Let’s Be Reasonable About It: Defining the Reasonable Inquiry in an Age of Disaggregation

Molly Crane[*]

Introduction

By signing a discovery request, response, or objection, an attorney certifies that he or she has conducted a reasonable inquiry and concluded that the document is consistent with existing laws and the Federal Rules of Civil Procedure, is not imposed for an improper purpose, and is neither unreasonable nor unduly burdensome or expensive.[1] Pursuant to Rule 26(g), sanctions for improper certifications are mandatory absent substantial justification.[2] The complex nature of discovery in today’s electronic world creates new issues for the courts in determining whether a signatory to a discovery document has conducted a reasonable inquiry. Though the modern discovery process has long been a collective effort of the client, attorneys, and support staff, e-discovery is significantly more disaggregated and is carried out by multi-component teams consisting of various counsel, the client, consultants, and e-vendors.[3] Increasingly, the courts must grapple with the issue of which attorneys to sanction when a discovery request, response, or objection violates Rule 26(g) and where multiple national, regional, and local counsel have all participated in the discovery process.

Part I of this Note will discuss the development of Rule 26(g). Part II will analyze the trend in disaggregation of legal representation and the unique challenges disaggregation in the age of electronic discovery presents. Parts III and IV will address the lack of guidance regarding what constitutes a reasonable inquiry for an attorney signing discovery documents prepared by others and the consequences that flow therefrom. Finally, Part V proposes several steps that signing attorneys should undertake in order to insulate themselves from sanctions.

  1. The Evolution of Rule 26(g)

Rule 26 requires that at least one attorney of record sign all discovery responses.[4] The signature indicates that “to the best of the person’s knowledge, information and belief formed after a reasonable inquiry,”[5] the request, response, or objection (1) is consistent with the Federal Rules of Civil Procedure and existing law or is a nonfrivolous argument for extending, modifying, or reversing existing law or establishing new law;[6] (2) has not been interposed for any improper purpose;[7] and (3) the response is not unreasonable nor unduly burdensome or expensive considering the needs of the case, prior discovery, the amount in controversy, and importance of the issue at stake.[8] Improper certifications made “without substantial justification” must be sanctioned.[9]

  1. The Demand for Greater Judicial Control

Rule 26(g) was adopted to encourage greater judicial control over discovery abuses.[10] In the years leading up to the adoption of Rule 26(g), members of the bench and bar observed that judicial oversight of discovery was lacking.[11] Before 26(g) was adopted, the Supreme Court opined that “the extent of [discovery] abuse has been of increasing concern.”[12] A task force charged with investigating causes of popular dissatisfaction within the justice system warned that the bench and bar “should accord a high priority to the problem of [discovery] abuses in the use of pretrial procedures.”[13] In response, the Advisory Committee adopted 26(g) in 1983 as a “deterrent to both excessive discovery and evasion . . . [by obligating] each attorney to stop and think about the legitimacy of a discovery request, a response thereto, or an objection.”[14]

Significantly, Rule 26 mandates the imposition of sanctions for violations without substantial justification while sanctions for violations related to other pleadings and written motions are discretionary.[15] Pleadings and motions separate from discovery are governed by Rule 11.[16] Rule 26 largely mirrors Rule 11 in that both rules require that the signing attorney conduct a reasonable inquiry to ensure submitted documents are warranted by existing law[17] and are not being submitted for the improper purposes of harassment, causing unnecessary delay, or needlessly increasing the cost of litigation.[18] However, unlike Rule 11, which dictates that the court “may impose an appropriate sanction” for a violation of the rule,[19] Rule 26(g) states that “if a certification violates this rule without substantial justification, the court . . . must impose an appropriate sanction on the signer . . . .”[20] The mandatory imposition of sanctions underscores the Advisory Committee’s perceived need for greater judicial control over discovery abuses.[21]

While sanctions under 26(g) are mandatory, courts have great leeway in fashioning an appropriate sanction.[22] The goal of sanctions is “not merely to penalize those whose conduct may be deemed to warrant such sanctions but to deter those who might be tempted to such conduct in the absence of such a deterrent.”[23] Rule 26 explicitly provides that a sanction may include “an order to pay the reasonable expenses, including attorney’s fees, caused by the violation.”[24] However, courts may (and often do) impose sanctions not expressly stated in the rule itself. Sanctions may be as limited as requiring an attorney to write an article in local bar journals describing the sanctioned conduct[25] or as serious as referring attorneys to the state bar association for particularly egregious misconduct.[26]

  1. The Reasonable Inquiry

Though signing a discovery response without conducting a reasonable inquiry will subject the signing attorney to sanctions, it is unclear what steps signing counsel should take to demonstrate that they have conducted a reasonable inquiry. The “duty to make a ‘reasonable inquiry’ is satisfied if the investigation undertaken by the attorney and the conclusions drawn therefrom are reasonable under the circumstances.”[27] Whether an attorney’s inquiry is reasonable is an objective standard similar to the standard imposed by Rule 11.[28] The signature does not certify the “truthfulness of the client’s factual responses to a discovery request,” but that the “lawyer has made a reasonable effort to assure that the client has provided all [responsive] information and documents. . . .”[29] Counsel may also rely on communications with other counsel in the case “as long as that reliance is appropriate.”[30] However, ultimately, the committee note concedes that the appropriateness of an attorney’s relying upon assertions made by the client and other counsel “is a matter for the court to decide on the totality of the circumstances.”[31] Unlike the comment to Rule 11, the committee note does not even suggest a list of factors judges should consider in determining whether an attorney has made a reasonable inquiry.[32]

The courts have similarly failed to provide concrete guidance as to what constitutes a reasonable inquiry. Some courts have stated that relevant circumstances in determining whether an attorney has conducted a reasonable inquiry include “the number and complexity of the issues,” “the location, nature, number and availability of potentially relevant witnesses or documents,” “the extent of past working relationships between the attorney and the client,” and “the time available to conduct an investigation.”[33] However, only a limited number of courts have explicitly utilized these criteria.[34] Instead, courts have adopted an ad hoc approach[35] in determining when an attorney has failed to conduct a reasonable inquiry reminiscent of Justice Stewart’s infamous “I know it when I see it” approach to identifying obscenity.[36]

  1. Disaggregation of Counsel & The Complexities of E-discovery

The definition of the reasonable inquiry has become particularly important given the trend in disaggregation of legal services. Disaggregation refers to the “breaking up” or “parceling out” of legal representation to an appropriate service provider.[37] Strategic partnering between in-house and outside counsel has been a prominent feature of legal representation since 1992 when the Dupont Legal Model was unveiled.[38] However, disaggregation has greatly accelerated to the point where counsel may be represented by multiple law firms and teams of counsel, who, in addition to coordinating with each other, must also coordinate with litigation support staff and electronic discovery vendors.[39]

In large, multi-jurisdiction cases, companies may retain national, regional, and local representation, in addition to in-house counsel participation.[40] Additionally, due to recent economic trends, companies may hire multiple national or local law firms for different tasks within a particular matter. For example, one national law firm might be in charge of planning and taking depositions while another national law firm heads the discovery team. While in-house counsel may assist outside counsel by providing expertise regarding the company’s policies and personnel,[41] national[42] (and sometimes regional)[43] counsel will coordinate a single litigation strategy, including assuming the responsibility for responding to discovery requests and interrogatories.[44] Clients may also be represented by local counsel.[45] Local counsel is primarily responsible for instituting the national strategy at the local trial level.[46] Hiring local counsel for the trial is advantageous as local counsel often possesses expertise on local laws and practice and will usually be more familiar with local judges, juries, and opposing counsel.[47] Local counsel may also be retained to comply with local rules requiring an attorney associated with the bar in that jurisdiction to file papers in court.[48]

Smaller litigation cases may also involve a division of responsibilities between main or out of state and trial or local counsel. Though clients involved in smaller litigation matters may hire local counsel for the same strategic reasons that clients involved in multi-jurisdictional cases retain local counsel, clients frequently retain local counsel in small matters as “mail drop” counsel who function solely as a conduit for pro hac vice counsel in jurisdictions that require a member of the local bar sign all papers presented to the court.[49]

Though diffusion of responsibility within multi-component legal teams in the paper world created many obstacles to signing counsel’s review of other counsel’s discovery efforts, the unique nature of electronic records has further compounded those obstacles.[50] The volume of paper discovery pales in comparison to the billions of electronic records that may need to be searched.[51] Companies may have key information not only in their primary electronic storage servers, but also on personal and company-issued laptops, e-mail systems, external hard drives, and other information systems.[52] The character of Electronically Stored Information (ESI) is also far more complex than paper documents and includes not only the information visible on screen, but also the metadata embedded within.[53] Moreover, ESI is often designed to be routinely overwritten.[54] Finally, the systems that read ESI are often unique to the companies producing them and do not lend themselves to readability by other systems.[55] Though parties were significantly burdened by excessive discovery requests and evasive discovery responses before electronic discovery, the “burden has rise[n] significantly in discovery of electronically stored information.”[56]

  1. Inconsistent Judicial Approaches to Sanctions[57]

Courts have traditionally addressed the diffusion of discovery responsibility in legal representation in the context of the supervisor-subordinate relationship or attorney-client relationship. Both the courts and the Model Rules of Professional Conduct (“Model Rules”) dictate that a lawyer who delegates discovery matters to a subordinate has a duty to ensure that the subordinate abides by the discovery rules.[58] Similarly, in the attorney-client relationship, attorneys must inquire into whether the client is adequately complying with the rules of discovery.[59] However, the signing counsel-main counsel relationship does not fit into the same model as the supervisor-subordinate or attorney-client relationship.[60]

In allocating sanctions among different attorneys, some courts emphasize signing counsel’s involvement in the preparation of the offending document.[61] In St. Paul Reinsurance Co. v. Commercial Financial Corp.,[62] the District Court for the Northern District of Iowa did not sanction local counsel for signing “obstructionist” discovery objections.[63] Local counsel had an “equal obligation to prevent the assertion” of such objections.[64] However, the court sanctioned out of state counsel alone because he was the “principal signer and sole drafter of the discovery responses,” suggesting an emphasis on involvement in allocating sanctions.[65] Similarly, in Itel Containers International Corp.v. Puerto Rico Marine Management, Inc.,[66] the District Court for the District of New Jersey sanctioned both out of state and local counsel for intentionally withholding knowledge that the court lacked jurisdiction as part of a strategy to prolong litigation.[67] Though a Washington D.C. based firm primarily conceived of the strategy, local New Jersey counsel, who was retained due to New Jersey’s rule that out of state counsel must associate with a member of the New Jersey bar, was also sanctioned because “he joined in and effectuated the strategy [making] his firm liable for sanctions penalties to the same extent as [] the Washington lawyers.”[68]

Other courts hold that signing counsel’s lack of involvement in preparing the document he or she signs will not excuse him or her from sanctions where the attorney fails to conduct a reasonable inquiry.[69] In Coburn Optical Industries v. Cilco Inc.,[70] a North Carolina district court sanctioned both local and out of state counsel for failing to make a reasonable inquiry into the facts before filing a motion and for failing to reevaluate their position once newly discovered facts rendered their position untenable. [71] The court sanctioned local counsel who signed the offending motion because though the motion had largely been prepared by out of state counsel, local counsel did not satisfy its obligations to make a reasonable inquiry by “blindly . . . follow[ing] the commands of its out of state associates.”[72] Local counsel was “no doubt far less culpable than out of state counsel.”[73] Nonetheless, he could not “disclaim all responsibility for a paper bearing his name.”[74] Similarly, in Kipperman v. Onex Corp.,[75] the District Court for the Northern District of Georgia held that both local and main counsel were responsible for misrepresenting their knowledge of their client’s use of e-mail.[76] The judge recognized that because the legal team chose local counsel to argue the e-mail portion of the case, the attorney with the “least personal knowledge” about the workings of the companies in litigation, local counsel might not have discussed e-mail-usage with the client.[77] Nonetheless, the district judge stated local counsel “was responsible for being familiar with the state of the record” and that “his co-counsel were responsible for ensuring that he made no misrepresentations to the court or for correcting any made.”[78]

The recent decision in Qualcomm Inc. v. BroadcomCorp.[79] exemplifies the difficulty in assigning responsibility for the purposes of apportioning sanctions when discovery is carried out by disaggregated teams of counsel. Qualcomm sued Broadcom for infringing on Qualcomm’s video coding patents.[80] In response, Broadcom filed counterclaims alleging that Qualcomm’s patents were unenforceable because Qualcomm was a member of the Joint Video Team (JVT), the organization which created the H.264 video coding standard at issue.[81] All participants in the JVT were required to identify patents reasonably essential to the practice of the H.264 standard and to license them royalty-free or under non-discriminatory, reasonable terms.[82] If Broadcom could prove that Qualcomm participated in the JVT during the creation of the H.264 standard, Qualcomm’s patents would be unenforceable.[83]

After the initial trial, a magistrate judge, Judge Major, addressed Broadcom’s motion for sanctions regarding Qualcomm’s failure to produce tens of thousands of responsive documents during the trial.[84] Judge Major sanctioned several attorneys representing Qualcomm for ignoring evidence that Qualcomm’s document search and production were inadequate.[85] Qualcomm was represented by attorneys from the firms of Day Casebeer Madrid & Batchelder and Heller Ehrman LLP. However, the court did not impose sanctions pursuant to a strict interpretation of Rule 26(g). Under Rule 26(g), only the attorney who filed the false discovery responses would be subject to sanctions.[86]

Instead, the court sanctioned Day Casebeer attorneys Kevin Leung, Christopher Mammen, and James Batchelder, for failing to include fundamental terms in their document searches or search the computers of the Qualcomm employees most knowledgeable about the JVT as part of their reasonable inquiry into the sufficiency of the discovery responses.[87] The court also found that Mammen and fellow Day Casebeer attorneys Lee Patch and Adam Bier failed to conduct a reasonable inquiry when they did not renew their search for further responsive documents after discovering twenty-one e-mails relating to the JVT on a Qualcomm employee’s computer, despite Qualcomm assertions that such e-mails did not exist.[88] Finally, Patch, Batchelder, and Heller Ehrman attorney Stanley Young were sanctioned for failing to conduct a reasonable inquiry into Qualcomm’s discovery production before making factual and legal arguments to the court.[89] Young failed to investigate Qualcomm’s assertions that no e-mails were sent to employees regarding the JVT and that Qualcomm did not participate in the JVT before certifying such to the court.[90] Though Young certified the statements regarding the e-mails and Qualcomm’s involvement, Patch and Batchelder were also held responsible. Patch was “an integral part of the trial team familiar with Qualcomm’s arguments” and failed not only to produce the twenty-one responsive e-mails once he learned of them, but misled the court by arguing the e-mails were not responsive.[91] As lead attorney, Batchelder was “most familiar with Qualcomm’s important arguments and witnesses” and reviewed all of the pleadings asserting that Qualcomm had not participated in the JVT. Moreover, he failed to take action upon learning of the twenty-one responsive e-mails.[92]