Free Objections - District Court of Colorado - Colorado

Case 1:01-cv-01451-REB-KLM

Document 962

Filed 03/23/2006

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UNITED STATES DISTRICT COURT DISTRICT OF COLORADO

: : : : This Document Relates To: All Cases : ____________________________________:

IN RE: QWEST COMMUNICATIONS INTERNATIONAL, INC. SECURITIES LITIGATION

CASE NO. 01-CV-1451-REB-CBS JUDGE ROBERT E. BLACKBURN

OBJECTIONS TO PROPOSED SETTLEMENT OF CLASS ACTION COME NOW Charles B. Reiner and Margaret M. Flanagan, by and through undersigned counsel, and hereby file these Objections to the proposed Settlement of this Class Action and, in support thereof, state as follows: PROOF OF MEMBERSHIP IN CLASS Objector Charles B. Reiner resides at 3909 Beechmont Oval, Orange Ohio 44124, and purchased or sold 200 shares of Qwest Communications International, Inc. common stock in his account between May 24, 1999 and July 28, 2002. Objector Margaret M. Flanagan whose address is c/o John Duane, Esq. 99 Park Ave. Suite 800, New York, N.Y 10016 purchased 340 shares of Qwest Communications International, Inc. common stock during the Class period.

NOTICE OF INTENT TO APPEAR Objectors hereby give notice that they intend to appear, through undersigned counsel, at the fairness hearing presently scheduled for May 19, 2006 at 10:00 a.m. before the Honorable Robert E. Blackburn at the United States Courthouse, 901 19th Street, Room A-105, Denver Colorado 80294.

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OBJECTIONS The proposed Class Action Settlement Agreement is inadequate, unfair and unreasonable for the following reasons: 1. The settlement fund consists of cash in the amount of Four Hundred

Million Dollars ($400,000,000) plus interest. Class counsel in their Application for Award of Attorney's Fees and Expenses are requesting a fee of Ninety-Six Million Dollars ($96,000,000) which is equal to twenty-four (24%) percent of the Settlement Fund PLUS reimbursement of out-of pocket expenses of approximately $2.2 Million. The total monies that class counsel is requesting, therefore, is over Ninety-Eight Million Dollars ($98,000,000). This is objected to because the total aggregate requested by Class Counsel is almost Twenty-five (25%) percent of the total recovery, which is far in excess of what is fair and reasonable. From a review of the Declarations of the three firms that were involved as Class Counsel or Liaison Counsel in this case, it appears that the lodestar for all attorneys is less than Eighteen Million Dollars ($18,000,000). (Lerach Coughlin: $17.13 Million; Dyer & Shuman: $1.17 Million and Klari Neuwelt: $250,000.) Therefore, the multiple requested is well over 5 times the lodestar amount and should be carefully scrutinized. Such a multiple is out of line with recent decisions where multiples of more than 2 on the allowable lodestar amount are deemed suspect and cause for more inquiry. It is interesting to note that Class Counsel did not make any references to the amount of the multiple in its declarations and Fee Request. It was only possible to deduce it by studying the Declarations of counsel in support of the Fee Request. This glaring omission could relate to the fact that Class Counsel realizes that

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this fee request fails the lodestar cross check prescribed by Goldberger vs. Integrated Resources, Inc. 209 F. 3d 43 (2nd Cir 2000 ) to determine the reasonableness of the fee. The fact that a negotiated fee agreement exists is only of evidentiary value and this Court is not obligated to follow it slavishly. 2. Based upon the size of the Settlement Fund, the Court should award total

fees and costs to counsel in an amount not exceeding approximately 15.1 % percent of the Settlement Fund. Even this sum, which would be in excess of $60 Million, would reward Class Counsel handsomely for their services and would compute as an extremely generous multiple of more than 3. According to the study by the consulting firm of Logan, Moshman and Moore which analyzed over 1100 Common Fund cases, the average fee award for Class Action cases whose settlements were valued over $100 Million was 15.1 percent. Stuart J. Logan, Jack Moshman and Beverly C. Moore, Jr., Attorney Fee Awards in Common Fund Class Actions, 24 Class Action Rep. 169 (2003). A copy of the executive summary from such study and the data on the $100 Million plus settlements is attached hereto as Exhibit A. It has been suggested that the average is only exceeded when the multiple is too low to fairly recompense counsel. When the multiple is very high (as it is here), an award of the average amount or less, is appropriate. 3. There do not appear to be any provisions in the Plan of Allocation for more

than one distribution to those Class Members who submit claims. But these Class Members are limited to the full amount of their losses. It is conceivable that after applying the proportionate distribution formula described in the Plan of Allocation as limited by each Class Member's loss, funds will remain in the Settlement Fund. Objector could find no provision for dealing with this eventuality in the Settlement Agreement or

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the Plan of Allocation. Where would this money go? Would it revert to Defendants? Would it be allocated to some unnamed and currently unknown charity? Would it remain with the Court? The Class Members are entitled to information concerning this critical issue and it is not to be found in the Notice or the Settlement Agreement. 4. Objectors respectfully adopt and incorporate into these Objections all other well-taken, timely filed Objections that are not inconsistent with these Objections. 5. These Class members each has a legally protectable interest in this litigation. That interest will be impacted by the proposed settlement agreement, particularly the legal fees that are proposed to be paid and the allocation of any "excess" funds from the Settlement Fund. 6. These Objections, presented to the Court as a matter of right, are properly and timely filed by these Objectors. All of the legally required prerequisites material to these Objections have been met. WHEREFORE, Objectors respectfully request that this Court: A. B. Upon proper hearing, sustain these Objections; Continue the issue of attorneys' fees and expense reimbursement for a subsequent hearing; C. Upon proper hearing, enter such Orders as are necessary and just to

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adjudicate these Objections and to alleviate the inherent unfairness, inadequacies and unreasonableness of the Settlement and the requested attorneys' fees and expenses. Respectfully submitted,

____/s/ Arthur M. Schwartz_____ Arthur M. Schwartz, No. 557 SCHWARTZ & GOLDBERG, P.C. 1225 Seventeenth Street, Suite 1600 Denver, CO 80202 Telephone: (303) 893-2500 [email protected] _/s/ Edward F. Siegel____________________ EDWARD F. SIEGEL (Ohio Bar No. 0012912) 5910 Landerbrook Drive Suite 200 Cleveland, Ohio 44124 Voice (440) 544-1107 Facsimile (440) 446-1240 E-mail [email protected]

CERTIFICATE OF SERVICE I certify that these Objections were filed with the Court through its electronic filing system on March 23, 2006 and were served on all counsel by that system. In addition, courtesy copies were served by regular U.S. Mail, postage prepaid on March 23, 2006, to the following: Keith F. Park, Esq. LERACH COUGHLIN STOIA GELLER et al 655 West Broadway, Suite 1900 San Diego CA 92101-3301 Alfred Levitt, Esq. BOIES, SCHILLER & FLEXNER, LLP 5301 Wisconsin Ave. N.W. suite 20015

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Washington DC 20015 Counsel for Settling Defendant Qwest John Freedman ARNOLD 7 PORTER LLP 555 Twelfth Street N.W. Washington DC 20004-1202 Counsel for Defendant Arthur Andersen LLP

__/s/ Edward F. Siegel______________ EDWARD F. SIEGEL Counsel for Objectors

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