Free Motion to Stay - 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-RB-1472, 01-RB-1527, 01-RB-1616. 01-RB1799, 01-RB-1930, 01-RB-2083, 02-RB-333, 02-RB-374, 02-D-507, 02-RB-658, 02-RB755, 02-RB-798, and 04-RB-238) In re QWEST COMMUNICATIONS INTERNATIONAL INC. SECURITIES LITIGATION

UNOPPOSED DEFENDANT QWEST COMMUNICATIONS INTERNATIONAL INC.'S MOTION TO STAY PRODUCTION OF PRIVILEGED DOCUMENTS PRODUCED TO GOVERNMENT PENDING WRIT REVIEW BY COURT OF APPEALS

Defendant Qwest Communications International Inc. ("Qwest") moves for entry of an order staying compliance with that portion of this Court's February 2, 2006 Order Concerning Qwest's Renewed Motion To Reconsider And To Certify Interlocutory Appeal ("February 2, 2006 Order") (Docket # 923) requiring production of the documents Qwest previously produced to the government pursuant to written confidentiality agreements (the "Limited Waiver Material"). This motion is unopposed.1 Qwest requests that this stay continue for the duration of any appellate review resulting from Qwest's filing today of a Petition for Writ of Mandamus ("Mandamus

Pursuant to D.C.COLO.LCivR. 7.1(A), undersigned counsel for Qwest certify that they have conferred with Lead Counsel for Lead Plaintiffs. Lead Counsel advises that while they do not oppose this motion, they reserve the right to revisit any stay based on the timing of the proceedings in the Tenth Circuit and their continued litigation against the non-settling defendants. Further, as set forth in their prior briefing on this issue, Lead Plaintiffs expressly disagree with Qwest's characterization of its potential for success on appeal.

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Petition") with the United States Court of Appeals for the Tenth Circuit.2 Absent a stay, disclosure of the Limited Waiver Material may occur before the Tenth Circuit is able to complete its review, causing Qwest irreparable harm. I. PROCEDURAL BACKGROUND On February 2, 2006, this Court granted in part and denied in part Qwest's renewed motion to reconsider and certify, ordering Qwest to produce by March 15, 2006 those documents protected by the attorney-client privilege and fact work product doctrine from among the Limited Waiver Material. See Exhibit B, District Court's February 2, 2006 Order. Earlier today, Qwest filed a Mandamus Petition in the United States Court of Appeals for the Tenth Circuit, seeking immediate review of the limited waiver issue raised by this Court's February 2, 2006 Order. By this motion, Qwest respectfully requests that this Court stay compliance with its February 2, 2006 Order to permit the Tenth Circuit to conclude its review of the issue pursuant to Qwest's Mandamus Petition. II. ARGUMENT A. Legal Standard In ruling on a motion to stay an order to compel documents subject to privilege claims, courts generally balance four factors: (1) the threat of irreparable harm absent a stay; (2) harm to the non-movant if the stay is granted; (3) any risk of harm to the public interest; and (4) the likelihood of success on appeal. See F.T.C. v. Mainstream Marketing Services, Inc., 345 F.3d 850, 852 (10th Cir. 2003). Just as these
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See Exhibit A, February 23, 2006 Mandamus Petition.

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considerations sufficed to warrant a stay of the August 15 Order pending Tenth Circuit review, they likewise support a stay of the February 2, 2006 Order pending the Court of Appeals' disposition of Qwest's Mandamus Petition. B. Qwest Faces Irreparable Harm Absent A Stay Because Disclosure Of Its Privileged Documents Cannot Be Undone. An injury is irreparable if compensatory damages cannot restore the parties' respective positions. Wildmon v. Berwick Universal Pictures, 983 F.2d 21, 24 (5th Cir. 1992). Damages could not repair the harm Qwest will suffer if the documents at issue are produced and the Court of Appeals subsequently determines that Qwest's assertion of privilege is well founded. See, e.g., U.S. v. Philip Morris Inc., 314 F.3d 612, 622 (D.C. Cir. 2003) (noting, in granting motion to stay proceedings pending appellate review of privilege issues, that "the general injury caused by the breach of the attorneyclient privilege and the harm resulting from the disclosure of privileged documents to an adverse party is clear enough"). Put simply, as numerous decisions of this Court and others recognize, the storied bell cannot be un-rung: "In most cases, disclosure [of confidential or privileged information] makes meaningful review impossible because after disclosure whatever privilege attaches would be `worthless.'" Barclaysamerican Corp. v. Kane, 746 F.2d 653, 654 (10th Cir. 1984) (quoting United States v. West, 672. F2d 796, 799 (10th Cir. 1982)); see also United States v. Winner, 641 F.2d 825, 830 (10th Cir. 1981) ("[D]isclosure of the allegedly privileged or confidential information renders impossible any meaningful appellate review of the claim of privilege or confidentiality."); Jenkins v. Weinshienk, 670 F.2d 915, 917 (10th Cir. 1982) ("If [a

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litigant] must comply with the district court order and turn over his [documents], his . . . claimed privilege not to disclose information will be effectively destroyed.").3 Underscoring the irreparable harm to Qwest in the absence of the requested stay is the unique factual posture that distinguishes this case from virtually any other. Discovery in this case is coordinated with numerous other federal and state cases proceeding in this Court and across the United States. See Minute Order dated January 27, 2005 (Docket # 560). The orders establishing the coordinated discovery protocol require that Qwest produce to plaintiffs in all the coordinated cases documents produced in any one case. Id. Thus, requiring Qwest to comply with this Court's February 2, 2006 Order will set in motion a chain reaction waiver with far-reaching consequences in myriad jurisdictions. The resulting harm could not be remedied by a subsequent appeal in In re Qwest Sec. Litig., or any of the other coordinated cases. C. Stay Of The August 15 Order Pending A Ruling On Qwest's Mandamus Petition Poses Little Or No Risk Of Harm To Lead Plaintiffs Because Access To The Documents Is Preserved. The most extreme harm that Lead Plaintiffs might face if this Court stays the February 2, 2006 Order requiring Qwest to produce the Limited Waiver Material is that they will be unable to examine the documents at issue pending appellate review of this important issue. A hearing regarding the fairness of the partial settlement of the class

See also In re BankAmerica Corp. Sec. Litig., 270 F.3d 639, 641 (8th Cir. 2001) ("[A]n appeal after disclosure of the privileged communication is an inadequate remedy."); In re Regents of Univ. of Calif., 101 F.3d 1386, 1387 (Fed. Cir. 1996) (same); In re Beiter Co., 16 F.3d 929, 931-32 (8th Cir. 1994) (same); In re Steinhardt Partners, L.P., 9 F.3d 230, 233 (2d Cir. 1993) (undertaking mandamus review of waiver issue, in part because "the alleged privilege will be lost if review must await final judgment").

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action is scheduled for May 19, 2006. If approved, the partial settlement will result in the dismissal of the action against all but two defendants, Messrs. Joseph Nacchio and Robert Woodruff. The United States Attorney for the District of Colorado has intervened in this action and has requested that depositions of several key witnesses ­ including Messrs. Nacchio and Woodruff ­ be deferred for the time being.4 Thus, Lead Plaintiffs are not currently conducting discovery against Mr. Nacchio or Mr. Woodruff. In any event, the potential harm arising from any delay in reviewing this universe of documents would be minimal, and would be decidedly outweighed by (a) the irreparable harm to Qwest if the stay is not granted, and (b) the public interest in preserving privileges pending evaluation thereof, discussed infra. See In re Yellow Cab Co-op Ass'n, 192 B.R. 555, 558 (D. Colo. 1996) (temporary harm to non-moving party decidedly outweighed by harm to the movant (disruption of the status quo) and to the public interest ("destructive competition")). D. Stay Of The August 15 Order Serves The Public Interest By Safeguarding The Administration Of Justice. The parties do not dispute that, absent production to the government, the Limited Waiver Material is subject to legitimate claims of attorney-client and work-product privilege. The public interest is served by protecting these privileges. Horton v. United States, 204 F.R.D. 670, 672 (D. Colo. 2002). Here, the public interest is therefore served by maintaining protection of Qwest's privileges while the Court of Appeals

On December 20, 2005, the United States indicted Defendant Nacchio on charges of insider trading. The action is pending before the Honorable Judge Edward Nottingham in the United States District Court for the District of Colorado.

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considers the issue of waiver. See, e.g., Philip Morris Inc., 314 F.3d at 622 (granting motion to stay proceedings pending appellate review of privilege issues); Boughton v. Cotter Corp., 10 F.3d 746, 748 (10th Cir. 1993) (circuit court issued temporary stay of discovery order compelling disclosure pending decision on question of appellate jurisdiction); In re Steinhardt Partners, L.P., 9 F.3d 230, 233 (2d Cir. 1993) (circuit court issued stay of district court order compelling disclosure pending review of privilege issues on petition for writ of mandamus); Fausek v. White, 965 F.2d 126, 128 (6th Cir. 1992) (motions panel of court of appeals stayed district court's order compelling disclosure pending hearing and decision on privilege issue).5 Moreover, there is no countervailing public interest favoring immediate production of documents still subject to a claim of privilege. E. Qwest's Objections Are Likely to Succeed. The Tenth Circuit has held that "[w]ith respect to the four stay factors, where the moving party has established that the three `harm' factors tip decidedly in its favor, the `probability of success' requirement is somewhat relaxed." Mainstream Mktg. Servs., Inc., 345 F.3d at 852; see also Time Warner Entm't Co., L.P. v. Atriums Partners, L.P.,

See also In re Keeper of Records, 348 F.3d 16, 21 (1st Cir. 2003) (noting that district court had stayed proceedings pending appellate review of privilege and limited waiver issues); Westinghouse Elec. Corp. v. Republic of the Philippines, 951 F.2d 1414, 1421 (3d Cir. 1991) (noting that district court had stayed proceedings pending appellate review of privilege and limited waiver issues); Simon v. G.D. Searle & Co., 816 F.2d 397, 399 (8th Cir. 1987) (noting that district court had stayed proceedings pending appellate review of work product issues); cf. Watson v. Lowcountry Red Cross, 974 F.2d 482, 484 (4th Cir. 1992) (noting that district court had issued stay with respect to discovery order compelling disclosure pending appellate review of constitutional privacy issues).

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No. 02-2343, 2003 WL 111446, at *1 (D. Kan. Jan. 8, 2003) (Exhibit C) (probability of success that must be demonstrated is "inversely proportional to the amount of irreparable injury" that the movant will suffer). Under the "relaxed" standard, the movant demonstrates a sufficient probability of success by raising "questions going to the merits so serious, substantial, difficult, and doubtful as to make the issue . . . deserving of more deliberate investigation." Mainstream Mktg. Servs., Inc., 345 F.3d at 852-53. As discussed above, the three "harm" factors tip decidedly in Qwest's favor because the irreparable harm to Qwest absent the stay, combined with the public interest in protecting privileges, outweighs any theoretical harm Lead Plaintiffs might experience from a stay. See Yellow Cab, 192 B.R. at 558 (where harm to non-moving party was only temporary, harm to movant and to public interest were sufficiently prevailing to require application of the relaxed standard). Thus, Qwest need only raise "serious, substantial, difficult, and doubtful" questions about the merits of the Order to satisfy the relaxed standard. Mainstream Mktg. Servs., Inc., 345 F.3d at 853. That standard has been met. As discussed more fully in Qwest's Mandamus Petition, a number of federal courts of appeal have indicated that, in the context of production of documents to federal law enforcement authorities, general waivers of privilege to third parties can be avoided by a producing party's written agreement limiting waiver and the government's use of the documents in question. Indeed, as Qwest has noted previously, the United States Securities and Exchange Commission, one of the government agencies that entered into a written agreement with Qwest in this instance, has stated that recognition of such limited waiver agreements is essential to its effective

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enforcement of the federal securities laws. See June 14, 2005, Objection of Qwest Communications International Inc. To May 31, 2005 Order Of Magistrate Judge Shaffer Concerning Motion To Compel Production Of Documents, at 5-6 & n.7 (Docket # 691). Thus, resolution of the questions relating to the privileges at issue here is sufficiently difficult ­ and the resolution sufficiently important, given the significant federal interests involved ­ to warrant "more deliberate investigation." See, e.g., Westinghouse Elec. Corp. v. Republic of the Philippines, 951 F.2d 1414, 1421 (3d Cir. 1991) (district court stayed disclosure of documents pending appeal because of "'substantial questions' concerning the application of the attorney-client privilege and the work-product doctrine" in the context of limited disclosures). These considerations suffice to necessitate a stay, whether under the "relaxed standard" set forth in Mainstream Mktg. Servs., Inc., 345 F.3d at 852-53, or a more demanding standard that would more closely consider the appellant's likelihood of success. See, e.g., Philip Morris Inc., 314 F.3d at 622 (granting stay pending appellate review of privilege issues); Boughton, 10 F.3d at 748 (circuit court had issued temporary stay of discovery order compelling disclosure pending decision on question of appellate jurisdiction); In re Steinhardt Partners, L.P., 9 F.3d at 233 (issuing stay pending appellate review of privilege issues).

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IV.

CONCLUSION For the foregoing reasons, Qwest respectfully requests that the Court enter an

order staying compliance with the February 2, 2006 Order pending the United States Court of Appeals for the Tenth Circuit's disposition of Qwest's Mandamus Petition.

DATED: February 23, 2006 Respectfully submitted, ____/s/ Alfred P. Levitt___________ Jonathan D. Schiller David R. Boyd Alfred P. Levitt BOIES, SCHILLER & FLEXNER LLP 5301 Wisconsin Avenue, N.W. Washington, DC 20015 Telephone: (202) 237-2727 Facsimile: (202) 237-6131 Terence C. Gill SHERMAN & HOWARD, L.L.C. 633 Seventeenth Street, Suite 300 Denver, CO 80202 Telephone: (303) 297-2900 Facsimile: (303) 298-0940

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CERTIFICATE OF SERVICE I hereby certify that on this 23rd day of February, 2006, a copy of the foregoing UNOPPOSED DEFENDANT QWEST COMMUNICATIONS INTERNATIONAL INC.'S MOTION TO STAY PRODUCTION OF PRIVILEGED DOCUMENTS PRODUCED TO GOVERNMENT PENDING WRIT REVIEW BY COURT OF APPEALS was electronically filed with the Clerk of the Court using the USDC CM/ECF system, which will send notification of such filing to the following e-mail addresses: X. Jay Alvarez [email protected] Counsel for Lead Plaintiffs Counsel for Defendants Arthur Andersen & Iwan Counsel for Plaintiff Stichting Pensioenfonds ABP Counsel for Defendant Szeliga Counsel for Defendants Arthur Andersen & Iwan Counsel for Lead Plaintiffs Counsel for Defendant Woodruff Counsel for Defendants Arthur Andersen & Iwan Counsel for Defendant Woodruff Counsel for Defendant Szeliga

Timothy G. Atkeson

[email protected]

Michael J. Barry

[email protected] [email protected] [email protected] [email protected]

Terry W. Bird

Jessica Brody

[email protected]

Spencer A. Burkholz John K. Carroll

[email protected] [email protected] [email protected]

Kwame A. Clement

[email protected]

David L. Cook

[email protected]

Jennifer L. Coon

[email protected] [email protected]

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Michael J. Dowd

[email protected]

Counsel for Lead Plaintiffs Counsel for Defendant Szeliga Counsel for Defendant Smith Counsel for Lead Plaintiffs Counsel for Defendant J. Kozlowski in the SEC matter Local Counsel for Plaintiff Stichting Pensioenfonds ABP Local Counsel for Plaintiff Stichting Pensioenfonds ABP Counsel for Defendants Arthur Andersen & Iwan Counsel for Defendant Casey Local Counsel for Defendant Qwest Communications Int. Inc. Local Counsel for Defendant Qwest Communications Int. Inc. Counsel for

Mark T. Drooks

[email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected]; [email protected]

Stephanie E. Dunn

Thomas E. Egler

Kevin D. Evans

Clyde A. Faatz, Jr.

[email protected]

Christopher J. W. Forrest

[email protected] [email protected] [email protected] [email protected]

John A. Freedman

Walter W. Garnsey, Jr. Terence C . Gill

[email protected] [email protected] [email protected]

Marcy M. Heronimus

[email protected] [email protected]

Michael J. Hofmann

[email protected]

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Defendants Anschutz & Slater Kevin B. Huff [email protected] [email protected] Counsel for Defendants Anschutz & Slater Counsel for Defendants Arthur Andersen & Iwan

Shelby Hunt

[email protected]

Gary M. Kramer William J. Leone

[email protected] [email protected] [email protected]; [email protected] [email protected] United States Attorney; Intervenor Plaintiff Counsel for Defendant Szeliga

Vincent J. Marella

David Meister

[email protected] Counsel for Defendant Woodruff [email protected] Counsel for Defendant Woodruff Counsel for Defendant Smith Counsel for Defendant Mohebbi Counsel for Defendant Nacchio Counsel for Defendant Tempest Counsel for Plaintiff Stichting Pensioenfonds ABP Local Counsel for

James D. Miller

Robert N. Miller

[email protected]

Barbara C. Moses

[email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected]

Edward S. Nathan

James E. Nesland

Sharan Nirmul

Robin L. Nolan

[email protected]

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[email protected] [email protected] Elissa J. Preheim [email protected]

Plaintiff Stichting Pensioenfonds ABP Counsel for Defendants Arthur Andersen & Iwan Counsel for Defendant Woodruff Counsel for Defendant Szeliga Local Counsel for Defendant Nacchio Counsel for Defendants Arthur Andersen & Iwan Counsel for Defendant Mohebbi Counsel for Lead Plaintiffs Counsel for Defendants Arthur Andersen & Iwan Counsel for Defendant Tempest

Kimberly W. Price Thomas V. Reichert John M. Richilano

[email protected] [email protected] [email protected] [email protected] [email protected]

Eric T. Rillorta

Ashley Rupp

[email protected]

Scott Saham

[email protected]

Scott Schreiber

[email protected]

Paul H. Schwartz

David L. Schwarz

[email protected] [email protected] [email protected] [email protected] [email protected]

Joel M. Silverstein

[email protected]

Counsel for Defendants Anschutz & Slater Counsel for Defendant Nacchio Counsel for Defendant Tempest

Jeffrey A. Smith

[email protected] [email protected] [email protected] [email protected]

Jeffrey Speiser

Counsel for Defendant Nacchio

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Herbert J. Stern

[email protected]

Counsel for Defendant Nacchio Counsel for Alvarado, Haines, Hellman, & Stephens Counsel for Defendant Casey

Jesus M. Vazquez, Jr. James G. Waller

[email protected] [email protected] [email protected] [email protected] [email protected]

and, I also certify that I have served same by depositing in the U.S. Mail, first-class postage prepaid, addressed to the following: Frederick J. Baumann James M. Lyons Rothgerber Johnson & Lyons LLP 1200 17th Street, Suite 3000 Denver, CO 80202-5855 Counsel for Alvarado, Haines, Hellman, & Stephens Phone: 303.623.9000 Fax: 303.623.9222 [email protected] [email protected] C. Mylett PO Box 1031 Coleman, FL 33521 Plaintiff in Rogers, Mylett Matter Joe R. Whatley, Jr. Glen Connor Whatley Drake, LLC 2323 Second Avenue North Birmingham, AL 35202 Counsel for Plaintiff in ERISA matter Phone: 205.328.9576 Fax: 205.328.9669 [email protected] [email protected]

William M. Rogers 606 S. Military Trail Deerfield Beach, FL 33442 Plaintiff in Rogers, Mylett Matter

/s/ Jed Donaldson Jed Donaldson

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