case3:07-md-01827-si document6820 filed09/21/12 page1 of 32

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Michael P. Kenny ([email protected]) Debra D. Bernstein ([email protected]) Rodney J. Ganske ([email protected]) ALSTON + BIRD LLP 1201 West Peachtree Street Atlanta, Georgia 30309-3424 Telephone: (404) 881-7000 Facsimile: (404) 881-7777

Douglas R. Young ([email protected]) FARELLA BRAUN + MARTEL LLP 235 Montgomery Street San Francisco, California 94104 Telephone: (415) 954-4410 Facsimile: (415) 954-4480 Attorneys for Plaintiffs Dell Inc. and Dell Products L.P.

[Additional Counsel Listed On Signature Page]

UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

(SAN FRANCISCO DIVISION)

IN RE: TFT-LCD (FLAT PANEL) ANTITRUST LITIGATION

DELL INC. and DELL PRODUCTS L.P.,

Plaintiffs,

v.

AU OPTRONICS CORP., et al.,

Defendants.

MASTER CASE NO. 3:07-md-1827 SI, MQ MDL NO. 1827

Individual Case No. 3:10-cv-01064 SI

PLAINTIFFS DELL INC. AND DELL PRODUCTS L.P.'S NOTICE OF MOTION AND MOTION FOR SANCTIONS

Date: November 16, 2012 Time: 9:00 a.m. Place: Courtroom 10, 19th Floor Judge: Honorable Susan Illston

DELL'S MOTION FOR SANCTIONS Master File No. M07-1827 SI 3:10-cv-01064 SI

Case3:07-md-01827-SI Document6820 Filed09/21/12 Page1 of 32

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TABLE OF CONTENTS

Page(s)

I. INTRODUCTION 1

II. STATEMENT OF FACTS 3

A. Eric Korman and Dell Depositions Within the Discovery Period 3

B. Mr. Korman's Deposition Subpoena 3

C. The Special Master Grants Dell a Protective Order 4

D. This Court Overrules the Protective Order 5

E. The Joint Defense Group Demands that the December Subpoena Be Enforced ..... 6

F. Evidence of a Fraud on the Court 7

G. Misleading and False Representations in the Briefing 13

H. Additional Misrepresentations Regarding Payments to Korman's Charities Come

to Light for First Time in AUO Sentencing Process 17

III. LEGAL ARGUMENT 18

A. This Court Has Ample Authority To Sanction Defendants In This Case 18

B. Sanctions Are Required In This Case 20

IV. CONCLUSION 24

DELL'S MOTION FOR SANCTIONS Master File No. M07-1827 SI 3:10-ev-01064 SI


TABLE OF AUTHORITIES

CASES

Anheuser—Busch, Inc. v. Natural Beverage Distrib.,

Page(s)

69 F.3d 337 (9th Cir. 1995) 23

Chambers v. NASCO, Inc.,

501 U.S. 32 (1991) 19

Combs v. Rockwell Int '1. Corp.,

927 F.2d 486 (9th Cir. 1991) 23

Dahl v. City of Huntington Beach,

84 F.3d 363 (9th Cir. 1996) 18

Edwards v. Gen. Motors Corp.,

153 F.3d 242 (9th Cir. 1998) 24

Erickson v. Newmar Corp.,

87 F.3d 298 (9th Cir. 1996) 18, 19, 20

F.J. Hanshaw Enters. v. Emerald River Dev., Inc.,

244 F.3d 1128 (9th Cir. 2001) 20

Fink v. Gomez,

239 F.3d 989 (9th Cir. 2001) 18

Franco v. Dow Chem. Co. (In re Girard°,

611 F.3d 1027 (9th Cir. 2010) 23

Gas—A—Tron of Ariz. v. Union Oil Co. of Cal.,

534 F.2d 1322 (9th Cir. 1976) 18

Mark Indus., Ltd. v. Sea Captain's Choice, Inc.,

50 F.3d 730 (9th Cir. 1995) 19

Oliner v. Kontrabecki (In re Cent. European Indus. Dev. Co.),

No. 02-30421, 2009 WL 779807 (Bankr. N.D. Cal. Jan. 14, 2009) 22


ii


Roadway Express, Inc. v. Piper,

447 U.S. 752 (1980) 19

Roberts v. Heim,

184 B.R. 814 (N.D. Cal. 1995) 19

Trust Corp. of Mont. v. Piper Aircraft Corp.,

701 F.2d 85 (9th Cir. 1983) 19

Unigard Sec. Ins. Co. v. Lakewood Eng'g & Mfg. Corp.,

982 F.2d 363 (9th Cir. 1992) 19

United States v. Associated Convalescent Enters,. Inc.,

766 F.2d 1342 (9th Cir. 1985) 2, 19

Wages v. Internal Revenue Serv.,

915 F.2d 1230 (9th Cir. 1990) 18, 24

RULES

Cal. Rules of Professional Conduct, Rule 5-200 20

Civil L.R. 7-9 20

Civil L.R. 11-4 2

Civil L.R. 11-6 20

Civil L.R. 11-7 20

Fed. R. Civ. P. 11 18, 19

Fed. R. Civ. P. 60 20

Fed. R. Civ. P. 45 3

STATUTES

28 U.S.C. § 1927 18, 24

Cal. Bus. & Prof. Code § 6068(d) 2, 20


ill


NOTICE OF MOTION AND MOTION

TO ALL PARTIES AND THEIR COUNSEL OF RECORD:

PLEASE TAKE NOTICE that on November 16, 2012, at 9:00 a.m., or as soon thereafter as the

matter may be heard in the Courtroom of the Honorable Susan Illston, United States District Judge for

the Northern District of California, located at 450 Golden Gate Avenue, San Francisco, California,

Plaintiffs Dell Inc. and Dell Products L.P. (collectively, "Dell") will and hereby does move this Court

to enter an Order imposing sanctions on Defendants and their counsel.

The Motion is based on this Notice of Motion, the accompanying Memorandum of Law in

Support, the Declaration of Michael P. Kenny being submitted concurrently herewith and any exhibits

thereto, the argument of counsel, and all papers and records on file in this matter.

Respectfully submitted this 21st day of September, 2012.

DELL'S MOTION FOR SANCTIONS Master File No. M07-I827 SI 3:10-cv-01064 SI

iv


By: Michael P. Kenny, Esq. Debra D. Bernstein, Esq. Rodney J. Ganske, Esq. ALSTON + BIRD LLP 1201 West Peachtree Street Atlanta, Georgia 30309-3424 Telephone: (404) 881-7000 Facsimile: (404) 881-7777 [email protected] [email protected] [email protected]

Douglas R. Young FARELLA BRAUN + MARTEL LLP 235 Montgomery Street San Francisco, California 94104 Telephone: (415) 954-4410 Facsimile: (415) 954-4480 [email protected]

Kimball R. Anderson, Esq. WINSTON & STRAWN LLP 35 West Wacker Drive Chicago, Illinois 60601-9703 Telephone: (312) 558-5600 Facsimile: (312) 558-5700 [email protected]

Attorneys for Plaintiffs Dell Inc. and Dell Products L.P.


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v


tucka

Kenny

PRIOR RELEVANT ORDERS

Pursuant to this Court's Order of April 9, 2012 (Dkt. No. 5430), Dell respectfully submits that

the following prior orders are relevant to this Motion:

1. Special Master's Order Re Dell's Motion for Protective Order to Prohibit Defendants

from Deposing Eric Korman, December 27, 2011 (Dkt. No. 4430).

2. Order Allowing Deposition of Eric Korman (Dell), March 1, 2012 (Dkt. No. 4994).

3. Special Master's Order Re Defendants' Motion to Compel and Set Deposition of Eric

Korman, July 23, 2012 (Dkt. No. 6250).

4. Special Master's Order Regarding Individual Action Plaintiffs and Case Management,

March 12, 2010 (Dkt. No. 1595), modifying 113 of Special Master's Order regarding the Number of

Deposition, May 13, 2009 (Dkt. No. 983).

5. Special Master's Order regarding Dell's Emergency Motion to Stay the Deposition of

Eric Korman, August 17, 2012 (by email).


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I. INTRODUCTION

Plaintiffs Dell Inc. and Dell Products L.P. (collectively, "Dell") bring this motion for sanctions

because counsel for Defendant AU Optronics ("AUO"), who also acts as liaison counsel for the

Defendants adverse to Dell, perpetrated a fraud on this Court in order to obtain permission to depose

former Dell employee Eric Korman after the close of discovery and after reaching the court-ordered

limit on the number of depositions.1 Working closely with Mr. Korman as early as February 2010,

AUO counsel kept Mr. Korman under wraps as a potential witness for AUO. But, beginning on

December 16, 2011, AUO counsel (and counsel for the other Defendants) signed and submitted at least

six pleadings to the Special Master and this Court seeking to obtain Mr. Korman's deposition under

false pretenses and made additional statements at hearings before the Special Master — all of which

statements contained material misrepresentations of fact. In particular, despite being in regular contact

with Mr. Korman for years, Defense counsel told this Court that they had been unable to locate Mr.

Korman and that they had only recently realized Mr. Korman's supposed significance to their case.

Those statements were all false, and counsel knew it. The Court, however, was misled, and it

ordered the deposition of Mr. Korman to proceed. The Court was unaware, as was counsel for Dell,

that AUO and its counsel internally had identified Mr. Korman as a potential witness as early as

February 2010 and had regularly met with him, wined and dined him, and discussed litigation strategy

with him throughout 2010, 2011, and well into 2012; or that counsel for AUO had informed other

Defense counsel regarding their relationship with Mr. Korman at least in part by December 2011.

These facts were revealed only recently, after the Special Master ordered Defendants to produce their

communications with Mr. Korman and, in some instances, after Dell deposed Mr. Korman.

1 Counsel for Dell has put all Defense counsel on ample notice of this Motion. See, e.g., Ex. 1 (Dell's Mot. to Stay Korman Dep., 8/16/2012); Dkt. No. 6573 ¶11 10-12 (Ganske declaration stating Dell's intention to file sanctions motion); Dkt. No. 6615 at 3-5 (Dell's motion in opposition to unsealing Korman declaration discussing upcoming sanctions motion); Dkt. No. 6659 Tif (Ganske declaration stating Dell's intention to file sanctions motion);


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Attorneys, of course, are officers of the court. "As such, an attorney has a duty of good faith

and candor in dealing with the judiciary." United States v. Associated Convalescent Enters,. Inc., 766

F.2d 1342, 1346 (9th Cir. 1985). This Court's Local Rules and the California Professional Rules of

Conduct both reiterate the importance of candor in judicial proceedings. Civil Local Rule 11-4

provides that every attorney admitted to practice in the Northern District of California has a duty to

"comply with the standards of professional conduct required of members of the State Bar of California

. . . the Local Rules of this Court . . . [and to] [p]ractice with the honesty, care, and decorum required

for the fair and efficient administration of justice." Civil L.R. 11-4(a)(2) & 4(a)(4). Under California

law, an attorney may use only methods "as are consistent with truth, and never to seek to mislead the

judge or any judicial officer by an artifice or false statement of fact or law." Cal. Bus. & Prof. Code §

6068(d). "In presenting a matter to a tribunal, a member: (A) [s]hall employ, for the purpose of

maintaining the causes confided to the member such means only as are consistent with truth; [and] (B)

[s]hall not seek to mislead the judge, judicial officer, or jury by an artifice or false statement of fact or

law. . . ." Cal. R. of Prof 1. Conduct R. 5-200.

Counsel for the Defendants plainly violated their duty of candor to this Court. Severe

sanctions, therefore, are in order. Specifically, Dell requests that the Court: 1) bar the use of Mr.

Korman's testimony at trial, whether live, by deposition, or declaration; 2) strike Mr. Korman's

declaration and deposition testimony that have been submitted by Defendants in support of their

pending motion for partial summary judgment (Dkt. No. 5847); 3) strike each Defendant's statute of

limitations defense on the basis of fraudulent concealment and each Defendant's defense that Dell

could have mitigated its damages; 4) if Defendants attempt to rely on Mr. Korman in any way at trial,

instruct the jury regarding Mr. Korman's relationship with Defendants and the misrepresentations

made to the Court and Dell in an attempt to conceal that relationship; 5) order Defense counsel to

reimburse Dell for its reasonable attorney's fees incurred in bringing this motion and previous motions

related to Mr. Korman's deposition; 6) to the extent Dell's request to the Special Master for review of

Joint Defense communications related to Korman is not resolved, order that Defendants produce to the

Court and Dell all such communications; and 7) any other sanctions the court deems appropriate.


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II. STATEMENT OF FACTS

A. Eric Korman and Dell Depositions Within the Discovery Period

Eric Korman worked for Dell from 1997 to 2008. In June 2011, the Joint Defense Group2

contacted counsel for Dell concerning the potential depositions of several Dell-related witnesses,

including Mr. Korman. See Ex.3 3 (Dell's Mot. for Protective Order, 12/5/2011). Dell explained that it

was not authorized to accept service on behalf of Mr. Korman and two other former employees, and, in

compliance with the Special Master's February 17, 2010 deposition protocol, provided the Joint

Defense Group with the last known address for each of those witnesses. Id.; see also Dkt. No. 1546 at

5 (party "shall provide . . the date of departure and last known address of the former employee").

At that time, the Joint Defense Group did not pursue Mr. Korman's deposition. In total, over

the course of 2011, the Joint Defense Group raised 17 names of current and former employees with

Dell and eventually selected 12 witnesses to depose. All of those depositions were noticed and

scheduled in consultation with Dell, well in advance of the deposition date and the discovery deadline.

B. Mr. Korman's Deposition Subpoena

On November 30, 2011, in the middle of the whirlwind of Dell depositions,4 and six business

days before the close of years of discovery, the Joint Defense Group sent Dell a notice of a Rule 45

deposition subpoena for Mr. Korman, purporting to notice his deposition in Austin, Texas for

December 7, 2011. See Dkt. No. 4430 at 2 (Special Master's Order Re Dell's Mot. for Protective

Order to Prohibit Defs. from Deposing Eric Korman (Dec. 27, 2011)). The Joint Defense Group had

never discussed its intention to serve a subpoena on Mr. Korman with Dell, nor did it coordinate with

2 "Joint Defense Group" refers to current Defendants in Case 3:10-cv-01064 — Dell's individual case — and current and former counsel for those Defendants. Dell notes that it has settled with all Sharp entities, thus Sharp is not subject to this motion.

3 All references to "Ex." in this brief are to the Exhibits to the Declaration of Michael P. Kenny In Support of Dell's Motion for Sanctions ("Kenny Decl.") filed simultaneously herewith.

4 Between November 22, 2011 and December 6, 2011, the Joint Defense Group deposed six Dell witnesses in nine business days in Austin, Texas, and Palo Alto, California — witnesses Dell flew internationally, in many cases, to attend. Discovery closed December 8, 2011.


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Dell regarding scheduling of his deposition.5 The Joint Defense Group never mentioned to Dell its

intention to notice a late additional deposition, in excess of the 12-deposition limit in place in the case,

even though it had been in depositions with Dell for more than a week, and did not seek leave of Court

to take a 13th deposition. Id. at 3.

C. The Special Master Grants Dell a Protective Order

Dell filed a Motion for Protective Order because Defendants had not complied with this Court's

orders in attempting to depose Mr. Korman. See id. at 2-4. The Joint Defense Group responded with a

barrage of misrepresentations and false accusations against Dell. The Joint Defense Group accused

Dell of burying "the most relevant files in a 230,000—page production served toward the end of fact

discovery," Ex. 4 (Def.'s Letter to Special Master, 7/13/2012), neglecting to mention it did not even

ask for Mr. Korman as a deponent until June 2011 — 21 months after Dell received its first request for

documents in this matter, Ex. 5 (AUO's Sept. 2009 Doc. Subpoena to Dell), and only three months

before Dell's September 6, 2011 production of Mr. Korman's documents.

5 See Special Master's Order Regarding Individual Action Pls. and Case Management, Mar. 12, 2010 (Dkt. No. 1595), modifying ¶ 20 of Pretrial Order No. 5 re: Case Management, Sept. 25, 2007 (Dkt. No. 301) ("The parties shall consult in good faith in an effort to jointly schedule, notice, and take depositions."); see also Pretrial Order No. 5, Case Management, Sept. 25, 2007 at ¶ 2 (Dkt. No. 301) ("The Court recognizes that cooperation by and among plaintiffs' counsel, and by and among Defendants' counsel, is essential for the orderly and expeditious resolution of this litigation.").


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The Special Master granted Dell's motion for a protective order despite Defendants'

misrepresentations. Dkt. No. 4430 at 4.

D. This Court Overrules the Protective Order

Thereafter, the Joint Defense Group filed an objection with this Court. Dkt. No. 4528

(Defendants' January 10, 2012, Objection to Special Master's Order Regarding Korman Deposition)

The Joint Defense Group made material misrepresentations to the Court in an effort to persuade the

Court to overrule the Special Master:

"Over the next several weeks [after Dell sent a July 2011 email with Korman's Austin address, at 5 Chapin Lane], counsel for Sharp attempted to locate Mr. Korman. They learned that Mr. Korman may have moved to Taiwan but were unable to determine a valid address or means of contacting him there." Id. at 5.

"The importance of Mr. Korman's testimony became clear to Defendants only at this time [in early mid-November 2011, after reviewing Dell's September 6, 2011 document production]." Id. at 6.

The Joint Defense Group included a section entitled "Defendants Did Not Unreasonably Delay in Seeking to Serve Mr. Korman." Id. at 11-12.

The Court allowed Defendants to proceed with Mr. Korman's deposition if he appeared

voluntarily. See Dkt. No. 4994 at 3 (3/1/12 Order Allowing Dep. of Eric Korman).


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E. The Joint Defense Group Demands that the December Subpoena Be Enforced

After this Court ordered that Mr. Korman's deposition could proceed if he appeared voluntarily,

Mr. Korman retained legal counsel, Mr. Shannon Ratliff. (As is common in such situations, Mr.

Ratliff s fees were paid by Dell, but he was independent counsel for Mr. Korman.) Subsequently,

AUO served on Dell and other MDL counsel a second declaration signed by Mr. Korman ("Second

Declaration") that, unknown to the Court or Dell, the Joint Defense Group drafted for Mr. Korman

after a clandestine meeting in February 2012 (before he was represented by his own counsel).

In June 2012, Mr. Ratliff notified Dell, the Joint Defense Group, and the Special Master that

Mr. Korman was no longer willing to voluntarily appear for a deposition. On June 26, 2012, the Joint

Defense Group filed a Motion to Compel with the Special Master, and argued that Mr. Korman's

deposition should nevertheless go forward because Mr. Korman had been properly served with a

deposition subpoena. See Ex. 10 (Def.'s Letter to Special Master, 6/26/2012).

During the course of this next round of briefing, the Joint Defense Group made further

misrepresentations to the Special Master:

Ever since Defendants first asked Dell's counsel about Mr. Korman over a year ago, Dell has set up roadblocks: Dell concealed Mr. Korman's most current address from Defendants in June 2011, delayed producing his files until September 2011, and buried the most relevant files in a 230,000 - page production served toward the end of fact discovery.

Ex. 4 (Def.'s Letter to Special Master, 7/13/2012). The entire Joint Defense Group reaffirmed their

prior misrepresentations: "The Defendants have briefed Dell's dilatory tactics in extensive detail and

incorporate those arguments by reference." Id. at 4 n.3.

Mr. Korman contended he had not been personally served by Defendants. Ex. 11 at 2 (Ratliff

Letter to Special Master, 7/9/2012). Defendants continued attacking Dell, arguing that "Mr. Korman

changed his mind [regarding service] only after he hired an attorney selected and paid for by Dell." Ex.


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4 (Def.'s Letter to Special Master, 7/13/2012). The Special Master was never told that immediately

after Defendants tried to serve the subpoena, Mr. Korman told counsel for AUO that he had not been

served, and counsel for AUO made HannStar's counsel aware of this fact on December 4, 2011. Ex.

12 (Mr. Nedeau email to Mr. Bangasser that he "met with Mr. Korman in Taipei," and that Mr.

Korman "knew about your offices [sic] attempts to serve him with a deposition subpoena but insists he

was not served"). Relying on these misrepresentations and omissions, the Special Master ordered Mr.

Korman to appear for a deposition on or before August 20, 2012.

F. Evidence of a Fraud on the Court

In anticipation of Mr. Korman's deposition, on May 30, 2012, Dell served the Joint Defense

Group with discovery requests related to any communications with Mr. Korman, because it was

apparent that Defendants had drafted the Second Declaration Mr. Korman signed on March 1, 2012.

Dell was interested in the genesis of the Second Declaration because it was contradicted by multiple

Dell and conspirator witnesses in the case. The Joint Defense Group ignored Dell's requests, and Dell

was forced to move the Special Master to compel each Defendant to produce the requested

documents.6 On August 10, 2012, the Special Master granted Dell's Motion to Compel, and ordered

all Defendants to respond to Dell's discovery. Ex. 13 (8/10/2012 Special Master Order).

Documents produced by AUO prove that counsel for AUO — including Carl Blumenstein and

Chris Nedeau at Nossaman LLP, Mike Healy at Sedgwick LLP, AUO General Counsel Hank Liu, and

AUOA General Counsel Linh Ha — have been in frequent contact with Mr. Korman dating back to at

least February 2010. For more than two years, counsel for AUO knew Mr. Korman's address and

multiple phone numbers, met with Mr. Korman in the United States and Taiwan dozens of times,

6 The Joint Defense Group went to desperate lengths to keep the Korman-related documents secret. When it became clear the Special Master would grant Dell's motion to compel the production of Korman-related documents, the Group filed a "tit-for-tat" set of discovery on Dell fewer than 24 hours before the hearing on Dell's motion to compel. Kenny Decl. ¶ 65. At the hearing, Carl Blumenstein then attempted to use the Defendants' newly served discovery as a means to argue that the Special Master should cancel all the discovery altogether. Mr. Blumenstein argued that "AUO is fine with [a proposed] second option, that we just declare — we won't answer, they won't answer, no one produces anything and then we go forward with the deposition. We are fine with that." Ex. 14 at 27:13-17 (Tr. of 8/10/2012 Special Master Hrg.). This ploy was rejected.


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strategized with Mr. Korman about whom to depose at Dell and potential defenses in the litigation, and

knew by at least December 4, 2011, that Mr. Korman had not been served with the deposition

subpoena. Documents AUO produced — as well as Mr. Korman's testimony — prove that the Joint

Defense Group's representations to this Court — that they never realized Mr. Korman's importance and

that they could not serve Mr. Korman with a deposition notice because they did not know how to locate

him without Dell's assistance — were demonstrably false.

Numerous documents AUO produced prove the fraud in stark detail. For example:

In February 2010, AUO's General Counsel, Hank Liu, reached out to Mr. Korman to assist AUO in the TFT-LCD litigation, and connected Mr. Korman to AUO's U.S. General Counsel, Linh Ha, and AUO's outside counsel at Nossaman LLP. Ex, 15 (AU-MDL-09604186, 88). Mr. Korman agreed to travel to San Francisco to meet AUO's attorneys and said "Please decide how much, if any, AUO wishes to pay. As I mentioned the main concern is helping you get a reasonable resolution for this issue." Ex. 16 (AU-MDL-09603961). Mr. Korman flew business class from Taipei to San Francisco, and Nossaman LLP gave him a check for $1,305.23. Ex. 16 (AU-MDL-09603958, 62).

During Mr. Korman's February 2010 visit to San Francisco, Chris Nedeau and Carl Blumenstein from Nossaman LLP, along with AUOA's General Counsel, Mr. Ha, treated Mr. Korman to a wine-infused $438.60 dinner at Kokkari. Ex. 18 (AU-MDL-09603969).

Right after meeting Mr. Blumenstein in the United States, Mr. Korman solicited donations to his charity from Mr. Blumenstein. Ex. 19 (AU-MDL-09604001, 19).

On February 19, 2010, Mr. Korman emailed Mr. Blumenstein with AUOA's General Counsel, Mr. Ha, cc'ed, and asked "Should correspondence be marked 'attorney-client privileged' or something similar?" Ex. 20 (AU-MDL-09603997).

Over the next month, Mr. Korman sent a series of emails marked "ATTORNEY CLIENT PRIVILEGED" describing his contacts with multiple current and former Dell employees to attempt to enlist them to help AUO's cause, and he asked Mr. Blumenstein whether he has "any more 'home work' for him. Ex. 21 (AU-MDL-09603998, 3999); Ex. 47 (AU-MDL-09604008). Mr. Korman identified a former Dell employee for AUO, but said the situation "is a little bit complicated, so I would rather discuss it by phone." Ex. 22 (AU-MDL-09604012). Right after meeting Mr. Blumenstein in the United States, Mr. Korman also solicited donations to a charity from Mr. Blumenstein. Ex. 19 (AU-MDL-09604001, 19).

In April 2010, Mr. Blumenstein arranged to meet Mr. Korman in Taipei, and Mr. Blumenstein brought a case of champagne from San Francisco to Taipei in his luggage at Mr. Korman's request. Ex. 23 (AU-MDL-09604025, 27). Mr. Korman and Mr. Blumenstein met again, and Mr. Blumenstein thanked Mr. Korman for a "lovely evening" that was "tremendous — easily the epicurean highlight of my week in Taipei." Ex. 24 (AU-MDL-09604036).


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In June 2010, another Nossaman LLP counsel, Christopher Nedeau, traveled to Taiwan and treated Mr. Korman to a $656.67 dinner for 3 people. Ex. 25 (AU-MDL-09604038, 39, 40, 42; AU-MDL-09603975). In arranging the dinner, Mr. Nedeau asked Mr. Blumenstein for Mr. Korman's contact information, and Mr. Blumenstein responded with Mr. Korman's email address, cell phone number, and home number. Id.

In June 2011, Mr. Nedeau invited Mr. Korman to San Francisco for two days of deposition preparation. Ex. 26 (AU-MDL-09604045, 46, 47). Mr. Blumenstein twice took Mr. Korman to lunch with the descriptions "prepare witness for deposition" and "continue depo preparation." Ex. 27 (AU-MDL-09603983). Mr. Nedeau and Mike Healy, AUO outside counsel from Sedgwick LLP, treated Mr. Korman to a $664.90 dinner at RN74. Ex. 28 (AU-MDL-09603985).

On July 1, 2011, Mr. Nedeau sent Mr. Korman a $1,128.76 check to Mr. Korman's home at 5 Chapin Lane in Austin, Texas. Ex. 29 (AU-MDL-09603978). (As will be discussed below, this is the same address — 5 Chapin Lane in Austin, Texas — that Dell gave Defendants in July 2011 when they first requested Mr. Korman as a potential deponent.)

On July 21, 2011, Dell reached out to Mr. Korman for the first time in this litigation through in-house counsel, Alan Richey. Mr. Korman did not disclose that he had been working with AUO for almost a year and a half on the case, and immediately sent his summary of the call with Dell to counsel for AUO, Mr. Nedeau and Mr. Blumenstein. Ex. 30 (AU-MDL-09604073).

On August 17, 2011, Dell in-house counsel, Alan Richey, set up a call with Mr. Richey, Mr. Korman and Dell's outside counsel in the LCD litigation, and Mr. Korman forwarded the information to Mr. Blumenstein and Mr. Nedeau and asked for their "comments/guidance/recommendations" in advance of the call. Ex. 31 (AU-MDL-09604074). Mr. Korman disclosed nothing to Mr. Richey regarding his ongoing relationship with AUO, and even told Mr. Richey that he would let him know if any Defendants contacted him about the case but that none had thus far.

see also Ex. 32 (AU-MDL-09604144) (Korman telling Blumenstein that Richey requested that Korman notify Dell if Defendants contacted him).

In September 2011, Mr. Nedeau reached out to Mr. Korman and arranged for a meeting in Taipei. Ex. 33 (AU-MDL-09604078).

Beginning November 15, 2011, Mr. Blumenstein and Mr. Korman exchanged at least 10 emails about Mr. Korman's whereabouts. It is clear from these e-mails that Mr. Blumenstein was trying to determine if Mr. Korman would be in Austin in the coming weeks, and was aggressively attempting to arrange for Mr. Nedeau to have dinner with Mr. Korman in early December in Taipei, Taiwan. Ex. 34 (AU-MDL-09604080 to AU-MDL-09604099).


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On December 4, 2011, Mr. Nedeau emailed HannStar's outside counsel, Hugh Bangasser at K&L Gates (who has since withdrawn), and informed Mr. Bangasser that he "met with Mr. Korman in Taipei," and that Mr. Korman "knew about your offices [sic] attempts to serve him with a deposition subpoena but insists he was not served." Ex. 12 (AU-MDL-09604100).

On December 8, 2011, Mr. Korman told Mr. Blumenstein that Alan Richey from Dell had been attempting to reach him, and that he was going to call Mr. Richey back because he did "not want to appear uncooperative or anti-Dell." Ex. 35 (AU-MDL-09604108).

On December 13, 2011, Mr. Korman finalized and signed the First Declaration, drafted by Defense Counsel. See Ex. 36 (AU-MDL-09603866) (Blumenstein sending Korman first draft declaration). Correspondence between Mr. Korman and Mr. Blumenstein demonstrates that the declaration was edited through December 13, 2011, but was backdated five days to December 8, 2011 (placing it within the discovery period), and Mr. Korman told Mr. Blumenstein that he would be back in the United States soon, but was fine with the Declaration "as is" even though it says he will be in Taipei indefinitely. Ex. 37 (AU-MDL-09604123). Mr. Korman's declaration falsely states that he is a "neutral party" interested only in "[j]ustice being served."

On January 1, 2012, Mr. Korman emailed Mr. Blumenstein and wrote that he "[h]ope[s] that all is well and that 2012 is the year of liberation for your clients." Mr. Blumenstein responded with attempts to set up a meeting. Ex. 38 (AU-MDL-09604126, 28).

In early February 2012, AUO and Mr. Korman arranged a meeting for Mr. Korman with the Joint Defense Group in the United States. Mr. Korman emailed Mr. Blumenstein that he was worried about meeting with counsel for HannStar and Sharp because he told Alan Richey he would tell them if he met with any of the Defendants. Ex. 32 (AU-MDL-09604144).

Mr. Blumenstein notified Mr. Korman that they would have dinner at Michael Mina, to which Mr. Korman responded "[y]ou guys keep setting the bar higher and higher on restaurants." Ex. 39 (AU-MDL-09604143); Ex. 40 (AU-MDL-09603987) (Blumenstein expense report with receipt from Michael Mina for $190.23 with "E. Korman AUO" listed as attending).

In mid-February 2012, Mr. Blumenstein set up another dinner meeting with Mr. Korman in Taipei, and Mr. Korman asked Mr. Blumenstein what wine he would prefer: "Champagne, Red, White, or all of the above? [smiley face]." Mr. Blumenstein subsequently sent Mr. Korman a draft of the Second Declaration — prepared by Defense counsel — for Mr. Korman's review and signature. Ex. 41 (AU-MDL-09603881).

Mr. Korman reviewed the Second Declaration and asked why certain things were not included, among them that "[t]he suppliers referenced meetings at the Howard Plaza hotel (My suggestion since Dell and other large OEMS did not stay there) [smileyJ..." and that with regard to the Declaration, because of "large amounts of alcohol, etc. I may have a hard time being precise on the stand in a cross-examination about LG meetings, etc." Ex. 42 (AU-


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MDL-09604165) (emphasis added). Mr. Blumenstein and Mr. West then scrambled to get a final signed version in hand before the scheduled March 2, 2012 hearing before this Court on whether to affirm the Special Master's grant of a protective order related to Mr. Korman's deposition (the hearing was ultimately vacated by the Court). Ex. 43 (AU-MDL-09604174).

On March 1, 2012, Mr. Blumenstein sent Mr. Korman Judge Illston's Order allowing his deposition to proceed. Ex. 44 (AU-MDL-09604182).

The next day Mr. Korman emailed Alan Richey with the subject "Request for information" and his phone number. Ex. 45 (DELL-01278765).

On March 3, 2012, the day after speaking to Mr. Richey, Mr. Korman emailed Mr. Blumenstein and wrote simply "Please give me a call" with his phone number. Ex. 46 (AU-MDL-09604185). This e-mail is the last produced communication between counsel for AUO and Mr. Korman.7

When Mr. Korman was examined at his deposition by Dell's counsel, Mr. Korman suffered

from complete and total memory failure. Incredibly, he swore under oath that he could not remember a

single substantive detail of what was discussed during any of his years of meetings with counsel for

AUO.8 But the paper trail left by Mr. Korman's emails reveals that he was acting as a consultant for

AUO in the litigation:

- Mr. Korman's 2010 emails showed him working for AUO to recruit Dell witnesses to help AUO's case, and asking Mr. Blumenstein for more "home work." Ex. 47 (AU-MDL-09604008). Moreover, there is evidence Mr. Korman considered counsel for AUO to be his

7 Defendants have withheld a number of documents based on joint defense privilege. Dell is seeking to have those documents logged and reviewed by the Special Master in camera. Ex. 3 (Dell's Letter to Special Master, 9/5/2012). To the extent Dell's request to the Special Master for review of Joint Defense communications related to Mr. Korman is not resolved, Dell requests that this Court order that Defendants produce to the Court and Dell all such communications as part of the relief granted pursuant to this motion.

DELL'S MOTION FOR SANCTIONS Master File No. M07-I 827 SI 3:10-cv-01064 SI

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attorney too, because he marked communications with counsel for AUO "attorney-client privileged." Ex. 21 (AU-MDL-09603998, 99).

Mr. Korman emailed Mr. Blumenstein publications he believed could help AUO by damaging elements of Dell's case. Ex. 48 (AU-MDL-09604016); Ex. 49 (AU-MDL-09604069); Ex. 34 (AU-MDL-09604091).

Mr. Korman provided AUO a document relating to his employment at Dell that should have been returned to Dell when he was terminated. Ex. 50 (AU-MDL-09603996);

Mr. Korman emailed Mr. Blumenstein his own ideas about themes and arguments to make in response to Dell's case. Ex. 51 (AU-MDL-09604101) (emailing list of themes and arguments to contest Dell's case).

Mr. Korman worked with Defense counsel to strategize how to challenge Dell's Motion for a Protective Order as to Mr. Korman's deposition. Ex. 52 (AU-MDL-09604118) (Korman asks if it would be "better that the Hannstar attorney submits [his First Declaration] since they are the ones who tried to serve me?").

Specific examples of Mr. Korman's influence on AUO's case strategy include his suggestion to Mr. Blumenstein and Mr. Nedeau on December 5, 2011, that "AUO and some other panel suppliers won awards during the time period of alleged issues . .. this info might come in handy during trial" — Mr. Nedeau and counsel for AUO used that theme in the criminal trial a month later. Ex. 51 (AU-MDL-09604101); see also Ex. 53 at 355:6-7 (Nedeau opening statement at AUO's criminal trial: "During this period of 2001 and 2006, AUO won global awards for its technology.") (Tr. of AUO Criminal Trial, vol. 2); Ex. 54 at 2827-28 (AUO cross examination of Dell employee Piyush Bhargava about AUO winning Supplier of the Year) ( Tr. of AUO Criminal Trial, vol. 16). Also, on November 19, 2011, Mr. Korman sent Mr. Blumenstein a link to a blog post containing speculation and conjecture about a purported Dell/Intel antitrust conspiracy,

Ex. 34 (AU-MDL- 09604091);

Mr. Korman advertised his anti-Dell/pro-AUO bias to Mr. Blumenstein. Ex. 35 ("I do not want to appear uncooperative or anti-Dell." (emphasis added)) (AU-MDL-09604108); Ex. 38 ("Hope that all is well and that 2012 is the year of liberation for your clients." (emphasis added)) (AU-MDL-09604126); Ex. 42 (emailing ideas about material to include in his Second Declaration) (AU-MDL-09604165).

Mr. Korman told counsel for AUO that he would "come back to the USA as required, so just let me know." Ex. 34 (AU-MDL-09604081). Mr. Korman apparently rearranged travel on several occasions to do so.

DELL'S MOTION FOR SANCTIONS Master File No. M07-I 827 SI 3:10-cv-01064 SI

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G. Misleading and False Representations in the Briefing

These AUO documents confirm that the Joint Defense Group could have simply handed a

subpoena to Mr. Korman across the table any time during their repeated meetings and dinners with him

in the United States over the course of two years. They nevertheless led the Special Master and this

Court to believe that they had been unable to locate Mr. Korman. The misrepresentations are material

and manifold.9

First, on January 10, 2012, the Joint Defense Group told this Court that "[t]he importance of

Mr. Korman's testimony became clear to Defendants only at this time [early-mid-November 2011 after

reviewing Dell's September 6 document production]." See Dkt. No. 4528 at 6 (Defendants' Objection

to the Special Master's Order granting Dell's Motion for Protective Order); see also id. at 15 ("Is/ Carl

L. Blumenstein . . . Liaison Counsel for Defendants and Counsel for Defendants AU Optronics

Corporation and AU Optronics Corporation America"). On the contrary, when the January 10, 2012

brief was filed, AUO's counsel had been communicating and meeting with Mr. Korman for almost two

years. These meetings started in February 2010. AUO's counsel flew Mr. Korman to the United States

on multiple occasions. They treated Mr. Korman to expensive wine and dinners. They met Mr.

Korman for drinks. They brought Mr. Korman suitcases of champagne from the United States to

Taiwan. They prepped Mr. Korman for his deposition in the summer of 2011. Much of this conduct

occurred a year before the Joint Defense Group asked Dell for Mr. Korman's last known address, and

all of it occurred long before the Joint Defense Group noticed Mr. Korman's deposition on the eve of

the close of discovery. And it is clear that as of December 4, 2011, before this January brief was filed,

9 The misrepresentations for the Court's consideration are fully set forth in Appendix A attached hereto. Dell expects some Defendants to argue that they did not know about AUO's close relationship with Mr. Korman "until recently," e.g., Ex. 56 at 2 (CMO's Letter to Special Master, 8/17/2012) ("Chi Mei . . . was unaware of pre-service communications between AUO and Mr. Korman until recently");

And, in any event, as liaison counsel to the defense group, AUO acted as the agent for the group.


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counsel for HannStar was on notice of AUO's meetings with Mr. Korman. Ex. 12 (December 4, 2011

email from C. Nedeau to H. Bangasser) (AU-MDL-09604100),

The Joint Defense Group's representation that it did not realize Mr. Korman's significance, yet

AUO spent thousands of dollars traveling overseas to meet with Mr. Korman on a regular basis for two

years, is simply false.

but it was all a charade, because,

during the same time, AUO's counsel was flying Mr. Korman to San Francisco to "prepare for his

deposition" and treating Mr. Korman to extravagant meals."

Second, in every brief the Joint Defense Group filed related to the deposition of Mr. Korman, it

cynically accused Dell of delaying Mr. Korman's deposition by giving it an "invalid address" at 5

Chapin Lane, Austin, Texas.

This claim was demonstrably false.

Counsel for AUO knew Mr. Korman personally; they had been meeting with him for years;

they had easy and frequent access to Mr. Korman by phone, e-mail, and in-person meetings. E.g., Ex.

25 (AU-MDL-09604042) (On June 13, 2010, Blumenstein emails Korman's email, home, and cell

10

" See Ex. 26 (On June 21, 2011, C. Nedeau invites E. Korman to San Francisco for two days of deposition preparation, several hours each day) (AU-MDL-09604046); Ex. 27 (June 27, 2011, Blumenstein expense report shows $113.69 "Lunch with Eric Korman (prepare witness for deposition)") (AU-MDL-09603983); Ex. 28 (C. Nedeau and M. Healy take Korman to $664.90 dinner at RN74 on June 27, 2011) (AU-MDL-09603985); Ex. 27 (another Blumenstein lunch with Korman to on June 28, 2011 to "continue depo preparation") (AU-MDL-09603983).


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phone numbers to Nedeau);

They obviously had his address because they

sent money to him at this address in Austin, Texas. Indeed, in July 2011 Nossaman UP sent Mr.

Korman a check for $1,128.76 to 5 Chapin Lane, Austin, Texas. Ex. 29 (AU-MDL-09603978).

Third, the Joint Defense Group spent months falsely arguing that Mr. Korman had been served

with a deposition subpoena. As revealed in AUO's recently produced documents, after the Joint

Defense Group attempted service of Mr. Korman (at an address that they claimed to have spent months

tracking down), counsel for AUO informed counsel for HannStar that Mr. Korman had not been

personally served — a point Dell and Mr. Korman's counsel have repeatedly argued to the Court. In a

December 4, 2011 email from Christopher Nedeau (AUO's counsel) to Hugh Bangasser (HannStar's

counsel at K&L Gates), Mr. Nedeau wrote:

Hugh,

I met with Eric Korman here in Taipei. He knew about your office's attempts to serve him with a deposition subpoena but insists that he was not served. I will call you to follow up next week when I return to SF.

Christopher

See Ex. 12 (December 4, 2011 email from C. Nedeau to H. Bangasser) (AU-MDL-09604100). The

time spent arguing over whether service of Mr. Korman's deposition subpoena was proper under the

Federal Rules was another charade. Nonetheless, once Mr. Korman retained counsel to speak for him

and represented that he was not served, the Joint Defense Group argued that Mr. Korman only

contended he was not served because Dell was paying for counsel to represent him — again accusing

Dell of misconduct — even though counsel for AUO and HannStar knew by December 4, 2011, that Mr.

Korman had always contended he had not been served. The Special Master heard nothing but the Joint

Defense Group's (false) assertion that Mr. Korman was served and its cynical criticism that Mr.

Korman's position on service changed after he hired a lawyer who — they recklessly claimed — was in

Dell's pocket. Accordingly, the Special Master ordered Mr. Korman to appear for a deposition on or


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before August 20, 2012. Had the Joint Defense Group told the truth about its working with Mr.

Korman the whole time, or that Mr. Korman maintained to the Joint Defense Group as early as

December 4, 2011, that he had not been served, Mr. Korman's deposition never would have gone

forward.

The documents also unequivocally show misrepresentations in Mr. Korman's declarations that

the Joint Defense Group knew were false and yet still submitted it to the Court.

1. The Joint Defense Group knew Mr. Korman planned to be in the United States within weeks

of signing the First Declaration, contrary to his representation that he "plan[ned] to be in Taiwan for

the indefinite future." Ex. 37 (AU-MDL-09604123). Mr. Blumenstein recognized this

misrepresentation, asked whether Mr. Korman would like to correct it, and even after Mr. Korman said

"no," the Joint Defense Group still submitted the First Declaration with this knowing misrepresentation

"under penalty of perjury" in opposition to Dell's motion for protective order. Id. The same

documents show that Mr. Korman finalized and signed his declaration on December 13, 2011, and

backdated the signature to December 8, 2011 — the last day of the discovery period. Id.; Ex. 58

(12/8/2011 Korman Decl.).

2.

Yet they knew that Mr. Korman was neither neutral nor

unaffiliated. Mr. Korman, after being flown around the world in business class, treated to copious

quantities of fine wine by AUO's counsel, wrote that he hopes "2012 is the year of liberation for your

clients." Ex. 38 (AU-MDL-09604126, 28).

The revelation that Mr. Korman's declarations contain material misrepresentations is hardly

surprising, given that his declarations were impeached by the sworn testimony of multiple witnesses for

both Dell and the LCD conspirators. See Dkt. No. 6127 at 9-10 (Dell's Opposition Brief to

Defendants' Motion for Partial Summary Judgment on Statute of Limitations and Mitigation citing

testimony from Defendants' employees denying ever telling Dell about their price-fixing conspiracy).


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Mr. Korman also admitted to Defense counsel: "I may have a hard time being precise on the stand in a

cross-examination" because the "social dinners sometimes involved large amounts of alcohol." Ex. 42

(AU-MDL-09604165).

H. Additional Misrepresentations Regarding Payments to Korman's Charities Come

to Light for First Time in AUO Sentencing Process

AUO's documents revealed that Mr. Korman sent Mr. Blumenstein solicitations for charitable

contributions to Mr. Korman's Taiwan-based charities in February and March 2010. See Ex. 19 (AU-

MDL-09604001, AU-MDL-09604019 (including note from charity manager that Korman "may found

new potiental donators [sic]")). In hearings before the Special Master, Carl Blumenstein — counsel for

AUO — was unequivocal:

With regard to payments to Mr. Korman, I said to Your Honor at the hearing last Friday — I'll say it again — we have not retained him as a consultant. We have not paid him for his time. We did not make any payments to his charity, although he requested it. All of the information with regard to payments that AUO or Nossaman has made to Mr. Korman have been produced.

Ex. 59 (Tr. of 8/17/2012 Special Master Hrg.).

Mr. Blumenstein's and Mr. Korman's assertions have now been revealed to be

false and incredible.

Despite Mr. Korman's dubious memory failure, and despite Mr. Blumenstein's representations

to the contrary, it is now clear that Mr. Korman's charity has received money channeled through a

current member of the AUO Board of Directors. On September 11, 2012, AUO filed numerous

documents in support of its requests for lenient sentences, including letters in support. Included in

those documents is a letter Mr. Korman sent on behalf of Dr. Hui Hsiung (a member of AUO's Board

of Directors) dated May 29, 2012 —months before Mr. Blumenstein's unequivocal denials and Mr.

Korman's deposition. In the letter, Mr. Korman states that in 2009 — shortly before Mr. Korman began


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working with AUO on this case in February 2010 — he "had occasion to meet Mr. [sic] Hsiung at a

fund raising dinner" and that Dr. Hsiung learned that Mr. Korman "was supporting two charitable

causes in Taiwan and wanted to learn more about my efforts." N.D. Cal. 3:09-cr-00110-SI, Dkt. No.

947-10 at 2. Mr. Korman writes that he was later "surprised to learn that Mr. [sic] Hsiung had made a

generous donation to the Charity providing college scholarships for HIV positive students whose

parents had terminated their financial support." Id.

The record, therefore, is now clear. AUO's Former Executive Vice President and a current

member of its Board of Directors made a "generous contribution" to Mr. Korman's charity. AUO

wrongfully withheld Korman's May 29, 2012 letter from discovery — despite court orders to the

contrary — and affirmatively misrepresented facts relating to Mr. Korman's "charity" to the Court in

two separate hearings.12

III. LEGAL ARGUMENT

A. This Court Has Ample Authority To Sanction Defendants In This Case

Federal courts have broad powers to impose sanctions against parties or counsel for improper

conduct in litigation. Gas—A—Tron of Ariz. v. Union Oil Co. of Cal., 534 F.2d 1322, 1324-25 (9th Cir.

1976). The Court derives the power to impose sanctions on parties or their counsel from three

principal sources of authority: "(1) Federal Rule of Civil Procedure 11, which applies to signed

writings filed with the court, (2) 28 U.S.C. § 1927, which is aimed at penalizing conduct that

unreasonably and vexatiously multiplies the proceedings, and (3) the court's inherent power." Fink v.

Gomez, 239 F.3d 989, 991 (9th Cir. 2001).13 Here, sanctions are appropriate on all three grounds.

Rule 11(b) provides that:

[b]y presenting to the court a pleading, written motion, or other paper — whether by signing, filing, submitting, or later advocating it — an attorney or unrepresented party

12 Dr. Hsiung is listed as a member of AUO's Board of Directors as of March 31, 2012 with a note that he has been with the company for 16 years. Ex. 60 (Excerpt of AUO's Form 20-F SEC Filing, 4/27/2012).

13 The decision to impose sanctions is within the sound discretion of the Court. See Dahl v. City of Huntington Beach, 84 F.3d 363, 367 (9th Cir. 1996); Wages v. Internal Revenue Serv., 915 F.2d 1230, 1235 (9th Cir. 1990); Erickson v. Newmar Corp., 87 F.3d 298, 303 (9th Cir. 1996).


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certifies that to the best of the person's knowledge, information, and belief, formed after an inquiry reasonable under the circumstances: (1) it is not being presented for any improper purpose, such as to harass, cause unnecessary delay, or needlessly increase the cost of litigation; . . . [and] (3) the factual contentions have evidentiary support or, if specifically so identified, will likely have evidentiary support after a reasonable opportunity for further investigation or discovery.

The Court has authority to impose appropriate sanctions on any attorney, law firm, or party that has

violated this rule. Fed. R. Civ. P. 11(c).

"[A] district court may, pursuant to its inherent powers, impose sanctions on a party or its

counsel for making bad faith misrepresentations to the court." Roberts v. Heim, 184 B.R. 814,

818 (N.D. Cal. 1995) (emphasis added) {citing Mark Indus., Ltd. v. Sea Captain's Choice, Inc., 50 F.3d

730, 732-33 (9th Cir. 1995) (upholding district court's imposition of sanctions on attorney for bad

faith conduct including misrepresentation of facts to the court and emphasizing that the court was

within its discretion to view attorney's actions as "willful abuse of the judicial process or bad faith

conduct")). The Court's inherent powers "are 'governed not by rule or statute but by the control

necessarily vested in courts to manage their own affairs so as to achieve the orderly and expeditious

disposition of cases.' Unigard Sec. Ins. Co. v. Lakewood Eng'g & Mfg. Corp., 982 F.2d 363, 368 (9th

Cir. 1992) (quoting Chambers v. NASCO, Inc., 501 U.S. 32, 43 (1991)). This authority allows the

Court to impose sanctions on counsel as well as the parties. See Roadway Express, Inc. v. Piper, 447

U.S. 752, 767 (1980).

A district court has a duty to supervise the conduct of attorneys appearing before it. See

Erickson v. Newmar Corp., 87 F.3d 298, 301 (9th Cir. 1996); Trust Corp. of Mont. v. Piper Aircraft

Corp., 701 F.2d 85, 87 (9th Cir. 1983). "An attorney does not simply act as an advocate for his client;

he is also an officer of the court. As such, an attorney has a duty of good faith and candor in dealing

with the judiciary." Associated Convalescent Enters., 766 F.2d at 1346.

This Court's Local Rules and the California Professional Rules of Conduct both reiterate the

importance of candor in judicial proceedings. Local Rule 11-4 provides that every attorney admitted to

practice in the Northern District of California has a duty to "comply with the standards of professional

conduct required of members of the State Bar of California . . . the Local Rules of this Court . . . [and


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to] [pJractice with the honesty, care, and decorum required for the fair and efficient administration

ofjustice." N.D. Ca. L.R. 11-4(a)(1), 4(a)(2) & 4(a)(4) (emphasis added).

Under California law, an attorney may use only methods "as are consistent with truth, and never

to seek to mislead the judge or any judicial officer by an artifice or false statement of fact or law." Cal.

Bus. & Prof. Code § 6068(d). "In presenting a matter to a tribunal, a member: (A) [s]hall employ, for

the purpose of maintaining the causes confided to the member such means only as are consistent with

truth; [and] (B) [s]hall not seek to mislead the judge, judicial officer, or jury by an artifice or false

statement offact or law. . . ." Cal. Rules of Professional Conduct, Rule 5-200 (emphasis added).14

B. Sanctions Are Required In This Case

As demonstrated herein (see also Appendix A hereto), the Joint Defense Group submitted

numerous motions and other papers to the Court, with counsel for AUO as a signatory, including sworn

declarations, for which AUO and its counsel knew there was no evidentiary support and in many cases

were flat-out false. AUO's counsel's serial misrepresentations to the Court were knowing and

unprofessional. In the event that a Judge has cause to believe that an attorney has engaged in

unprofessional conduct, the Local Rules provide that the Judge may take any action authorized by

applicable law or, alternatively, may: (1) refer the matter to the Court's Standing Committee on

Professional Conduct; or (2) refer the matter to the Chief District Judge with the recommendation that

an order to show cause be issued under Civil Local Rule 11-7. Civil L.R. 11-6(a). Federal judges have

an "arsenal of sanctions" to impose for unethical behavior, including monetary sanctions, contempt,

dismissal, and disqualification of counsel. Erickson, 87 F.3d at 303. As a function of a court's

inherent powers to impose sanctions, a court can issue a broad range of sanctions, including ones that

14 In addition to, or in lieu of sanctions, this Court has authority to reconsider its March I, 2012 Order and reinstate Dell's previous protective order as to Mr. Korman, granted by the Special Master on December 27, 2011 (Dkt. No. 4430). The Court was misled by the Defendants as described herein in overturning that order, and accordingly under Fed. R. Civ. P. 60(b)(1), (2), and (3), the Court may relieve a party from an order for "mistake, inadvertence, surprise, or excusable neglect," "newly discovered evidence," or "fraud (whether previously called intrinsic or extrinsic), misrepresentation, or misconduct by an opposing party." To the extent required by Northern District of California Civil Local Rule 7-9(a), Dell hereby seeks leave to request relief under Rule 60(b).


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dismiss cases in their entirety, vacate prior orders, bar witnesses, award attorneys' fees, and assess

fines. See F.J Hanshaw Enters. v. Emerald River Dev., Inc., 244 F.3d 1128, 1136 (9th Cir. 2001).

The Joint Defense Group cannot be absolved of the serial misrepresentations to the Court and

to Dell by arguing that only AUO and its outside counsel at Nossaman LLP and Sedgwick LLP knew

the representations made to the Court were false. Nossaman LLP serves as liaison counsel for the Joint

Defense Group in this MDL, and it actively took the lead in discovery in the Dell case. Mr.

Blumenstein represented in his August 18, 2012 declaration that AUO only kept its relationship with

Mr. Korman secret lait all times prior to December 3, 2011," thus it appears the Joint Defense Group

was aware of Mr. Korman before it submitted its briefs to the Court, which briefs we now know

contained outright lies. Ex. 61 (8/17/2012 Blumenstein Decl.).

At present, it is unclear when exactly the other members of the Joint Defense Group became

aware of Mr. Korman's relationship with AUO, because the relevant documents have been withheld

from Dell on spurious assertions of "privilege." But from what has been produced, the Court can tell

that each of the remaining members of the Joint Defense Group knew well before Mr. Korman's

deposition about the true nature of the AUO-Korman relationship, yet made no effort to correct the

record before the Court:

All Defendants knew at least as early as December 4, 2011, that AUO had an established relationship with Mr. Korman — as AUO was unbelievably able to obtain a final signed declaration from Mr. Korman by December 8, 2011. It is not plausible that anyone believed AUO reached out to Korman for the first time after Defendants' attempted service on December 1, 2011 and Korman gave complete strangers a declaration.

All Defendants knew at least as early as February 1, 2012, that AUO was able to secure a meeting in San Francisco with Mr. Korman, as Sharp, Toshiba, HannStar and AUO attended that meeting with Mr. Korman at the offices of Nossaman LLP.I5 In addition, Mr. Blumenstein represents that AUO only kept the many meetings, e-mails, and calls with Mr. Korman secret from the Joint Defense Group "prior to December 3, 2011." Ex. 61 ¶ 10 (8/17/2012 Blumenstein Decl.). These facts indicated that the Joint Defense Group was on notice by at least February 1, 2012 (and perhaps as early as December 3, 2011), that AUO had a

15 It is unknown if all members of the Joint Defense Group were invited or aware of the meeting, and CMO and Epson opted not to attend. What is clear is that all Defendants knew that a draft Declaration was prepared for Mr. Korman by the Defendants after that meeting and that Mr. Korman was working with the Joint Defense Group at that time, putting them on notice.


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longstanding relationship with Mr. Korman, and therefore had a duty to correct the record before the Court regarding their misrepresentations related to the timing of Defendants' realization that they wanted Mr. Korman's deposition and what he would say if asked. This knowledge similarly required candor from the Joint Defense Group in all subsequent briefing related to Korman. Oliner v. Kontrabecki (In re Cent. European Indus. Dev. Co.), No. 02-30421, 2009 WL 779807, at *6 (Bankr. N.D. Cal. Jan. 14, 2009) ("Furthermore, it is settled that concealment of material facts is just as misleading as explicit false statements, and accordingly, is misconduct calling for discipline."). Nonetheless, the Joint Defense Group submitted at least five briefs to this Court after its February 1, 2012 meeting with Mr. Korman without making any attempt to correct the highly misleading record before the Court. See generally Appendix A (outlining representations made in briefs filed by Defendants February 10, 2012 [Reply Brief to Judge Iliston], May 18, 2012 [Letter Brief to Special Master], June 26, 2012 [Letter Brief to Special Master], and July 13, 2012 [Letter Brief to Special Master]).

HannStar also received an email on December 4, 2011, indicating that AUO's counsel met with Mr. Korman between December 1, 2011, (when Defendants attempted to serve Mr. Korman), and December 4, 2011, in Taipei. This information was sufficient to put HannStar on notice as of December 4, 2011, that AUO had an existing relationship with Mr. Korman and knew how to locate him.

Toshiba admitted in its August 17, 2012, letter brief to the Special Master that it was aware AUO was in contact with Mr. Korman on or around December 1, 2011 which would put it on notice of the AUO-Korman relationship. Toshiba "wr[o]te separately to emphasize that Toshiba was not aware that AUO was in contact with Mr. Korman until after Mr. Korman was served on December 1, 2011, and did not learn the full details of AUO's communications with Mr. Korman until this week." Ex. 17 at 1 (Letter from M. Toto to Special Master, 8/17/2012). Toshiba's attempt to hide behind a defense of not knowing the "full details" cannot avoid the inconvenient fact that Toshiba was aware of the AUO contacts with Korman and their ability to get in touch with him and meet with him, yet continued to falsely attack Dell and misrepresent facts to the Court for more than eight months.

CMO claims that "counsel for Chi Mei has not had contact with Mr. Korman, was unaware of pre-service communications between AUO and Mr. Korman until recently, and received AUO's production the same time as Dell." Ex. 56 at 2 (CMO's Letter to Special Master, 8/17/2012). These carefully chosen words likely mean the same thing Toshiba said — as of December 1, 2011 (the time of the attempted service), CMO was aware that AUO was in contact with Mr. Korman yet did not inform the Court - and signed on to numerous briefs with factual misrepresentations and lies to the Court and falsely disparaged Dell.

DELL'S MOTION FOR SANCTIONS Master File No. M071827 SI 3:10-ev-01064 SI

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"[The Joint Defense Group's] states of mind clearly evolved over time. [They] were obviously more

culpable in opposing [later briefing] than they were at earlier stages in the proceedings, although many

of the events that occurred in district court should have put them on notice that their position was

untenable. . . ." Franco v. Dow Chem. Co. (In re Girard!), 611 F.3d 1027, 1037 (9th Cir. 2010).

The Joint Defense Group, moreover, was required by the Orders in this MDL to coordinate on

discovery. See Special Master's Order Regarding Individual Action Plaintiffs and Case Management,

March 12, 2010 (Dkt. No. 1595), modifying IN 12 & 20 of Pretrial Order No. 5 re: Case Management,

September 25, 2007 (Dkt. No. 301) ("All plaintiffs' counsel and defendants' counsel shall engage in

their best efforts to conduct discovery efficiently and without duplication."; and "The parties shall

consult in good faith in an effort to jointly schedule, notice, and take depositions."); see also Pretrial

Order No. 5, Case Management, September 25, 2007 at ¶ 2 (Dkt. No. 301) ("The Court recognizes that

cooperation by and among plaintiffs' counsel, and by and among Defendants' counsel, is essential for

the orderly and expeditious resolution of this litigation."). The required coordination by liaison counsel

with the remaining members of the Joint Defense Group should be presumed, and AUO's knowledge

about the false representations in the Joint Defense Group's briefs should therefore be imputed to the

other members of the group for that reason as well.

Under these circumstances, the Court should impose harsh sanctions. Where "a party has

engaged deliberately in deceptive practices that undermine the integrity of judicial proceedings," harsh

sanctions, including dismissal, are appropriate. Anheuser—Busch, Inc. v. Natural Beverage Distrib., 69

F.3d 337, 348 (9th Cir. 1995) (explaining that courts have "'inherent power to dismiss an action when

a party has willfully deceived the court and engaged in conduct utterly inconsistent with the orderly

administration of justice' (quoting Wyle v. R.J. Reynolds Indus., Inc., 709 F.2d 585, 589 (9th Cir.

1983))); see Combs v. Rockwell Intl. Corp., 927 F.2d 486, 488 (9th Cir. 1991) ("Dismissal is an

appropriate sanction for falsifying deposition."). The Joint Defense Group's intentional efforts to

conceal facts and mislead the Court were "deceptive" and unquestionably undermined the integrity of

the judicial proceedings in this case. Given the materiality and extent of the Joint Defense Group's

misrepresentations, Dell respectfully requests that the Court:


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1) Bar the use of Mr. Korman's testimony at trial, whether live, by deposition, or declaration.

2) Strike Mr. Korman's declaration and deposition testimony that have been submitted by

Defendants in support of their pending motion for partial summary judgment (Dkt. No. 5847).

3) Strike each Defendant's statute of limitations defense on the basis of fraudulent concealment

and each Defendant's defense that Dell could have mitigated its damages.

4) If Defendants attempt to rely on Mr. Korman in any way at trial, instruct the jury regarding

Mr. Korman's relationship with Defendants and the misrepresentations made to the Court and Dell in

an attempt to conceal that relationship.

5) Order Defense counsel to reimburse Dell for its reasonable attorney's fees incurred in

bringing this motion and previous motions related to Mr. Korman's deposition.16

6) To the extent Dell's request to the Special Master for review of Joint Defense

communications related to Korman is not resolved, order that Defendants produce to the Court and

Dell all such communications.

7) Order any other sanctions the court deems appropriate.

IV. CONCLUSION

For the foregoing reasons and the authorities cited, Dell respectfully requests this Court

exercise its broad discretion and impose sanctions on the Joint Defense Group and its counsel.

16 This Court has authority to award fees against counsel pursuant to 28 U.S.C. § 1927, "[a]ny attorney or other person admitted to conduct cases in any court of the United States . . . who so multiplies the proceedings in any case unreasonably and vexatiously may be required by the court to satisfy personally the excess costs, expenses, and attorneys' fees reasonably incurred because of such conduct." The decision to award § 1927 sanctions rests in a court's sound discretion. Wages, 915 F.2d at 1235. A § 1927 sanction requires "evidence of bad faith, improper motive, or reckless disregard of the duty owed to the court." Edwards v. Gen. Motors Corp., 153 F.3d 242, 246-47 (9th Cir. 1998) (holding that "willful continuation of a suit known to be meritless" satisfies section 1927).


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Respectfully submitted this 21st day of September, 2012.

By: /s/ Michael P. Kenny Michael P. Kenny, Esq. Debra D. Bernstein, Esq. Rodney J. Ganske, Esq. ALSTON + BIRD LLP 1201 West Peachtree Street Atlanta, Georgia 30309-3424 Telephone: (404) 881-7000 Facsimile: (404) 881-7777 [email protected] [email protected] [email protected]

Douglas R. Young FARELLA BRAUN + MARTEL LLP 235 Montgomery Street San Francisco, California 94104 Telephone: (415) 954-4410 Facsimile: (415) 954-4480 [email protected]

Kimball R. Anderson, Esq. WINSTON & STRAWN LLP 35 West Wacker Dr. Chicago, Illinois 60601-9703 Telephone: (312) 558-5600 Facsimile: (312) 558-5700 [email protected]

Attorneys for Plaintiffs Dell Inc. and Dell Products L.P.


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