III. THE RESPONDING ATTORNEYS ARE CONSTRAINED BY THE DUTY OF CONFIDENTIALITY AND THE ATTORNEY-CLIENT PRIVILEGE
In considering the Responding Attorneys‘ Declarations, the Court should recognize the unique dilemma faced by lawyers who are called to explain how they conducted themselves in the course of representing a client. Here, despite repeated requests, QUALCOMM has declined to waive its privilege. Zeldin Dec., ¶ 2. Accordingly, the rules constraining the Responding Attorneys are discussed below.
A. California Law Requires Attorneys to Comply With the Client’s Assertion of Privilege Even When Threatened with Sanctions
This Court’s Local Rules provide that attorneys must “comply with the standards of professional conduct required of members of the State Bar of California….” S.D. Cal. R. 83.4(b). Those standards not only require attorneys to maintain the attorney-client privilege, but also impose a strict duty of confidentiality. The State Bar Act requires attorneys to “maintain inviolate the confidence, and at every peril to himself or herself to preserve the secrets, of his or her client.” Cal. Bus. & Prof Code §6068(e)(1). Similarly, California Rule of Professional Conduct 3-100(A) provides that an attorney “shall not reveal information protected from disclosure by Business and Professions Code section 6068, subdivision (e)(1) without the informed consent of the client …. (Notice of Lodgment (“NOL “). Ex. 1.).
California defines client confidentiality to encompass “all information gained in the professional relationship that the client has requested be kept secret or the disclosure of which would likely be harmful or embarrassing to the client.” State Bar of Cal. Formal Op. 2003-161, at 9 (NOL, Ex. 2); State Bar of Cal. Formal Op. 2003-163, at 2 (confidential information is “information that the lawyer gains as a result of the professional relationship and which the client has requested to be kept confidential or the disclosure of which would be embarrassing or would likely be detrimental to the client”) (NOL. Ex. 3); Dixon v. State Bar, 32 Cal. 3d 728, 739 (1982) (disclosing “a sensitive and confidential allegation that [the attorney] knew would be embarrassing to the honor of his client… violated the sanctity of the confidential relationship existing between attorney and client”). “Section 6068(e) has been rigidly adhered to by California courts, and its command has been given liberal application.” Los Angeles County Bar Ass’n Formal Op. No. 386 (1980) (NOL, Ex. 4.).
The State Bar has issued a formal opinion that provides specific guidance to California attorneys who are faced with a sanctions motion. State Bar of Cal. Formal Op. 1997-151 (1997). (NOL, Ex. 5.) In that opinion, the State Bar has emphasized that an attorney has a continuing duty to maintain client confidentiality, even if doing so prevents the attorney from presenting a defense against sanctions. “If Attorney’s defense to the motion [for sanctions] involves the disclosure of such [confidential information] and Client does not consent to its disclosure, Attorney cannot disclose the information.” State Bar of Cal. Formal Op. 1997-151 (1997) (emphasis added). (NOL, Ex. 5.)
The Responding Attorneys recognize the seriousness of the Court’s inquiry. But even the threat of dire sanctions outlined in the OSC does not release the Responding Attorneys from their duties, under the authorities discussed above. QUALCOMM alone holds the privilege, and QUALCOMM has not waived it. The Responding Attorneys have concluded that they may not unilaterally ignore their duties in this regard, and may not disclose attorney-client privileged information absent a ruling from this Court that such information may be disclosed in this proceeding.6
B. The Court Has Ruled That the Self-Defense Exception to the Attorney-Client Privilege Does Not Apply but That the Attorneys May Introduce Evidence Which Would Be Protected Under the Work Product Doctrine
On September 28, 2007, the Court denied the Heller Attorneys‘ motion (joined in by the Responding Attorneys) for an order that the self-defense exception applies. At the same time, the Court ruled that the work product protection belongs to the attorney, not the client, so that disclosing work product in the Responding Attorneys‘ Declarations “does not violate the attorneys‘ ethical duties and professional responsibilities under Rule 3-100 of the California Rules of Professional Conduct, Section 6068 of the California Business and Professions Code or other applicable regulations.” Order Denying Motion for an Order Determining That Federal Common Law Self-Defense Exception to Disclosing Privileged and/or Confidential Information Applies. 2-3. Based on these rulings, the Responding Attorneys are constrained from revealing confidential communications that would be helpful in demonstrating the honesty and reasonableness of their conduct, but they have presented the Court with as much evidence as possible to respond to the OSC.
C. The Responding Attorneys Should Not Be Sanctioned For Conduct Or Events They Cannot Fully Explain Due To Their Duty Of Confidentiality
1. Sanctioning Individual Attorneys Who Are Legally Constrained From Responding Fully To The OSC Would Violate Due Process
Imposing liability or other adverse consequences on an attorney who cannot respond to allegations of misconduct because of the duty of confidentiality would violate due process. In recognition of this fundamental principle of fairness, California courts have held that civil suits against an attorney must be dismissed if the attorney cannot respond due to confidentiality. The same reasoning applies a fortiori to a threat of serious sanctions that could impact their careers.
In McDermott, Will & Emery v. Superior Court, 83 Cal. App. 4th 378, 385 (2000), shareholders of Memorial Healthcare Systems contended that the company’s outside counsel had committed malpractice in connection with a merger. The shareholders brought a derivative claim on behalf of Memorial against the lawyers. The Court noted that the shareholders lacked standing to waive the attorney-client privilege because “the corporation, and not the shareholder… is the holder of the privilege.” Id. at 383. Because the corporation had not waived its privilege, the Court found that it would be unfair to the defendant lawyers to permit the suit to go forward:
[S]uch a lawsuit against the corporation’s outside counsel has the dangerous potential for robbing the attorney defendant of the only means he or she may have to mount any meaningful defense. It effectively places the defendant attorney in the untenable position of having to ‘preserve the attorney client privilege (the client having done nothing to waive the privilege) while trying to show that his representation of the client was not negligent.’ (Id. at 384 (quoting Kracht, 219 Cal. App. 3d at 1024))
The Court explained that even involuntary assignment of a legal malpractice claim is barred because the assignee cannot waive confidentiality that belongs to the assignor: “We simply cannot conceive how an attorney is to mount a defense in … [an] action alleging a breach of duty to the corporate client, where, by the very nature of such action, the attorney is foreclosed, in the absence of any waiver by the corporation, of disclosing the very communications which are alleged to constitute a breach of that duty.” Id. at 385. See also Kroll & Tract v. Paris & Paris, 72 Cal. App. 4th 1537, 1544 (1999) (law firm sued for malpractice could not cross-claim against client’s other counsel who could not reveal attorney-client communications to defend himself). A similar issue arose in Solin v. O’Melveny & Myers, 89 Cal. App. 4th 451, 466 (2001).
The plaintiff, Solin, was an attorney. He consulted with another attorney, Cohen at O’Melveny, concerning a fee dispute with one of Solin’s clients, Reich. Solin disclosed privileged information about Reich to Cohen. Solin later sued Cohen for malpractice. Cohen responded that his defense would require him to disclose Solin’s confidential communications with Reich, and Reich objected to any such disclosure. The Court held that Solin’s lawsuit could not go forward because it would be “fundamentally unfair” to require Cohen to defend himself while hobbled by the privilege. “Simple notions of due process counsel against such a procedure.” Id. at 463.
Here, the Responding Attorneys‘ Declarations demonstrate that the attorney-client privilege prevents those individuals most closely involved in the discovery and other proceedings at issue from fully responding to the ultimate question — why the documents found after trial were not produced during discovery. In such a circumstance, due process and fundamental fairness prevent the imposition of sanctions on the Responding Attorneys because they would have to reveal attorney-client communications to fully defend themselves.
2. The Court Should Not Draw Inferences Against The Responding Attorneys Based On QUALCOMM’s Assertion Of Its Privilege
The Responding Attorneys do not intend to cast aspersions by noting QUALCOMM’s assertion of privilege. QUALCOMM has a right to assert privilege, and QUALCOMM’s ongoing legal disputes with Broadcom give ample reason to do so. Under Knorr-Bremse Systeme Fuer Nutzfahrzeuge GmbH v. Dana Corp., 383 F.3d 1337, 1344 (Fed. Cir. 2004), “no adverse inference shall arise from invocation of the attorney-client .. privilege”; see also Nabisco, Inc. v. PF Brands, Inc., 191 F.3d 208, 226 (2d Cir. 1999) (abrogated on other grounds in Moseley v. V Secret Catalogue, Inc. 537 U.S. 418 (2003)) (stating “we know of no precedent supporting such an [adverse] inference based on the invocation of the attorney-client privilege. This privilege is designed to encourage persons to seek legal advice, and lawyers to give candid advice, all without adverse effect”). More importantly, the Court cannot draw inferences against the Responding Attorneys for respecting QUALCOMM’s assertion of its privilege, as the Responding Attorneys are required to do.
In this matter, the Court has acknowledged the rule against adverse inferences but stated that it will not draw inferences in favor of QUALCOMM based on QUALCOMM’s assertion of privilege. Ex. Zeldin-9 (7/26/07 Transcript 174:11-18). The Responding Attorneys, however, do not control the privilege. See In re Vargas, 723 F.2d 1461, 1466 (10th Cir. 1983) (“an attorney cannot waive the attorney-client privilege without the client’s consent”). Accordingly, the Court should apply to these individuals the usual presumption that attorneys, as officers of the Court, are deemed to act ethically unless the contrary is proven. Geders v. United States, 425 U.S. 80, 93 (1976) (Marshall, J., concurring) (“If our adversary system is to function according to design, we must assume that an attorney will observe his responsibilities to the legal system, as well as to his client”); Eaton v. Siemens, 2007 U.S. Dist. LEXIS 58621 *22 (E.D. Cal. Aug. 10, 2007) (“This court properly assumes that lawyers behave ethically.”) (citing DCH Health Servs. Corp. v. Waite, 95 Cal. App. 4th 829, 834 (2002) (“[T]he court should start with the presumption that, unless proven otherwise, lawyers will behave in an ethical manner.”)).