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Email and Discovery Risks: Beyond Qualcomm v. Broadcom

Effectively Managing Electronic Evidence and Avoiding Sanctions,Penalties and Ethical Violations

presents

Today's panel features:

Lynn M. Reilly, K & L Gates, Seattle

Michael E. Lackey, Jr., Partner, Mayer Brown, Washington, D.C.

Marie A. Lona, Partner, Winston & Strawn, Chicago

Wednesday, June 3, 2009

The conference begins at:1 pm Eastern12 pm Central

11 am Mountain10 am Pacific

The audio portion of this conference will be accessible by telephone only. Please refer to the dial in instructions emailed to registrants to access the audio portion of the conference.

A Live 90-Minute Audio Conference with Interactive Q&A

Email and Discovery: Lessons Learned from Qualcomm

Lynn Reilly, K&L Gates

2

Qualcomm Inc. v. Broadcom Corp.

U.S. District Court, Southern District of CaliforniaSenior District Judge Rudi M. BrewsterMagistrate Judge Barbara Lynn Major

3

What Went Wrong?

Option 1: Qualcomm intentionally hid documents so effectively that outside counsel did not know or suspect that the suppressed documents existed.

Option 2: Outside lawyers failed to discoverintentionally hidden documents due to“complete ineptitude and disorganization.”

4

What Went Wrong?

Option 3: Qualcomm shared the damaging documents with outside counsel and they worked together to hide them.

Option 4: Outside counsel suspected they existed, but ignored the evidence and warning signs and accepted Qualcomm’s “incredible assertions.”

5

Background

Patent infringement case regarding video compression technology

H.264 standard implicated Qualcomm’s patents

Qualcomm’s participation in standards body central to defense

6

How Did They Get Here?

Typical Discovery Responses

“… documents describing QUALCOMM’s participation in the JVT, if any”

“... documents that were given to or received from” a standards body

7

How Did They Get Here?

30(b)(6) response “troubling”

Two witnesses; both testified falsely

Neither witness’ computer had been searched

8

The Loose Thread …

2002 “email reflector list” from the “Advanced Video Coding” ad hoc group (avc_ce)

Among the list of participants: [email protected](Viji Raveendran)

9

Begins to Unravel …

Over the coming months, Qualcomm aggressively argues, based on lack of evidence, that it did not participate.

Submits expert report on corporate records Moves for summary adjudication Files motion in limine to exclude the email list

10

Begins to Unravel …

Did not search the hard drives of the 30(b)(6) witnesses

Did not search for pre-September 2003 JVT, avc_ce or H.264 records in the email of testifying witnesses

11

Trial Begins

A junior associate discovers an email welcoming Viji to the avc_ce mailing list

Search for term “avc_ce” discovers 21 more emails not produced

Qualcomm decides not to produce: not responsive to discovery requests

Qualcomm trial team conducts no further investigation

12

The Turning Point …

Qualcomm’s counsel, arguing that email list is inadmissible:

“Actually, there are no emails – there are no emails … there’s no evidence that any email was actually sent to this list.“

No Qualcomm attorney mentioned the 21 emails found four days earlier

13


During Viji’s direct testimony, Qualcomm’s counsel asked whether she had “any knowledge of having read” email from the avc_ce mailing list

14


Viji admits receiving email from the acv_ce mailing list in 2002

Qualcomm produces the 21 emails during lunch recess

15

Six Months Later …

Qualcomm had searched the email archives of 21 employees and located more than 46,000 responsive documents totaling more than 300,000 pages that had not been produced.

Many of these emails were to or from the original 30(b)(6) witness.

16

“The Court finds by clear and convincing evidence that Qualcomm counsel participated in an organized program of litigation misconduct and concealment throughout discovery, trial and post-trial ….”

Judge Brewster’s 8/6/07 Order

17

“[T]he Sanctioned 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 Sanctioned Attorneys then used the lack of evidence to repeatedly and forcefully make false statements and arguments to the court and jury.”

Magistrate Judge Major’s 1/7/08 Order

18

Summary of Failings

No reasonable inquiry before making specific representations and legal arguments to the court

No search of key employees’ computers using obvious search terms

Ignored warning signs and failed to investigate further

19

Summary of Failings

Decided not to produce critical emails

“Approved or ignored” pleadings containing false statements

“Stood mute” while inaccurate representations were made to the court

20

Sanctions imposed by the magistrate judge:

Qualcomm sanctioned $8,568,633.24 All Broadcom’s attorneys’ fees and costs

6 Qualcomm outside counsel ordered to report themselves to California State Bar

6 Qualcomm outside counsel and 5 in-house attorneys ordered to participate in CREDO program

21

Updates

Tension between Qualcomm and its outside counsel

Judgment affirmed December 1, 2008

Discovery dispute continued until case settled

22

Lessons Learned

Don’t ignore red flags – follow up and fully investigate Junior lawyers must report problems to supervising

attorneys Make factual representations to the court only after

conducting a reasonable inquiry

23

Records Management

Develop comprehensive records management policies

Consistency means lower costs

Ensures critical business information is disaster-proof

24

Litigation Readiness

Develop a litigation response plan

Lower costs to collect and review

Quick dissemination of legal holds

Strategic advantage during early meet and confer

Easier compliance with discovery obligations

Mayer Brown is a global legal services organization comprising legal practices that are separate entities ("Mayer Brown Practices"). The Mayer Brown Practices are: Mayer Brown LLP, a limited liability partnership established in the United States; Mayer Brown International LLP, a limited liability partnership incorporated in England and Wales; and JSM, a Hong Kong partnership, and its associated entities in Asia. The Mayer Brown Practices are known as Mayer Brown JSM in Asia.

Month 2008

Michael E. Lackey, Jr.For Strafford Publications

June 3, 2009

Email and Discovery:Lessons Learned From Qualcomm

2

Amended FRCP

• Rule 16 Scheduling Order• Rule 26(a) Initial Disclosures• Rule 26(b) Duty to Disclose Scope

of Inaccessible Data Sources• Rule 26(f) Early Meeting of Counsel• Rule 33 Interrogatories to Parties• Rule 34 Demand for Documents• Rule 37 Sanctions• Rule 45 Subpoenas

3

Trigger Analysis: Plaintiffs v. Defendants

• “Reasonable anticipation of litigation”• Defendant demand letter workplace dispute (employment cases) attorney work product

• Plaintiff start thinking about a suit begin factual/legal inquiry draft complaint

4

FRCP 37 & The “Litigation Hold”

• “Reasonable and good faith efforts to retain information that may be relevant to pending or threatened litigation” Sedona Principle 5

•Rule 37: “Absent exceptional circumstances, a court may not impose sanctions under these rules on a party for failing to provide electronically stored information lost as a result of the routine, good faith operation of an information system.”

5

What Is “Routine Loss”?

• Standing Committee Report: Recycling of backup tapes

• Automatically or manually?

Automatic overwriting of deleted information

Automatic deletion of e-mail that has not beenaccessed within a defined period

Automatic changes to metadata as information is used

Dynamic database programs that are automatically updated and discard information

6

What Is “Good Faith”?

Cannot take advantage of such routine operations to destroy data that should be preserved

7

Litigation Hold Considerations

• What information is relevant?• Who is likely to have relevant information?

Get organizational charts; create lists; interviews

• Where are the data located? Data mapping; identify servers/laptops/etc.; e-mail, file/print

servers, databases, distributed data; voicemail; home computers,PDAs, backup tapes The “Morgan Stanley” problem

• When is the relevant time frame? Historical only? Current data? Ongoing?

• How must the data be handled? HIPPA

8

Best Practices When Implementing A Hold

• Prompt notification Key people, work outward Who sends the notice Broad then narrow

• Involve business unit, IT, document management personnel Awareness of automatic deletion issues

• Email janitor system; databases, archives (backup systems and paper)

Suspend systems?

• Keep good records of process, decisions• Identify 30(b)6 witness(es)

9

Best Practices When Implementing A Hold

• Supplemental notice with more detailed information and guidance Refine what must be retained

How to retain (be specific)

How will data be collected

Who to contact with questions

• Personal follow-up, interviews

10

Ongoing Preservation Obligation

• Difficult problem: Advanced Micro Devices, Inc. v. Intel Corp., (D. Del.)

• Volume

• Risk of mistake

• Manual v. Automated Approach

11

ESI Collection Issues

• Flexibility

• Authenticity – data not changed

• Admissibility – chain of custody issues, hearsay

• Lorraine v. Markel American Ins. Co., 241 FRD 534 (D. Md. 2007)

• United States v. Safavian, 435 F. Supp. 2d 36 (D.D.C. 2006)

12

Privilege Issues

• Rule 26(f) Meet and confer obligation: parties must meet “as soon as practicable”

• Parties must discuss “preservation issues”

•As part of discovery plan, parties address: Handling privilege claims

13

Privilege Issues

• Rule 26(b)(5)(B): Privilege Absent agreement, a party notified of a claim that

information produced was privileged or trial preparation material must promptly return, sequester, or destroy it and not use it until claim resolved

Rules 26(f) and 16(b) Committee Notes encourage use of “Quick Peek” and /or “Clawback” agreements

14

Rule 26(f): “Quick Peek” Agreement

•Responding party makes all potentially relevant information available without first performing a privilege review

•Requesting party reviews the information and designates what is responsive

•Responding party then reviews only the designated information for privilege issues and asserts privilege for appropriate documents even though other side has already seen them

15

Rule 26(f): “Claw Back” Agreement

•Non-waiver agreement

•Parties agree that, if privileged information is inadvertently produced, the receiving party will return it

•They agree that the inadvertent production did not waive the privilege

•Receiving party may still challenge the claim of privilege on other grounds

16

Litigation Risks in Hold and Collection Process

•Hold: miss documents versus over preserve possible sanctions

subsequent litigation

impact organizations operations

•Collection: miss documents versus over collect and review possible sanctions

cost

17

Litigation Risks in Hold and Collection Process

•Possible sanctions Monetary: Qualcomm ($8.5 million)

Adverse Inference: In re Napster, Inc. Copyright Litig., 2006 WL 3050864 (N.D. Cal. Oct. 25, 2006)

Default, partial default judgment: Morgan Stanley

Referral to state bar: Qualcomm

Criminal: Andersen

•Self-imposed remediation AMD v. Intel

Mayer Brown is a global legal services organization comprising legal practices that are separate entities ("Mayer Brown Practices"). The Mayer Brown Practices are: Mayer Brown LLP, a limited liability partnership established in the United States; Mayer Brown International LLP, a limited liability partnership incorporated in England and Wales; and JSM, a Hong Kong partnership, and its associated entities in Asia. The Mayer Brown Practices are known as Mayer Brown JSM in Asia.

Month 2008

Michael E. Lackey, Jr.For Strafford Publications

June 3, 2009

Email and Discovery:Lessons Learned From Qualcomm

Winston & Strawn LLP © 20091

ESI Retention and Production in Today's World

June 3, 2009Presentation for

Strafford Publications

Marie A. LonaWinston & Strawn LLP


ESI Retention and Production Best Practices

• Information Management: Minimizing Risks

• Impact of Early Decisions: Policies, Processes and Plans


Information Management:Types of Electronic Documents and Data

• E-mail (including attachments)• Word processing documents• Spreadsheets• Presentation documents• Graphics• Animations• Images• Audio, video and A-V recordings• Voicemail• Text messages and other communication


Information Management:Still More Sources of Electronic Documents and Data

• Databases• Networks• Computer systems, including legacy systems

(hardware and software)• Servers (network, departmental, e-mail, fax, etc.)• Archives• Back up or disaster recovery systems• Tapes, discs, back-up zip, jaz and tape drives,

thumb drives and other storage media


Information Management:Still More Sources of Electronic Data

• Business and/or home desktop or laptop computers (i.e., "hard drives")

• "Deleted files"

• "Metadata"

• Internet and Intranet data, including Internet Service Providers

• Personal digital assistants

• Handheld wireless devices

• Mobile telephones

• Paging devices

• Audio systems, including voicemail


Information Management:Nuances Associated with Electronic Discovery

• E-Discovery requests may ask for:

Format – hard copy v. electronic

If electronic format – native (original) or "searchable" (PDF or TIFF)

Metadata

Software necessary to retrieve, read or interpret

Inquiries as to data organization, location and storage

"Legacy" data

Back-up tapes


Risks and Costs of Failing to Prepare Now for E-Discovery Down the Road

• Increased costs of compliance with discovery

• Embarrassing/damaging information that should have been purged is retained and produced

• Relevant data is not retained or not produced

Sanctions for spoliation/destruction

• Monetary sanctions

• Adverse inference instruction or other ruling against interest

• Default judgment

• Potential criminal penalties associated with government investigations or audits

• Outside counsel sanctions - Qualcomm


ESI Retention and Production Best Practices

•• Information Management: Minimizing RisksInformation Management: Minimizing Risks

• Impact of Early Decisions: Policies, Processes and Plans


Policies, Processes and Plans

• E-Discovery Plan / CREDO

• Records Retention (Information Management) Policy

• Preservation (Litigation Hold) Policy and Process


CREDO Program

• Developing an e-discovery response plan

Lines of communication and responsibility

Process to understand information systems

Process for responding to e-discovery


Policies, Processes and Plans –E-Discovery Response Plan

• Create an inventory of hardware and software

• Assemble electronic discovery response team

• Understand information retention practices

• Suspend document destruction policy

• Take preservation steps, including notice to employees and third parties

• Identify list of key custodians likely to possess responsive documents

• Identify Rule 30(b)(6) witnesses

• Consider forensically sound image of hard drives from key individuals or other sources

• Determine method of collection, review and production


Information Management Policy

• Goals

Curb tendency of employees to retain significant volumes of electronic documents when there is no business or legal reason

Enable organization to quickly identify and isolate potentially relevant documents when faced with the possibility of litigation

Educate employees on what information should be created

Provide "safe harbor" from sanctions for nonproduction or spoliation


Information Management Policy

• Must take a cross-discipline approach

IT

Records management

Legal

Senior Management


Elements of a Sound Information and Records Retention Policy

• Must Identify

What type of information is generated, per business unit

Where the information is stored

How the information is stored

Who is knowledgeable about the information and the manner it is kept

• Policy should allow you to efficiently determine scope of production AND scope of preservation



• Not a one-size-fits-all, but rather must be realistic, practical and tailored to the circumstances of the organization

• Document the reasons for the establishment and implementation of the policy

• Define roles and responsibilities for individuals (by title) who are responsible for implementation and administration of the policy



• Define the information covered by the policy and how it is to be treated

• Develop procedures / cycles for systematic creation, storage, recycling or destruction

• Provide guidance to employees regarding identification and maintenance of information

• Communicate the policy to all employees and have the policy readily accessible

• Establish monitoring and enforcement plan, including periodic compliance reviews

• Consider importance of continuing employee education


Impact of Early Decisions in Information Management

• Understanding the Electronic Environment -QUICKLY

Types and categories of data

Platforms

Retention schedules

Storage media and policies

Key custodians of data

Witnesses


Impact of Early Decisions in Information Management

• Accessible v. "Not Reasonably Accessible"

• Gathering and collecting data

• Implementing reliable preservation processes

• Defines what information should be available


Best Practices in Information Management

• Robust retention program that includes ESI (types of information created, where located and who is knowledgeable)

• Maintain datamap of information systems

Includes records of all types of hardware and software in use and the locations of all electronic data

Outlines flow of data into and out of the company


Policies, Processes and Plans –Litigation Hold

• Preservation of Data

When to start preserving information

Scope of preservation

Communication of preservation notice


Litigation Hold Best Practices

• Be prepared to disclose preservation steps

Best Practice: Document the steps you take to preserve ESI, including:

• When the hold was initiated and by whom

• The custodians and sources involved

• Audit and monitoring steps taken to ensure compliance

• The date of preservation reminders

• The collection protocol (includes instructions on how to collect if done by individual employees)

Best Practice: Document steps and decisions surrounding collection process


Collecting ESI

• Establish procedure for collection of ESI –consider using third-party vendor

• Establish and maintain chain of custody of ESI and document means for authentication

• Best Practice: Maintain the native file format so they can be compared to the documents offered at trial.

• Best Practice: Make mirror images of critical drives prior to any collection efforts to make sure relevant data is not lost or damaged.


Collecting ESI

• Identify witnesses

Rule 30(b)(6) deposition – also on policies and procedures

Certification

Support for position

• Cost

• Burdensome

• Not Reasonably Accessible

• Spoliation

Trial


Reasonable Inquiry into Collection

Qualcomm Inc. v. Broadcom Corp.,2008 U.S. Dist. Lexis 911 (S.D. Calif. 2008)

Key Issues• Good faith

• Rule 26(g) – reasonable inquiry– Reliance on client personnel likely insufficient

– Must challenge questionable results

– Cannot simply accept unsubstantiated assurances


Reasonable Inquiry into Collection

Phoenix Four, Inc. v. Strategic Resources Corp., 2006 WL 1409413 (S.D.N.Y. May 23, 2006)

• Defendant goes out of business and abandons computers

• Counsel needed to make reasonable inquiry: Abandonment of computers "constituted an act of gross negligence that is not excused by the disarray of their business affairs"


Perils of Collection

• Samsung Electronics Co., Ltd. v. Rambus, Inc., 439 F.Supp.2d 524, 565 (E.D. Va. 2006)

Not sufficient to just tell employees "save relevant documents"

• Wachtel v. Healthnet, Inc., 2006 WL 3538935 at *8 (D.N.J., Dec. 6, 2006)

Reliance only on certain business people within company to search and identify responsive documents was insufficient

• United States v. O'Keefe, 527 F. Supp. 2d 14 (D.D.C. 2008)

Sufficiency of search terms based on Fed. R. Evid. 702 -Expert testimony

• Victor Stanley, Inc. v. Creative Pipe, 2008 WL 2221841 (D. Md. 2008)

• Equity Analytics v. Lundin, 248 F.R.D. 331 (D.D.C. 2008)


Compliance Guidelines For In-House Counsel

• Ten steps a company should take to comply with electronic discovery obligations Maintain and communicate a well-thought-out records retention policy

– involve legal, IT, records managers and senior management Implement and monitor information management policy Create datamap of electronic environment Set up a discovery response plan and team Maintain litigation hold policy and database Routine communication of litigation holds Make sure in-house counsel is educated about ESI Make sure outside counsel is educated about ESI Implement preservation steps quickly Proceed cautiously with collection of ESI and document steps and

decisions


Suggestions for Outside Counsel Under the Amended Rules

• Understand the client's electronic environment early

• Obtain information on ESI in advance of Rule 26(f) conference

• Use the Rule 26(f) conference to disclose ESI environment, accessibility issues and preservation steps – First line of defense for later motion practice and sanctions

• Document steps and decisions made regarding production and preservation

• Develop lines of communication with in-house counsel and IT personnel as well as third-party vendors


Marie A. Lona

• Marie Lona is a litigation partner in Winston & Strawn's Chicagooffice and is the founding chair of the firm's e-Discovery and Electronic Information practice group. She is highly experienced in e-discovery matters in large, complex litigation from assessment and retention through production and admissibility. She assistsclients in simplifying the often complex world of electronic information in anticipation of and preparation for major litigation-oriented activities. Ms. Lona routinely provides seminars to corporations concerning electronic information. She also is a member of the Sedona Conference working group, Electronic Document Retention and Productions.

• Contact info: Winston & Strawn LLP, 35 West Wacker Drive, Chicago, Illinois 60601, 312-558-5692, [email protected]

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