Magistrate Judge Major heard 5 hours of argument yesterday regarding possible sanctions against Qualcomm and its outside counsel, the Heller & Day, Casebeer firms. Judge Major showed complete mastery of a lengthy and complex record; in some cases she knew it better than counsel. There is no doubt the case has received and will receive the consideration it deserves.
Counsel for the firms argued a tough case with great skill. I was particularly impressed with a comment by counsel for Mr. Casebeer, who began by taking responsibility on Mr. Casebeer's behalf for two associates who were implicated for work they did for him. In form and substance, pure class. (Note to prospective students who might wonder about going to work for the firm based on the OSC: Don't worry.)
A key issue is Qualcomm's assertion of the privilege. The outside lawyers say they have exculpatory but privileged information, and that due process requires that they not be sanctioned if they cannot defend themselves fully.
Outside counsel must show they investigated Qualcomm's documents adequately. They claim Qualcomm had at least some control (perhaps almost complete control) over document search and production, but that they cannot detail the allocation of responsibility without divulging privileged communications. Joel Zeldin, who did a masterful job in general, was particularly effective in identifying specific issues as to which he represented that he had exculpatory but privileged information; holding the documents up for the court to see from a distance was a nice touch. David Noonan was also excellent, both in stressing the reality that lawyers must rely on clients and each other in complex cases, and in focusing on the points most important to Judge Major (on one of which, with help from his client, he seemed to make significant progress in showing the reasonability of his client's actions).
The privilege problem is significant. The premise that outside counsel are constrained by the privilege seems sound, and there is great force to their claim that it would be unfair to sanction them when they have exculpatory information they cannot provide the court. Weighing against those considerations is the magnitude of the discovery failure--200,000 relevant documents produced only after trial.
Qualcomm filed declarations implicitly blaming outside counsel for the discovery failures. At the hearing it took the position that these declarations did not waive the privilege because they did not disclose statements by lawyers or counsel. I find that assertion unpersuasive. The declarations implicitly asserted that certain matters were not discussed, and that outside counsel did not prepare Qualcomm witnesses adequately. In this context, these implicit assertions point the finger at counsel; they reveal part of the content of communications--that certain matters were not discussed.
I think the implicit finger-pointing is an adequate basis for the court to find that Qualcomm asserted the privilege strategically, and thus to find waiver. One option is for Judge Major to find a waiver and allow time for supplemental briefing and declarations. That would provide the fullest record, and the fairest allocation of responsibility, but it would invariably result in Qualcomm attempting to obtain interim appellate relief, and it would further protract already lengthy proceedings. Neither prospect is appealing.
Judge Major several times suggested that she might disregard the Qualcomm declarations. That seems an appropriate alternative to a waiver finding, but it does not solve the due process problem, which the declarations exacerbate but which still exists without them. She also floated the idea of relatively light sanctions, such as mandatory CLE. The notion of accounting for the privilege problem by lightening the sanction has the appeal of splitting the difference between a harsh sanction and no sanction, but it may be difficult to make predicate findings on an incomplete record.
Qualcomm's counsel pointed out that the firm already faces a multi-million dollar fee award, and has replaced its general counsel. Both facts are indeed significant. It is hard to say that Qualcomm did not get Judge Brewster's point when the chief legal officer presiding over the case is gone.
Strangely, though, at the end of the proceedings I was left with the feeling that Qualcomm is impenitent. In part it is because of the finger-pointing declarations. In my view, they did try to use the privilege both as a sword and shield, pointing toward the conclusion that outside counsel could not be sanctioned because Qualcomm asserted the privilege, and Qualcomm has been sanctioned enough already, so that no further action is needed. At the end of the day, I don't think that is a very appealing position.
Apart from the fate of some lawyers whose involvement in the case was truly insubstantial, as to whom Judge Major's lack of questions signaled no need to worry, it is hard to predict what will happen. Whatever does happen, though, we can be confident that it will be the product of a great deal of study by an excellent judge, assisted with first-rate presentations by counsel.
DM