Free Objections - District Court of Colorado - Colorado

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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO Civil Action No. 01-cv-1451-REB-CBS
(Consolidated with Civil Action Nos. 01-cv-1472-REB-CBS, 01-cv-1527-REB-CBS, 01cv-1616-REB-CBS, 01-cv-1799, REB-CBS, 01-cv-1930-REB-CBS, 01-cv-2083-REBCBS, 02-cv-0333-REB-CBS, 02-cv-0374-REB-CBS, 02-cv-0507-REB-CBS, 02-cv-0658REB-CBS, 02-cv-755-REB-CBS, 02-cv-798-REB-CBS and 04-cv-0238-REB-CBS)

In re QWEST COMMUNICATIONS INTERNATIONAL, INC. SECURITIES LITIGATION __________________________________________________________________________ NOTICE OF OBJECTIONS __________________________________________________________________________ OBJECTORS ELDON GRAHAM, HAZEL FLOYD, MARY M. HULL, and the ASSOCIATION OF U S WEST RETIREES, by and through their counsel Curtis L. Kennedy, hereby object to Lead Counsel's pending request for an award of attorneys' fees of $96,000,000.00 plus expenses of $2,219,063.84. OBJECTORS state as follows:

A. 1.

Introduction and Background. On June 20, 2001 Morgan Stanley publicly revealed its analysis of potential

accounting problems at Qwest Communication International, Inc. On July 27, 2001, this securities class action was promptly filed against Qwest and other defendants. In a nutshell, this case is about Qwest's fraudulent scheme causing its stock to be artificially inflated in violation of federal securities laws. While Lead Counsel are due get credit for being the first to commence a civil action against Qwest just before the federal government law enforcement agencies got their act together, it is all too obvious that Lead Counsel are the mere jackals to the government's lions, feasting after both the United States Securities Exchange Commission and the United States Justice Department made the kill. Lead Counsel take too much credit and, unlike the jackal, they seek the lion's share of the Settlement Fund recovery.

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2.

In November 2005, the parties executed a "Stipulation of Settlement." 1 There

will be a Settlement Fund established in the amount of $400 million. The Settlement Fund will first be used to pay the expenses of sending out the class notice and claim form. Then, the Settlement Fund will be used to pay the attorneys' fees and expenses. The attorneys are asking for $96 million in fees, plus $2.2 million for expenses and costs. Then, the Settlement Fund will be used to pay expenses of administration. What's left will be distributed to class members. 3. These objections are being filed by class members pursuant to the January 5, 2006 Each

Notice of Pendency and Partial Settlement of Class Action (the "Class Notice").

OBJECTOR was a shareowner of securities issued by U S WEST, Inc., which securities were converted to securities of Qwest Communications International, Inc. upon the merger of U S WEST and Qwest on or about June 30, 2000. The Association of U S WEST Retirees (AUSWR) 2 is a non profit organization of retirees and last owner of record of at least 100 shares of U S WEST common stock converted into Qwest common stock upon the merger. At the time of the U S WEST - Qwest merger, Eldon Graham was last owner of record of at least 1,300 shares of U S WEST common stock converted into Qwest common stock. At the time of the U S WEST - Qwest merger, Hazel Floyd was last owner of record of at least 160 shares of U S WEST common stock converted into Qwest common stock. Likewise, at the time of the U S WEST - Qwest merger, Mary M. Hull was last owner of record of at least 100 shares of U S

The Stipulation resolves claims against all defendants except Former Qwest CEO Joseph P. Nacchio and Former Qwest CFO Robert S. Woodruff. The official website for the Association of U S WEST Retirees (www.uswestretiree.org) reports that it is the umbrella organization of six retiree groups within the former U S WEST area consisting of fourteen states. AUSWR was formed in August 1999. AUSWR's Board of directors consists of elected retirees from U S WEST/Qwest.
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WEST common stock converted into Qwest common stock. Each OBJECTOR continued to retain the Qwest common stock obtained upon the merger of U S WEST and Qwest through at least February 12, 2002. Each OBJECTOR is a member of the class as defined by this Court's order and each OBJECTOR has standing to challenge or advocate for changes in the proposed settlement. 3 Each OBJECTOR has not requested to be excluded from the Settlement Class. 4. There will be a hearing on Tuesday, May 19, 2006, at 10:00 a.m. in Courtroom A-

105 of the Denver Federal Court to determine the fairness of the proposed settlement and an award of attorneys' fees and expenses ("Settlement Hearing"). 5. OBJECTORS contend that Lead Counsel can be reasonably compensated by a fee

which is substantially less than the $96 million pay day they seek, OBJECTORS intend to appear at the Settlement Hearing, and they object as set forth herein.

B.

Argument and Objections 1. The Class Notice is Inadequate and Materially Misleading; There Has Been Inadequate Disclosure of the Hours Expended As the Basis for Lead Counsel's Request For an Award of Attorney's Fees and There Has Been Inadequate Disclosure And Lack of Detail of the Expenses Incurred.

6.

While the Class Notice need not give all the details of settlement, it must "fairly

apprise" the class members of the terms of the proposed settlement and their options. Gottlieb v. Wiles, 11 F.3d 1004, 1013 (10th Cir. 1999). OBJECTORS object on the basis that the Class Notice is materially misleading and confusing to the reasonable class member. 7. For instance, the class notice states on page 7 at Paragraph 2: "For shares of

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These objections are timely filed by the due date, Thursday, March 23, 2006.

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common stock that were acquired in the June 30, 2000 merger with U.S. West, and f) retained at the end of February 12, 2002, the claim per share is $13.95 per share." A reasonable class member who acquired at least 1,000 shares in the June 30, 2000 merger and kept those shares through at least February 12, 2002 is led to believe he or she will be submitting a claim for an award of $1,395.00, a sizable chunk of money. In that same paragraph, the notice woefully fails to clearly inform the claimant that his or her claim will be distributed on a pro-rata basis and, therefore, his or her actual award per share will be substantially less than $13.95 per share. This has led to widespread confusion amongst U S WEST/Qwest retiree class members who have inundated AUSWR leadership for clarification. Lead Counsel strategically chose not to provide either a telephone number or email address on the Class Notice, so as to hamper class members efforts to make contact and get informed. The only means for a class member to seek an explanation from Lead Counsel is to send a letter, an inexcusably slow process. 8. Also, the Class Notice is misleading with respect to the amount of attorneys' fees

and costs to be sought by Lead Counsel. The Class Notice states on page 10 in Section X. "APPLICATION FOR FEES AND EXPENSES - At the Settlement Hearing, Lead Counsel will request the Court to award attorneys' fees of up to 24% of the Settlement Fund, plus reimbursement of expenses, not to exceed $5.2 million, which were incurred in connection with the Litigation, plus interest thereon." Many reasonable class members have been led to believe that an award of Lead Counsel's fees plus expenses will not exceed a total of $5.2 million. 4

The class notice should have clearly stated as follows: Lead Counsel will apply to the Court at the Settlement Hearing for an award of attorneys' fees of up to 24% of the Settlement Fund or $96 million, plus reimbursement of litigation expenses not to exceed $5.2 million which were incurred in connection with the Litigation.

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9.

Moreover, the Class Notice is inadequate because it fails to inform class members

about the amount of fees to be requested by Lead Counsel, but simply gives notice of the fee's outside limit. Certainly, there is no disclosure about the 5.1 multiplier or more of the hourly rates Lead Counsel is seeking to be paid for every hour spent by every attorney partner, attorney associate, paralegal or document clerk on this case, not matter how important or insignificant the nature of the task performed during the litigation. 10. Lead Counsel did not publicly disclose any material information about their

request for attorneys' fees until more than six (6) weeks after the Class Notice was mailed. In order to learn about Lead Counsel's fee request, a person must retrieve the court filings submitted on February 27, 2006 (Docket Nos. 928-939) consisting of 52 separate entries or a total 834 pages that can only be downloaded through Public Access to Court Electronic Records (PACER) at the rate of $.08 per page for a total charge of $66.72. Indeed, for hundreds of

thousands of stockholders the cost of retrieving and downloading that material information easily exceeds any financial benefit they will obtain from the Settlement Fund! 11. At the very least, Lead Counsel should have posted at a dedicated free website

detailed information about the number and nature of attorney hours expended in this case, the loadstar amount and detailed itemization of the expenses incurred. 5 Lead Counsel's dearth of disclosures in the Class Notice reflects a very cavalier approach to seeking an exorbitant amount of attorneys' fees and expenses in shareholder lawsuits settled well before trial on the merits.

Lead Counsel established a website where a class member can retrieve the Stipulation of Settlement, its exhibits, and additional copies of the Class Notice and Proof of Claim and Release forms. Curiously, absolutely nothing related to Lead Counsel's request for attorneys' fees and expenses is available at that website. See www.gilardi.com. and click on "Qwest Communications."

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12.

For all the foregoing reasons, Lead Counsel should be required to provide a

revised Class Notice and post material information about their requested fees and expenses at a free dedicated Internet website.

2.

The Requested Fee Award Sought by Lead Counsel is Extremely Outrageous. A. Lead Counsel Should Be Required To Submit Detailed Time Records, Not Generalized Summaries.

13.

Lead Counsel seeks an award pursuant to the Private Securities Litigation Reform

Act of 1995 ("PSLRA"). The PSLRA states that "[t]otal attorneys' fees and expenses awarded by the court to counsel for the plaintiff class shall not exceed a reasonable percentage of the amount" recovered for the class. 15 U.S.C. § 78u-4(a)(6). "The legislation's primary purpose was to prevent fee awards under the lodestar method from taking up too great a percentage of the total recovery." Powers v. Eichen, 229 F.3d 1249, 1258 (9th Cir. 2000) (citing H.R. Conf. Rep. 104-369 (1995). 14. In "Lead Counsel's Motion for Award of Attorneys' Fees and Reimbursement of

Expenses" (Docket No. 929), Lead Counsel seek attorney's fees of $96 million, plus costs of $2.2 million. Even more, Lead Counsel wants to be paid interest! OBJECTORS contend that an award of $96 million is unjustified. In this case, there wasn't a total victory after a trial. Moreover, Lead Counsel benefitted tremendously by the actions of the federal government, including the United States Congress. While OBJECTORS believe that Lead Counsel should

be paid a fair fee for services rendered, OBJECTORS object to any fees award that is not based upon either a smaller percentage of the fund method or some reasonable loadstar calculation.

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15.

The award of attorney's fees to plaintiffs in shareholder lawsuits is based upon

the common benefit doctrine, an exception to the American Rule that prevailing litigants must pay their own attorney's fees. Hall v. Cole, 412 U.S. 1, 5 (1973). It applies where the plaintiff's successful litigation confers a substantial benefit on all of the shareholders of the defendant corporation. Boeing Co. v. Van Gemert, 444 U.S. 472, 481 (1980). 16. Lead Counsel contend that "Plaintiffs' counsel and their para-professionals and

in-house experts expended 53,895.87 hours to this Litigation with a resulting lodestar of $18,547,453.65. The requested $96 million fee represents a multiple of approximately 5.1 times the lodestar." (Docket 929-1, p. 25). Simply put, Lead Counsel is requesting a payment of more than $1,750 for every hour every person spent allegedly working on this case. That figure simply shocks the conscience of every non-institutional shareholder. 17. Therefore, OBJECTORS demand there be an evidentiary hearing to take evidence

on the reasonable hourly rates for the attorneys involved in pursuing the case and the amount of time and effort expended. 18. In determining the amount of attorney's fees to be award, the Court should

consider the "Johnson factors," referred to in Brown v. Petroleum Co., 838 F.2d 451, 454 (10th Cir. 1988) (applying factors enunciated in Johnson v. Georgia Highway Express, Inc., 488 F.2d. 714, 717 (5th Cir. 1974). 6 Factors which militate for a reduction in the $96 million amount

The Johnson factors include: "the time and labor required, the novelty and difficulty of the question presented by the case, the skill requisite to perform the legal service properly, the preclusion of other employment by the attorneys due to acceptance of the case, the customary fee, whether the fee is fixed or contingent, any time limitations imposed by the client or the circumstances, the amount involved and the results obtained, the experience, reputation and ability of the attorneys, the 'undesirability' of the case, the nature and length of the professional relationship with the client, and awards in similar cases." Johnson v. Georgia Highway Express, Inc., 488 F.2d 714, 717-19 (5th Cir. 1974).

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requested, include the fact the amount recovered is a fraction of the potential liability. The settlement may have been a reasonable option, but is by no means a home run. Additionally, apparently, there has been no client actively scrutinizing attorney bills on a monthly basis, thus, giving Lead Counsel little incentive to minimize duplication of time spent or increase efficiency. OBJECTORS expect the attorney time records will show that the lawyers had a tendency to expand the time required for various projects, added as many bodies as possible, and were not as careful as they should have been in recording time, resulting in a highly inflated calculation of recorded time. OBJECTORS contend the Court should require Lead Counsel to present proof of "meticulous time records that `reveal . . . all hours for which compensation is requested and how those hours were allotted to specific tasks.'" Jane L. v. Bangerter, 61 F.3d 1505, 1510 (10th Cir. 1996) (quoting Ramos v. Lamm, 713 F.2d 546, 553 (10th Cir. 1983). B. The Awards in Similar Megafund Securities Cases Recoveries Weigh in Favor of Awarding Far Less Than $96 Million or 24% of the Settlement Fund.

19.

In support of the motion for an award of attorney's fees, Lead Counsel filed

numerous unreported case decisions and cited several dozen published case decisions. Curiously, Lead Counsel did not even mention the Tenth Circuit's leading decision in Rosenbaum v. MacAllister, 64 F.3d 1439 (10th Cir. 1995). Probably, Lead Counsel would prefer no attention be paid to the Rosenbaum decision, so as not to become publicly embarrassed by their obvious gluttony. In Rosenbaum, the appellate court said "our conscience is shocked by an award of a 3.16 multiplier that results in a fee equal to more than $900 per hour for every attorney, paralegal, and law clerk who worked on the case." Id. at 146768.

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20.

Here, Lead Counsel is requesting a multiplier of 5.1 which result causes even

more shock to a reasonable person's conscience. Lead Counsel is requesting a $96 million payment which when divided by 53,895.87 hours works out to be more than $1,750 for every hour any person - no matter what his or her role - allegedly worked on this case. Surely, such an award would constitute a substantial windfall to the attorneys to the detriment of the class members who stand to recover only pennies on the dollar. 21. Lead Counsel, whose primary law practice and office is based in San Diego,

California, within the Ninth Circuit Court of Appeals, does not cite to that appellate court's leading case decision of Vizcaino v. Microsoft Corp., 290 F.3d 1043 (9th Cir. 2002). In Vizcaino, the Ninth Circuit provided an appendix demonstrating that the vast majority of fee awards in common fund cases that settled for $50 to $200 million between 1996 and 2001 resulted in a fee award within the 1.0 to 4.0 lodestar range. Id. 290 F.3d at 1051, n.6 and Appendix. 22. Furthermore, in the supporting brief Lead Counsel refers to an outdated 1996

report by the National Economic Research Associates (NERA), an economics consulting firm. (See Docket 929-1, p. 32 and Docket 929-20). An updated NERA report in July 2005 shows that fee percentages decline to 26% in settlements in the $25-$100 million range and 19% in settlements of over $100 million. See Exhibit 1 filed herewith, Elaine Buckberg, Ph.D, Todd Foster, Ronald I. Miller, Ph.D., Recent Trends in Shareholder Class Action Litigation: Are WorldCom and Enron the New Standard? at 7 (NERA July 2005). 23. Courts typically reduce the percentage of the fee as the size of the recovery

increases and utilize the lodestar method to confirm that the percentage amount does not award

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counsel an exorbitant hourly rate. See In re Bristol-Myers Squibb Securities Litigation, 361 F. Supp.2d 229, 230 (SD NY 2005), in which the court awarded a fee of $12 million representing approximately 4% of a $300 million settlement; In re Prudential Ins. Co. of America Sales Practices Litig., 962 F.Supp. 572, 585 (D.N.J.1997), reversed and remanded, 148 F.3d 283 (3d Cir.1998) (noting that percentage awards in megafund cases range from 4.1 percent to 17.92 percent of fund); Duhaime v. John Hancock Mut. Life Ins., 989 F.Supp. 375 (D. Mass.1997) (applying 9.3 percent to a common fund over $300 million). Where the fund is unusually large, courts have used a "sliding scale, with the percentage decreasing as the magnitude of the fund increased ..." Manual for Complex Litigation, Third, § 24.12 at 189, Federal Judicial Center (1995) (citations omitted). See e.g., Branch v. FDIC, 1998 WL 151249 (March 24, 1998) (applying 14 percent up to $22 million; 12 percent of the next $10 million, and 5 percent over and above $32 million). 24. One example where the trial court applied such a sliding scale is the case of In re

Lucent Techs., Inc. Sec. Litig., 327 F. Supp. 426, 432 (D. N.J. 2004), where the settlement fund was a whopping $517 million. The court awarded attorneys' fees of 17% of the settlement fund was cross-checked against the lodestar of 61,354 documented attorney hours and resulted in a multiple of 2.13. Id. at 443. 25. In other types of civil actions where a class recovers more than $75-$200 million,

courts weight the economies of scale inherent in class actions in fixing a percentage to yield a recovery of reasonable fees. Accordingly, fees even in the low range of 6-10 percent are common in megafund cases. See In re Washington Public Power Supply Sys. Sec. Litig., 779 F.Supp. 1063 (D. Ariz.1990) (awarding fee of 4.9 percent of $690 million common fund); In re

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MGM Grand Hotel Fire Litig., 660 F.Supp. 522 (D. Nev.1987) (awarding 7 percent of $205 million recovery); In re Corrugated Container Antitrust Litig., 1983-2 Trade Cas (CCH) ¶ 65,628 (S.D. Tex. September 1, 1983) (awarding fee of 9 percent of $366 million fund); In re Folding Carton Antitrust Litig., 84 F.R.D. 245 (N.D.Ill.1979) (awarding fee of 6.6 percent of $200 million class settlement); but see In re Shell Oil Refinery, 155 F.R.D. 552, 573-74 (E.D. La.1993) (on a recovery of $170 million, the court awarded counsel fees comprising 17.92 percent of that recovery). 26. Even in the very case that Lead Counsel places significant reliance upon, the

court was careful not to over indulge the plaintiffs' team of attorneys. In the supporting brief, Lead Counsel extol the virtues of Senior Judge Katz's reasoning to grant an attorneys' fees award of 30% of the $111 million settlement fund in the case of In re Ikon Office Solutions, Inc. Sec. Litig., 194 F.R.D. 166 (E.D. Pa 2000). (See Docket 929-1 at p. 20 - listing, and p. 21 discussion). What Lead Counsel fails to report is that Judge Katz cross-checked his award and found it to be only 2.43 times the loadstar on 47,814 hours of documented attorney time, while saying "the hours do not appear to be inflated and the hourly rates are appropriate." Id. at 195. 27. Similarly in another case Lead Counsel relies upon, In re Lease Oil Antitrust

Litig., 186 F.R.D. 403 (S.D. Tex. 1999), the award of attorneys' fees was 25% of the $190 million settlement fund, but the total attorney hours expended was 132,000 hours which made the award to be 1.35 multiplier on the lodestar. Id. at 448. Again, the trial court took into account the plaintiffs' attorneys actual regular hourly rates.

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3.

Lead Counsel Has Cleverly Hidden Within The Inflated "Request For Attorneys' Fees" Over 8,400 Hours Of Work Performed by Accountants.

28.

Lead Counsel has disingenuously factored into the exorbitant attorneys' fees

request thousands of non-attorney time, work performed by in-house accountants. OBJECTORS contend Lead Counsel is trying to pull a fast one upon unsuspecting class members. The PSLRA does not consider accountant and investigator time the same as billable attorney time. When the Court cross-checks its attorneys' fee award with the lodestar multiplier, the Court should not include the following in-house accountant and investigator time: NAME Alvarado, Edward Azevedo, Kerri Hanselman, Susan K. Mitrovich, Risto Rudolph, Andrew J. Forensic Accountants Barhoum, Anthony J. (FA) (FA) (FA) (FA) (FA) (FA) (EA) HOURS 633.75 741.50 552.50 1,225.00 2,542.50 1,886.75 237.25 135.75 187.75 340.00 RATE 300 300 310 340 425 125-425 290 260-290 200-335 190-225 LODESTAR $190,125.00 222,450.00 171,275.00 416,500.00 1,080,562.50 321,976.25 68,802.50 37,080.00 54,256.25 73,422.50

Economic/Damage Analysts (EA) Investigators MIS

TOTAL

8,482.75

$2,636,450.00

(See Docket 939-1, pp. 2-3). Lead Counsel impermissibly tallies up all this non-lawyer time and lumps it into the alleged lodestar of over 53,895.87 billable attorney hours and seeks at least a 5.1 multiplier on all of that. In short, Lead Counsel is trying to recover $10 million as attorneys'

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fees for work performed by its in house workers and accountants. That's not right. The Court should not grant an enhanced attorneys' fees award based upon accountant time. 29. Moreover, OBJECTORS contend the class members' Settlement Fund should not

be charged phantom hourly rates for Lerach's in-house accountant's work if the law firm was not actually charged those same hourly rates. The Settlement Fund should only be charged the actually charges incurred by the law firm, not the market value of someone's services who are on the internal payroll of the law firm. Therefore, Lead Counsel should make complete disclosure of the true actual out-of-pocket expenses the law firm incurred for having in-house accountants perform their accounting work, not what Lead Counsel believe those in-house accountants could have charged on the open market, had they not been in-house employees. 30. The Court should be most skeptical about granting Lead Counsel's request for an

enhanced attorneys' fee award equivalent to $6,907,250.00 (or at least $1,750.00 times the 3,947 hours) for work allegedly performed by an unidentified "Document Clerk." Lead counsel don't give the courtesy of naming this person, someone who supposedly worked almost three times as many hours as any single attorney. (See Docket 939-1, p. 2). 7 But, Lead Counsel include in the 53,895.87 total attorney lodestar hours the 3,947 hours allegedly worked by this "Document Clerk" whose hourly rates are shown to be $135-200.

Likewise, Lead Counsel don't give the courtesy of naming "Paralegal 1, Paralegal II and Paralegal III" who allegedly have a combined 7,205.75 hours in the case. Again, Lead Counsel has included all that time in the enhanced fee request of an average $1,750 per hour or a total of $12,610,062.50 for paralegal time in this litigation. (See the chart within Lerach Attorney Michael Dowd's Declaration, Docket 939-1, p. 3).

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3.

There Is Insufficient Documentation To Justify Reimbursement of Requested Expenses.

31.

Lead Counsel have not provided sufficient documentation or explanation about

the $2.219,063.84 million in alleged expenses and, the Court should not take for granted that all those expenses, including expert witness fees, were either necessary or reasonable and, therefore, should be charged against the Settlement Fund. For instance, there are no receipts for any of the alleged $394,891.69 "meals, hotels and transportation" the Lerach law firm seeks to charge the Settlement Fund (See Docket 939-1, pp. 11-23). 32. The photocopying charge rate of $.25 per copy is excessive. (See Docket 939-1,

p. 23). Considering the Lerach law firm allegedly made 885,001 copies, there should be a volume discount charged to the Settlement Fund and the requested reimbursement of $221,250.25 should be substantially reduced. Likewise, Lead Counsel devote a mere paragraph statement about the $135,024.64 legal research charges the Lerach law firm allegedly incurred. Lead Counsel should provide the necessary receipts and invoices. 33. OBJECTORS request opportunity to examine the list of expenses and explanation

given for them in order to determine reasonableness. It is unreasonable for Lead Counsel to take for granted that class members and the Court will simply acquiesce to plans to charge the Settlement Fund with undocumented and insufficiently explained $2.2 million in expenses. 34. OBJECTORS concede the nature of high stakes shareholder litigation justifies

large legal fees and substantial costs and expenses. However, succeeding in a shareholder action where the settlement falls in place after a punishing SEC penalty ($250 million), criminal plea bargains within the cast of Defendant characters and further criminal prosecutions, should not be the equivalent of holding a winning lottery ticket. OBJECTORS are not alone in their protests - 14 -

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that the requested over $1,750 for every hour of work allegedly performed by lawyer associates, paralegals and clerks, at rates that significantly enhance profits to the lawyer partners of the law firms involved in the case is just not appropriate. While the reward for success should justifiably be substantial, that does not necessarily equate to rates that are forty or fifty time higher than the average wage earner.

4.

The Court Should Postpone the Final Hearing For Determining Attorneys' Fees Until After Lead Counsel Submits Detail Concerning The Hours Expended, Rates Charged and Sufficient Documentation For The Alleged Expenses For Which Reimbursement Is Sought From The Settlement Fund.

35.

In this $400 million common fund recovery case, the Court has a special

duty to protect the interests of the class. On the issue of how much attorney's fees should be paid to the Named Plaintiffs' counsel, the lawyers now occupy a position adversarial to the interests of the class. OBJECTORS contend this Court must assume the role of fiduciary for the class of shareholders. See e.g., Brown v. Phillips Petroleum Company, 838 F.2d 451, 456 (10th Cir. 1988) ("The trial judge in a common fund case must `act as a fiduciary for the beneficiaries' of the fund."); In re Copley Pharmaceutical, Inc.,"Albuterol" Products Liability Litigation, 1 F.Supp.2d 1407, 1409 (D. WY 1998, Judge Brimmer) ("When an attorney makes a claim for fees from a common fund, his interest is `adverse to the interest of the class in obtaining recovery because the fees come out of the common fund set up for the benefit of the class.' [citations omitted] this divergence of interests requires a court to assume a fiduciary role when reviewing a fee application, because there is often no one to argue for the interests of the class."); In re Coordinated Pretrial Proceedings in Petroleum Prods. Antitrust Litig., 109 F.3d 602, 608 (9th Cir. 1997) ("In a common fund case, the judge must look out for the interests of the

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beneficiaries, to make sure that they obtain sufficient financial benefit after the lawyers are paid. Their interests are not represented in the fee award proceedings by the lawyers seeking fees from the common fund."). 36. Therefore, OBJECTORS contend that it is premature to hold a final hearing on

determining an award of attorney's fees and expenses, because Lead Counsel provided insufficient documentation. OBJECTORS request that at the May 19, 2006 Settlement Hearing, the Court withhold decision on an award of attorneys' fees and expenses. After Lead Counsel provide their documentation, OBJECTORS and class members should be afforded opportunity

to further respond to the request for payment of fees and expenses by the Settlement Fund.
WHEREFORE, OBJECTORS and class members ASSOCIATION OF U S WEST RETIREES, ELDON GRAHAM, HAZEL FLOYD and MARY M. HULL submit their objections as stated herein. OBJECTORS request the Court to scrutinize Lead Counsel's request for expenses to be charged to the Settlement Fund and limit recovery to only those expenses that were necessary and reasonable, an amount substantially less than $2.2 million presently requested. OBJECTORS also request an order limiting Lead Counsel's fee recovery to substantially less than the 24% of the Settlement Fund or $96 million being sought. Any fee award should be cross-checked under the lodestar method with a result that does not exceed a reasonable multiplier, certainly far less than the 5.1 multiplier contemplated by Lead Counsel. Moreover, OBJECTORS request a postponement of the May 19, 2006 Settlement Hearing for determination of attorney's fees and expenses to be paid out of the Settlement Fund until after Lead Counsel has provided sufficient documentation and OBJECTORS and class

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members have sufficient opportunity to further respond to that request. Dated: March 6, 2006. s/ Curtis L. Kennedy Curtis L. Kennedy 8405 E. Princeton Avenue Denver, Colorado 80237-1741 Telephone: (303) 770-0440 Fax: (303) 843-0360 Email: [email protected] Attorney For OBJECTORS

Name and Address of each OBJECTOR: Association of U S WEST Retirees c/o Nelson Phelps, Executive Director 1500 S. Macon Street Aurora, CO 80012- 5141 Hazel A. Floyd 4660 Newton Street Denver, CO 80211-1161 Eldon H. Graham 13629 SE 20th Street Bellevue, WA 98005-4047

Mary M. Hull 678 Clarkson Street Denver, CO 80218

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CERTIFICATE OF SERVICE I hereby certify that on the 6th day of March, 2006, a true and correct copy of the above and foregoing document, together with Exhibit 1, was electronically filed with the Clerk of the Court using the CM/ECF system and a courtesy copy was emailed to counsel of record in accordance with the January 5, 2006 Class Notice as follows: Keith F. Park, Esq. Michael J. Dowd, Esq. LERACH COUGHLIN STOIA GELLER RUDMAN & ROBBINS LLP 655 West Broadway, Suite 1900 San Diego, CA 92101-3301 [email protected] Lead Counsel for Plaintiffs Alfred Levitt, Esq. BOIES, SCHILLER & FLEXNER LLP 5301 Wisconsin Ave., N.W., Suite 800 Washington, DC 20015 [email protected] Counsel for Settling Defendant Qwest John Freedman, Esq. ARNOLD & PORTER LLP 555 Twelfth Street, N.W. Washington, DC 20004-1202 [email protected] Counsel for Defendant Arthur Andersen LLP

and a copy of the same was sent via email to OBJECTORS - Association of U S WEST Retirees, Eldon H. Graham, Hazel A. Floyd and Mary M. Hull. s/ Curtis L. Kennedy

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