US judge rebukes law firm Quinn Emanuel, awards $3 million sanction in Guardant case

By Mike Scarcella

July 11 (Reuters) - A federal judge in California has awarded medical diagnostics company Guardant Health GH.O nearly $3 million in legal fees after rebuking attorneys for its adversary Natera NTRA.O for their conduct in a lawsuit over false advertising claims.

U.S. District Judge Edward Chen in the San Francisco federal court said in a sanctions order on Wednesday that he will appoint a court official to determine whether Natera or its lawyers at law firm Quinn Emanuel must pay the fees.

The official, called a special master, will also assess whether some Quinn Emanuel attorneys in the case should be referred to California’s attorney conduct regulator for further investigation, the judge said.

“We respectfully disagree with the court’s findings because we have always conducted ourselves with candor and in good faith," Quinn Emanuel said in a statement, adding it looked forward to “presenting the full facts surrounding this matter to the Special Master.”

Natera declined to comment. Guardant and its lawyers did not immediately respond to requests for comment.

The judge's order stems from a lawsuit that Guardant filed in 2021 claiming Natera made misleading claims about the companies' competing colorectal cancer blood tests.

Natera denied any wrongdoing, arguing its statements qualified as protected speech under the U.S. Constitution’s First Amendment.

A jury in November awarded Guardant more than $292 million in damages after a trial in the case. Natera is contesting the verdict, and Chen has not issued a final judgment.

The alleged litigation misconduct involved Natera's efforts to introduce a supplemental report about a clinical study on the eve of trial, after the evidence collecting phase of the litigation had closed, court records show.

Guardant claimed a third-party medical expert for Natera had concealed email communications about the study, including whether he had early access to the results.

Chen said Quinn Emanuel made misleading statements, creating a false impression that there was a late-breaking evidentiary development in the case.

“But for the deliberate misrepresentation made to this court, the court would not have postponed trial and reopened discovery,” Chen wrote in Wednesday’s order.

The order followed a related sanctions ruling last year in which Chen barred some evidence related to the study from the trial.

Natera had opposed additional sanctions, according to Wednesday's order. The Quinn Emanuel attorneys submitted declarations saying their statements to the court about the evidence were made in good faith, relying on the third-party expert.

The $3 million sanction covers about 2,000 hours of lawyer time Guardant's legal team spent on the evidence dispute, Chen said in his ruling.

The case is Guardant Health Inc v Natera Inc, U.S. District Court, Northern District of California, No. 3:21-cv-04062-EMC.