Apple Urges Sanctions Against Quinn Emanuel Lawyers in Chip Suit

Apple Inc. told a federal judge that Quinn Emanuel Urquhart & Sullivan LLP and individual attorneys should be sanctioned for failing to act on “the most consequential email you can get from a client” during a Wednesday hearing in its trade secrets lawsuit against chip startup Rivos Inc.

Quinn Emanuel countered that Apple is exaggerating the events surrounding defendant Wen Shih-Chieh’s deletion of a folder containing confidential Apple documents and argued the tech giant failed to prove that electronically stored information has been lost or can’t be replaced through alternate discovery. Magistrate Judge Nathanael Cousins of the US District Court of the Northern District of California said he will issue a recommendation on the motion for sanctions at a later date.

One of the attorneys at risk of sanctions is former Quinn Emanuel partner Stephen A. Swedlow, who left the firm last year after winning a seat as a judge in Illinois’ Cook County.

Apple sued Rivos and former employees in April 2022, alleging that Rivos poached its engineers to steal trade secrets used to develop its chip design. Apple moved for sanctions against the defendants and attorneys in April.

Shih-Chieh deleted a zip file containing confidential Apple documents including code and modeling of hardware components a month after the lawsuit was filed, according to the motion. He said he transferred a new copy of the zip file back to his Rivos-issued laptop and told Quinn Emanuel counsel immediately after.

Quinn Emanuel knowingly submitted a false declaration from Shih-Chieh claiming he hadn’t accessed, used, transferred, or copied any Apple information since leaving, Mary Prendergast of Morrison & Foerster LLP said, arguing on behalf of Apple.

Apple had to wait 10 months to discover this information, Prendergast said, calling the delay “extremely prejudicial.” She added, “And all that time counsel was saying, ‘We are being transparent,’ ‘We’re being forthcoming.’”

“That wasn’t true,” Prendergast said. “It took 10 months of millions of dollars of expense to get any discovery out of Rivos.”

Ryan Landes of Quinn Emanuel focused on the fact that Shih-Chieh restored the deleted file. Apple’s focus on the potential loss of metadata—which includes whether a file was opened or not—fails to acknowledge that “even if there was evidence of usage, even if the metadata that Apple says was lost, even if that existed in the first place and was lost, it could be replaced from other sources.”

He added that if Shih-Chieh was “acting with an intent to deprive Apple of evidence,” his way of doing so was “frankly completely nonsensical.”

“He didn’t throw his laptop to the bottom of a river. He didn’t just format it. He didn’t use evidence-wiping software. He deleted a file” and put it right back, Landes said.

Addressing Shih-Chieh’s email to counsel disclosing the deleted folder, Swedlow emphatically said they “believed in good faith that he moved a file and moved it back.”

“So to say that the cumulative information leads to individual and personal sanctions without identifying anything beyond this email, I don’t think Apple meets its burden,” Swedlow added.

In her rebuttal, Prendergast characterized Shih-Chieh’s email as “maybe the most consequential email you can get from a client.” For a lawyer to just take him at his word and do nothing is sanctionable, she said.

The court denied Rivos’ motion to dismiss trade secrets and breach of contract claims earlier this month, and Apple filed a third amended complaint on Tuesday.

In addition to sanctions, Apple is seeking an adverse inference for spoilation and fees related to its motion to compel Shih-Chieh and motion for sanctions.

The case is Apple Inc. v. Rivos Inc., N.D. Cal., No. 22-cv-02637, hearing 8/30/23.