it is likely that this case will continue to be the equivalent of “Kaiser Soze” for the legal community, i.e.,  “a spooky story” told as a reminder of what could happen to an attorneys who doesn’t comply with his or her ethical and legal obligations. Right … what could happen ….

In any event, the “major errors”highlighted by the magistrate’s April Order are instructive for both in-house and outside counsel. The first “fundamental problem” was “an incredible breakdown in communication,” which “contributed to all of the other failures.” Other specific failures recognized by the court included a failure to present evidence establishing that any attorney (in-house or outside counsel) explained the legal issues to the appropriate employees or discussed collection procedures; the failure to obtain sufficient information to understand the relevant computer systems; and the failure of any attorney to take on a supervisory responsibility for verifying that the necessary discovery was conducted.

Attorneys Pay Attention: Michigan Courts Direct Parties to Address E-discovery Matters

Last year Michigan joined a number of other states that have added rules to specifically address e-discovery (Click here for a write-up and link to Michigan’s e-discovery amendments and here for a listing of states that have e-discovery rules on the books). E-discovery commonly refers to the preserving, reviewing, and producing digital information that relates to litigation. Just because these rules are on the books, however, doesn’t mean parties, attorneys, and judges are attentive  as they should be  when it comes to addressing e-discovery. For example, a prior post reported on a Michigan Court of Appeals panel affirming a dismissal of a plaintiff’s employment claim because the plaintiff failed to comply with his e-discovery obligations. Click here for that post.

Additionally, I spoke with a federal magistrate at an e-discovery seminar about what is being done in federal courts to encourage e-discovery discussions on the front end of litigation and he candidly responded, “not much.” A survey of court opinions shows that failing to discuss e-discovery at the outset of litigation often forces a party to dig out of a digital hole. See 3M Innovative Props. Co. v. Tomar Elecs., 2006 WL 2670038 (D. Minn. Sept. 18, 2006) (Court affirmed the magistrate’s recommendation for imposing sanctions against defendant  based upon defendant’s failure to carry out a  legal hold, failure to conduct a reasonable search for responsive documents, failure to comply with prior discovery order, and other discovery abuses); Cornwell v. N. Ohio Surgical Ctr., 2009 WL 5174172 (Ohio. Ct. App. Dec. 31, 2009) (Plaintiff believed that defendants had purposefully altered electronically created evidence related to surgeon’s knowledge of decedent’s medical history. Appellate Court affirmed Order allowing Plaintiff’s expert to image Defendants’ hard drives to support claims of spoliation and fraud); TR Investors, LLC v. Genger, 2009 WL 4696062 (Del. Ch. Dec. 9, 2009) (Defendant was held in contempt and found to have intentionally spoliated relevant documents in violation of a court order).

But there are judges who are taking the lead and actively directing parties at the outset of litigation to address e-discovery. In this regard, the Hon. Lisa Gorcyca (Oakland County Circuit Court), has incorporated a provision addressing electronically stored information, i.e., e-discovery, in her court’s scheduling order. This provision directs the parties to discuss e-discovery issues and sets time frames for when such discussions must take place: “Any discovery issue regarding electronically stored information is governed by MCR 2.401(B)(2)(C) and must be brought to the Court’s attention no later than 90 days before the close of discovery; otherwise, those discovery issues will be deemed waived.”

Admittedly there are questions as to what makes up an issue regarding “electronically stored information” as opposed to a general discovery issue. For example, if a party fails to produce an email or information from a database, is that an e-discovery issue or a general discovery issue? Does the answer change depending upon the relief requested, e.g., if a party ask that a forensic inspection of a hard drive should be ordered to obtain that e-mail versus production of the actual e-mail. Or what if the forensic inspection reveals that the party deleted the e-mail after the preservation trigger should have been pulled and an adverse jury instruction is requested? Setting aside these issues, this Order makes clear that parties and their attorneys must be prepared to have the right answers to these questions and know what issues should be addressed. Such attention is especially important for business organizations who are already running lean now and do not have the resources to dig out of a digital hole created by improper planning, which can send litigation costs soaring. So even if Judge Gorcyca does not become an e-discovery “trendsetter” it is still in a business organization’s best interest to have their e-discovery ducks in a row.

I would be interested if you are aware of what other Michigan judges are doing with respect to e-discovery. And, as always, if  you have questions about this post or other e-discovery matters, feel free to contact me.

Any discovery issue regarding electronically stored information is governed by MCR 2.401(B)(2)(C) and must be brought to the Court’s attention no later than 90 days before the close of discovery; otherwise, those discovery issues will be deemed waived.