Free Reply to Response to Motion - District Court of Colorado - Colorado

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

Document 895

Filed 11/29/2005

Page 1 of 10

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO Civil Action No. 01-cv-1451-REB-CBS (Consolidated with Civil Actions Nos. 01-cv-1472, 01-cv-1527, 01-cv-1616, 01-civ 1799, 01-civ -1930, 01-cv-2083, 02-cv-333, 02-cv-374, 02-cv-507, 02-cv-658, 02-cv755; 02-cv-798, 04-cv-238) In re QWEST COMMUNICATIONS INTERNATIONAL, INC. SECURITIES LITIGATION This document relates to: STICHTING PENSIOENFONDS ABP v. QWEST COMMUNICATIONS INTERNATIONAL INC., ET AL. Civil Action No. 04-cv-238-REB-CBS ______________________________________________________________________ PLAINTIFF'S REPLY MEMORANDUM OF LAW IN FURTHER SUPPORT OF ITS MOTION FOR RECONSIDERATION ______________________________________________________________________

Plaintiff, Stichting Pensioenfonds ABP, hereby submits its reply in further support of its Motion for Reconsideration filed with the Court on September 26, 2005, and in response to Defendant Drake Tempest's Opposition to Plaintiff's Motion for Reconsideration, filed on November 11, 2005. Having filed his response to Plaintiff's Motion for Reconsideration almost three weeks late, subject to his motion for leave to file an out of time response,1 Tempest argues, incongruously, that while justice requires

1

See Defendant Drake Tempest's Motion for Leave to File Out of Time Response to Plaintiff Stichting Pensioenfond ABP's Motion for Reconsideration, dated Nov. 4, 2005, docketed as #873. Plaintiff does not oppose Mr. Tempest's request to file his out-oftime response and recognize the fairness of allowing the parties to brief this issue on its merits. However, Fed. R. Civ. P. 6(b) places ultimate discretion on this Court whether to accept Mr. Tempest's late response upon a showing of "excusable neglect" and Plaintiff takes no position on whether Mr. Tempest has met this standard. Notably, courts in this Circuit and elsewhere have routinely rejected mistakes by counsel in not remembering filing deadlines as not constituting "excusable neglect" within the meaning

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

Document 895

Filed 11/29/2005

Page 2 of 10

that he be given the opportunity to address the merits of Plaintiff's motion for reconsideration despite his late response, Plaintiff, on the other hand, should be denied the opportunity to properly address the issue of his Section 20(a) liability. Clearly, however, if justice requires that Tempest be heard on the merits, Plaintiff should not be denied the same opportunity. In addressing the substance of Plaintiff's allegations regarding Tempest's control over Qwest, Tempest disputes the inferences that may be drawn from the specific allegations in the Complaint. This argument is misguided. At the pleading stage,

Plaintiff's burden is to plead sufficient facts to place Tempest on notice of its theory of control-person liability, and all reasonable inferences from Plaintiff's allegations are to be drawn in Plaintiff's favor. Plaintiff has indisputably met this pleading standard. ARGUMENT I. AS TEMPEST ACKNOWLEDGES, PERMITTING THE PROPER BRIEFING OF TEMPEST'S CONTROL-PERSON LIABILITY FURTHERS THE INTERESTS OF JUSTICE Tempest argues in his Motion for Leave to File an Out of Time Response that "allowing Mr. Tempest a brief extension to respond to Plaintiff's motion will further the interests of justice by allowing Mr. Tempest to address the arguments raised in

of Rule 6(b). See e.g, Ghamrawi v. Case & Assocs. Props. Inc., No. 03-6328, 2004 WL 2476459, at 4 (10th Cir. Nov. *4, 2004) (affirming district court's rejection of late filing where "Plaintiff contends her untimely request should have been excused because her counsel's workload was out of control and counsel could not timely file the request because of other deadlines"); Whale v. United States, 792 F.2d 951, 952-53 (9th Cir.1986); Davidson v. Keenan, 740 F.2d 129, 132 (2d Cir.1984) (inadvertence or oversight of counsel does not constitute "excusable neglect" that might justify an extension of time for filing papers under Fed. R. Civ. P. 6(b)(2)). Ramseur v. Barreto, 216 F.R.D. 180, 182 (D.D.C. 2003) (holding that Defendant's attorney's inadvertent overlooking of filing deadline for filing opposition to plaintiff's petition did not constitute "excusable neglect" sufficient to permit enlargement of time to file opposition). 2

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

Document 895

Filed 11/29/2005

Page 3 of 10

Plaintiff's motion."2

This very same principle requires that Plaintiff be given the

opportunity to properly address Mr. Tempest's liability under Section 20(a) of the Exchange Act. Contrary to Tempest's assertion that Plaintiff's motion is an attempt to "rehash arguments, correct its own errors, or dress up arguments that previously failed," instead, as Plaintiff pointed out in its moving papers, Plaintiff did not address Mr. Tempest's argument at all because Mr. Tempest's skeletal "me-too" brief in support of his motion to dismiss merely referenced arguments raised in other defendants' briefs-- all of which were properly briefed by Plaintiff--that were ultimately rejected by this Court. Thus, far from trying to "rehash" arguments, Plaintiff seeks only to have the issue of Mr. Tempest's liability under Section 20(a) properly considered--as Tempest does in seeking leave to offer his late response--on the merits of Plaintiff's allegations, rather than dismiss the claim on the basis of inadvertence or error.

Foman v. Davis, 371 U.S. 178, 181-182 (1962) (noting that "[t]he Federal Rules reject the approach that pleading is a game of skill in which one misstep by counsel may be decisive to the outcome and accept the principle that the purpose of pleading is to facilitate a proper decision on the merits"). II. PLAINTIFF NEED ONLY SATISFY NOTICE PLEADING STANDARDS TO ESTABLISH CONTROL-PERSON LIABILITY AND EASILY MEETS THIS BURDEN Tempest argues that Plaintiff's allegations of control are, as a matter of law, insufficient to state control to support a claim under Section 20(a) and he attempts to dispute the inferences that may be drawn from Plaintiff's specific allegations. These arguments are specious.
2

Failing to cite a single case in support of his position--

See Tempest Motion for Leave to File An Out Of Time Response, at 2. 3

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

Document 895

Filed 11/29/2005

Page 4 of 10

because none exist--his argument also betrays a fundamental misunderstanding of the burden for pleading a control-person claim.3 Plaintiff's control-person claims are subject only to notice-pleading requirements, and Plaintiff demonstratively has exceeded this minimal burden. The law is indisputably clear that allegations of "control" to establish a Section 20(a) claim need only satisfy notice pleading requirements. See In re Storage Tech. Corp. Sec. Litig., 147 F.R.D. 232, 236 (D. Colo. 1993) (holding that Section 20(a) claim is subject to ordinary notice pleading requirements and noting that a "claimant need not set out in detail the facts upon which he bases his claim. Rather, the allegations must be sufficient to give a defendant fair notice of the plaintiff's claim and the basis upon which it rests") (internal citations omitted); In re Parmalat Sec. Litig., 376 F. Supp. 2d 472, 516-17 (S.D.N.Y. 2005) (at the pleading stage, allegations of control are governed by Rule 8); see also, In re Enron Corp. Sec., Derivative & ERISA Litig., Nos. MDL-1446, Civ. A. No. H-01-3624, 2003 WL 230688, at *11 (S.D. Tex. Jan. 28, 2003) (concluding that Rule 8 notice pleading standard applies to Section 20(a) claims because "the legislative history behind the controlling person provision of both the 1933 and 1934 Acts indicates that Congress sought to reach persons who tried to evade responsibility under the common law of agency by standing behind the scenes and having `dummies'
3

Tempest implies that Plaintiff's control person allegations should be subject to a higher pleading burden because of Plaintiff's "access to millions of pages of documents and scores of thousands of pages of deposition testimony." Notwithstanding, the fact Tempest cites no authority for this position, Plaintiff in fact has yet to be afforded the opportunity serve its own discovery and Mr. Tempest has yet to give his deposition in any of these consolidated proceedings as a result of a stay requested by the U.S. Attorney based on the U.S. Attorney's ongoing criminal investigation into the conduct of Tempest, and others. See Motion of Proposed Intervenor Plaintiff, United States Attorney's Office, District of Colorado To Intervene For the Limited Purpose of Seeking a Stay of Discovery and Memorandum Brief In Support (filed Aug. 3, 2005), at 7-9. 4

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

Document 895

Filed 11/29/2005

Page 5 of 10

under their control commit the primary violations" and "without discovery, it would be extremely difficult to know facts where the controlling person was hiding behind the controlled person"). Moreover, control person allegations are viewed in their entirety. In re Leslie Fay Cos., Inc. Sec. Litig., 918 F. Supp. 749, 764 (S.D.N.Y. 1996) ("When viewing all the indicia of control in their entirety, we conclude that BDO has alleged sufficient facts to withstand Odyssey's and Hechler's challenge that "control" has not been sufficiently alleged to support a section 20(a) `control person' claim"). As set forth in Plaintiff's moving papers, Plaintiff adequately has alleged Tempest's control for purposes of pleading a Section 20(a) claim. These allegations include the fact that Tempest was Qwest's Executive Vice President, General Counsel, Chief Executive Officer and Corporate Secretary (¶¶ 507, 510),4 that he directed Qwest's response to criticism regarding its accounting (¶¶ 99, 100, 668, 670), that he wrote a letter to the Denver Post on behalf of Qwest and refuted allegations of improper accounting (¶ 507), and was consulted by Robin Szeliga, Qwest's CFO, regarding the propriety of secret side deals, that facilitated revenue recognition. (¶ 667). Such

allegations of control are sufficient, for notice pleading purposes, to establish a Section 20(a) claim and Plaintiff therefore respectfully requests that the Court reconsider its dismissal of Plaintiff's Section 20(a) claim against Tempest.

4

All references to Plaintiff's First Amended Complaint appear as "¶__." 5

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

Document 895

Filed 11/29/2005

Page 6 of 10

CONCLUSION WHEREFORE, Stichting Pensioenfonds ABP respectfully requests that its motion for reconsideration be granted. Date: November 29, 2005 Respectfully submitted, /s/ Michael J. Barry_______ Jay W. Eisenhofer Michael J. Barry Sharan Nirmul GRANT & EISENHOFER P.A. Chase Manhattan Centre 1201 N. Market Street Wilmington, Delaware 19801 Telephone: (302) 622-7000 Facsimile: (302) 622-7100 Clyde A. Faatz, Jr. Christopher J.W. Forrest Robin L. Nolan HAMILTON & FAATZ A Professional Corporation 1600 Broadway, Suite 500 Denver, Colorado 80202-4905 Telephone: (303) 830-0500 Facsimile: (303) 860-7855 Attorneys for Plaintiff Stichting Pensioenfonds, ABP

6

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

Document 895

Filed 11/29/2005

Page 7 of 10

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO CERTIFICATE OF SERVICE (CM/ECF) I hereby certify that on this 29th day of November, 2005, a copy of the foregoing PLAINTIFF'S REPLY MEMORANDUM OF LAW IN FURTHER SUPPORT OF ITS MOTION FOR RECONSIDERATION 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 email addresses:
· ·

· · · · ·

· · · · · · ·

X. Jay Alvarez [email protected] Timothy Granger Atkeson [email protected] [email protected];[email protected];[email protected] om;[email protected];[email protected];eric_rillorta@ap orter.com;[email protected];[email protected] Michael James Barry [email protected] [email protected];[email protected] Jeffrey Allen Berens [email protected] Nicholas M. Billings [email protected] Terry W. Bird [email protected] Jessica Brody [email protected] [email protected];[email protected];[email protected] om;[email protected];[email protected];kwame_clement @aporter.com;[email protected];[email protected] Spencer A. Burkholz [email protected] [email protected] John K. Carroll [email protected] Kwame A. Clement [email protected] [email protected] David Lawrence Cook [email protected] Jennifer Lynn Coon [email protected] [email protected] Marguerite S. Dougherty [email protected] Michael J. Dowd [email protected] [email protected]

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

Document 895

Filed 11/29/2005

Page 8 of 10

· · · · · · · · · · · · · · · ·

· · ·

· · ·

Mark T. Drooks [email protected] [email protected] Stephanie Erin Dunn [email protected] [email protected] Thomas E. Egler [email protected] [email protected] Kevin D. Evans [email protected] [email protected] Clyde A. Faatz, Jr [email protected] [email protected];[email protected] Christopher James W. Forrest [email protected] [email protected];[email protected] Joshua David Franklin [email protected] John A. Freedman [email protected] Walter W. Garnsey, Jr [email protected] [email protected] Terence C. Gill [email protected] [email protected];[email protected] Marcy Marie Heronimus [email protected] [email protected];[email protected] Scott M. Himes [email protected] Michael James Hofmann [email protected] [email protected] Kevin Brent Huff [email protected] [email protected] Shelby Hunt [email protected] Lee Frederick Johnston [email protected] [email protected];[email protected] Roberta A. Kaplan [email protected] Gary Michael Kramer [email protected] [email protected] William J. Leone [email protected] [email protected];[email protected] Alfred P. Levitt [email protected] [email protected] Vincent J. Marella [email protected] David Meister [email protected]

2

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

Document 895

Filed 11/29/2005

Page 9 of 10

·

· · · · · · · · · · · · · ·

· · ·

· · ·

James D. Miller [email protected] [email protected];[email protected] Robert Nolen Miller [email protected] [email protected] Barbara C. Moses [email protected] [email protected] James E. Nesland [email protected] [email protected];[email protected] Sharan Nirmul [email protected] [email protected] Robin Lee Nolan [email protected] [email protected];[email protected] Elissa J. Preheim [email protected] Kimberly Wolf Price [email protected] Thomas Vincent Reichert [email protected] [email protected] Eric Tolentino Rillorta [email protected] Kenneth F. Rossman, IV [email protected] Ashley Elizabeth Rupp [email protected] Scott Saham [email protected] Scott B. Schreiber [email protected] Paul Howard Schwartz [email protected] [email protected];[email protected];[email protected] David L. Schwarz [email protected] Jeffrey Allen Smith [email protected] [email protected];[email protected] Holly Stein Sollod [email protected] [email protected];[email protected] Jesus Manuel Vazquez, Jr [email protected] [email protected] James Gregory Waller [email protected] [email protected];[email protected] Jennifer H. Weddle [email protected]

3

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

Document 895

Filed 11/29/2005

Page 10 of 10

And, I also certify that I served same by depositing the forgoing in the U.S. Mail, first-class postage prepaid, addressed to the following: David R. Boyd Lerach Coughlin Stoia Geller Rudman & Robbins, LLP 401 B Street #1700 San Diego, CA 92101 Cleo J. Rauchway Rothgerber, Johnson & Lyons, LLP United States District Court Box 11 1200 - 17th Street #3000 Denver, CO 80202

/s/ Michael J. Barry Michael J. Barry, Esquire GRANT & EISENHOFER P.A. Chase Manhattan Centre 1201 N. Market Street Wilmington, Delaware 19801 Tel: (302) 622-7000 Fax: (302) 622-7100 [email protected] Attorney for Plaintiff

4