While press coverage of the Federal Trade Commission’s antitrust case against Qualcomm Inc. has focused on U.S. District Judge Lucy Koh’s May 21, 2019 ruling that Qualcomm used unlawful tactics in an attempt monopolize the smartphone chip market and must renegotiate its licensing agreements at reasonable prices, the role of documents in the bench trial was also noteworthy. We see at least two takeaways from the trial related to eDiscovery.
First, for a case that involved massive amounts of document discovery—or, more accurately, eDiscovery—the parties presented a dramatically small number of documents into evidence at trial. Providing a hint of the scale of eDiscovery in the case, a status report in February revealed that Apple Inc., a non-party in the case, had produced more than 3.9 million documents, totaling over 34 million pages in response to Qualcomm’s third-party subpoenas. Qualcomm’s productions were likely also very large. Yet, at trial, Qualcomm introduced only sixteen of its own documents, while the FTC introduced 125 Qualcomm documents, excluding licenses and agreements.
The tremendous disparity between the number of documents produced in discovery and the number presented at trial in the case is striking. Of course, it is fairly common to have a large discrepancy between the number of documents produced in discovery and the number presented at trial. Yet, we doubt the discrepancy often reaches such orders of magnitude.
It certainly raises questions about proportionality and whether courts and parties are using it effectively since its introduction into the scope of discovery in the 2015 amendment to Federal Rule of Civil Procedure 26(b)(1). If the trial was determined on the basis of so few documents, narrowly targeted to address the issues in dispute, why wasn’t discovery similarly focused?
Rule 26(b)(1) provides that discovery must be “proportional to the needs of the case.” Here, the needs of the case, as demonstrated by the number of documents presented at trial, were very limited. Two of the proportionality factors set forth in Rule 26(b)(1) presumably would have been applicable: “the importance of the discovery in resolving in the issues” and “whether the burden or expense of the discovery outweighs its benefit.” Judging by the small number of documents admitted into evidence, a lot of unimportant (yet highly expensive) document discovery occurred in the case.
In a recent article entitled “Application of the New ‘Proportionality’ Discovery Rule in Class Actions: Much Ado About Nothing” in the Vanderbilt Law Review, Prof. Robert Klonoff examined every published judicial opinion between December 1, 2015 and April 30, 2018 that applied the proportionality rule in the class action context. His conclusion: the amendment has had “little impact,” at least in the class action context. Notably, the article also states that “as with many pre-Amendment cases, the outcomes in many cases can be explained by ineffective lawyering.”
As one might expect in a case where the stakes are so high, Qualcomm was represented—not doubt very ably—by several of the most prestigious law firms in the country. And Qualcomm likely viewed the FTC antitrust case against it as another front in its war with Apple, which separately sued to get out from paying Qualcomm’s heightened royalties for using its technology, leading to the voluminous discovery it obtained from Apple as a third party in the FTC case. Yet, one must question how well our discovery system is being used when tens of millions of pages of documents are produced and only 142 documents are presented at trial.
Our second eDiscovery takeaway from the Qualcomm trial pertains to the weight given documents when juxtaposed against inconsistent testimony. Faced with discrepancies between testimony at trial and documents introduced into evidence, Judge Koh chose to believe the documents.
Throughout the 233-page decision, Judge Koh gave more weight to the documents than to witnesses’ testimony, and pointed out inconsistencies between them. Many times, according to the decision, Qualcomm’s witnesses neither rebutted nor responded to the evidence in its own documents. Judge Koh also noted that most of Qualcomm’s experts did not review the company’s documents. Finding that many of Qualcomm’s witnesses lacked credibility, Judge Koh concluded that much of the testimony offered by Qualcomm at trial should be disregarded.
The lessons learned: One, parties and courts need to do more to ensure that the proportionality amendment to Rule 26(b)(1) is not “much ado about nothing.” Requiring parties—and non-parties—to produce millions of documents when less than two hundred are presented at trial reflects a failure of our civil discovery process. Parties should make proportionality arguments, citing cases like this one as examples, that discovery should focus more quickly on the documents that will ultimately matter. Two, documents are important. Knowing what meaningful information is in them—even when they number in the millions—and framing your trial strategy around that information is critical.
These are two very good reasons to make sure that your eDiscovery strategy is coordinated with your trial strategy from the start of the case through its culmination at trial.