Free Brief in Opposition to Motion - District Court of Colorado - Colorado

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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO Case No. 01-cv-01451-REB-CBS (Consolidated With Civil Action Nos. 01-cv-1472-REB-CBS, 01-cv-01527-REB-CBS, 01-cv-1616-REB-CBS, 01--cv-01799-REB-CBS, 01-cv-01930-REB-CBS, 01-cv-02083-REB-CBS, 02-cv-00333-REB-CBS, 02-cv-00374-REB-CBS, 02-cv-00507-REB-CBS, 02-cv-00658-REB-CBS, 02-cv-00755-REB-CBS, 02-cv-00798-REB-CBS, and 04-cv-00238-REB-CBS) In Re QWEST COMMUNICATIONS INTERNATIONAL, INC. SECURITIES LITIGATION This document relates to: STICHTING PENSIOENFONDS ABP V. QWEST COMMUNICATIONS INTERNATIONAL INC., et al., Case No. 04-cv-00238-REB-CBS DEFENDANT DRAKE S. TEMPEST'S OPPOSITION TO PLAINTIFF'S MOTION FOR RECONSIDERATION

Plaintiff's Motion, which seeks reconsideration of this Court's September 12, 2005 Order dismissing Plaintiff's purported claim against Defendant Drake S. Tempest under Section 20(a) of the 1934 Securities Exchange Act (the "September 12, 2005 Order"), is nothing more than an attempt to spin Plaintiff's own pleading failures into a failure of this Court to "apprehend" Plaintiff's allegations. The Motion provides no legal or factual basis for the Court to change its September 12, 2005 Order and should be denied. I. PLAINTIFF HAS NOT ESTABLISHED ANY BASIS ORDER. A.
FOR

THIS COURT

TO

REVERSE

ITS

Legal Standard for Motions for Reconsideration.

A motion to reconsider filed within ten days of judgment should be analyzed under the framework for analyzing motions to alter or amend a judgment under Rule 59(e) of the Federal Rules of Civil Procedure. See Hatfield v. Board of County Comm'rs for Converse County, 52

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F.3d 858, 861 (10th Cir. 1995); Van Skiver v. United States, 952 F.2d 1241, 1243 (10th Cir. 1991). Reversing the court's own ruling is generally appropriate only in three situations: (1) an intervening change in controlling law; (2) the availability of new evidence; or (3) the need to correct clear error or prevent manifest injustice. See Major v. Benton, 647 F.2d 110, 112 (10th Cir. 1981). It may also be appropriate in the rare situation where "the [c]ourt has patently misunderstood a party, or has made a decision outside the adversarial issues presented to the [c]ourt by the parties, or has made an error not of reasoning but of apprehension." United States v. Ibarra, 920 F.2d 702, 706 n.3 (10th Cir. 1990) (citations and quotations omitted). A motion to reconsider is not an opportunity for the losing party to rehash arguments, correct its own errors, or dress up arguments that previously failed. See Voelkel v. General Motors Corp., 846 F. Supp. 1482, 1483 (D. Kan. 1994), aff'd 43 F.3d 1484 (10th Cir. 1994). Most importantly, it is not a motion "to reargue those issues already considered when a party does not like the way the original motion was resolved." In re Houigant, Inc., 914 F. Supp. 997, 1001 (S.D.N.Y. 1996). Nor is it appropriate "to revisit issues already addressed or advance

arguments that could have been raised in prior briefing." Servants of Paraclete v. Does, 204 F.3d 1005, 1012 (10th Cir. 2000) (quoting Van Skiver, 952 F.2d at 1243) (emphasis added). Because Plaintiff is using this Motion to try to correct its own errors and to revisit issues that could have been raised in prior briefing, Plaintiff's motion should be denied. B. Plaintiff Has Not Established Any Basis for This Court to Reconsider Its Order.

Plaintiff claims that Mr. Tempest "did not adequately apprise Plaintiff that he was challenging the sufficiency of Plaintiff's factual allegations relating to his position as a `control person' within the meaning of Section 20(a)." (Pl. Mot. at 7.) Mr. Tempest, however, gave clear 2

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notice to Plaintiff that he was joining, among others, the motions to dismiss filed by Defendants Anschutz and Slater, and even specified the sections of the motions in which he was joining. (See Tempest Mot. to Dismiss at 1-2.) One of the sections joined clearly and expressly

addressed Plaintiff's failure to state a claim under Section 20(a). (See Anschutz and Slater Mot. to Dismiss at 21-22.) Plaintiff had ample notice of the arguments Mr. Tempest was advancing and, thus, had ample opportunity to respond to those arguments. As this Court noted in its Order, Plaintiff failed to point "to any specific allegations in the Complaint that indicate that Tempest had control over any of the primary violators who committed the violations alleged in the Complaint." (Sept. 12, 2005 Order at 24.) Far from "misapprehending the facts," this Court correctly concluded that Mr. Tempest joined in the other defendants' motions by his motion to dismiss, correctly noticed that Plaintiff had failed to respond to Mr. Tempest's arguments, and, most importantly, correctly decided that Plaintiff had not stated a Section 20(a) claim against Mr. Tempest. (Id.) II. EVEN IF PLAINTIFF WERE GRANTED RECONSIDERATION, PLAINTIFF FAILS TO STATE A CLAIM UNDER SECTION 20(a). Plaintiff claims that had it responded to Mr. Tempest's arguments, "it would have highlighted the wealth of facts in the First Amended Complaint, and which were also set forth in Plaintiff's response briefs, that establish Tempest's liability as a control-person of a primary violator of Section 10(b)." (Pl. Mot. at 8.) Although Plaintiff characterizes its Complaint as containing such a "wealth of facts," the Court stated that it had "not noted any such allegations in its review of the Complaint." (Sept. 12, 2005 Order at 24.) The Court's statement was only

logical since the Complaint does not contain anything remotely close to a "wealth of facts"

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establishing Mr. Tempest as a control person. allegations.

In fact, the Complaint contains no such

To state a claim of control person liability under Section 20(a), a plaintiff must establish "(1) a primary violation of the securities laws and (2) `control' over the primary violator by the alleged controlling person." Maher v. Durango Metals, Inc., 144 F.3d 1302, 1305 (10th Cir. 1998); see also City of Philadelphia v. Fleming Cos., Inc., 264 F.3d 1245 (10th Cir. 1991). As the Court recognized in its September 12, 2005 Order, "to allege control sufficiently, a plaintiff must plead facts from which it can reasonably be inferred that the defendant was a control person....To make this showing, the plaintiffs must allege facts that indicate that the defendant had `possession, direct or indirect, of the power to direct or cause the direction of the management and policies of [a primary securities law violator], whether through the ownership of voting securities, by contract, or otherwise.'" Maher, 144 F.3d at 1305 (citations omitted); (quoted in Sept. 12, 2005 Order at 23). In Plaintiff's 308-page, 882-paragraph Complaint, there are a grand total of four allegations specifically relating to Mr. Tempest which Plaintiff now claims demonstrate his control over the alleged primary violators: (1) Mr. Tempest's job title, (2) the allegation that he wrote a letter to the editor of the Denver Post, (3) two meetings with other defendants, and (4) an anonymous letter in 2002 saying that Mr. Tempest should have been fired. Under the wellestablished standard for determining a control person under Section 20(a), none of Plaintiff's alleged bases for control person liability are even arguably sufficient, as a matter of law, to withstand a motion to dismiss.

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A.

Plaintiff Cannot Base a Claim of Control Person Liability Upon Mr. Tempest's Position at Qwest.

Plaintiff first alleges that Mr. Tempest's position as Qwest's Executive Vice President, General Counsel, Chief Administrative Officer and Corporate Secretary put him "in the position to control the content of Qwest's SEC filings and public statements." (Pl. Mot. at 9.) But simply alleging that an individual's position gives him control over an entity is insufficient to state a claim under Section 20(a). See, e.g., Sloane Overseas Fund, Ltd. v. Sapiens Int'l Corp., N.V., 941 F. Supp. 1369, 1378 (S.D.N.Y. 1996) (holding that plaintiff must plead "facts from which control status can be inferred, e.g., that defendant has power, pursuant to an agreement to control the primary violator or aided the primary violator in performing some culpable conduct linking the defendant to the primary violation for which relief is sought."). The absence of any

particularized allegations is understandable because, after months of discovery, Plaintiff should know that the General Counsel of Qwest did not have control over accounting or financial disclosures. Therefore, Plaintiff's conclusory allegations that Mr. Tempest occupied a position of control based on his employment position with Qwest are legally insufficient. B. Plaintiff's "Specific Examples" of "Actual Control" Are Also Insufficient to State a Claim Under Section 20(a).

Plaintiff's second, third and fourth allegations are couched as "specific examples" of Mr. Tempest's "actual control" over violators. (Pl. Mot. at 9.) All three of these "specific

examples," however, are even more conclusory and insufficient than the general allegation of control person liability based on Mr. Tempest's position. Underscoring the conclusory nature of these allegations, Plaintiff cites absolutely no legal authority in support of any of these "specific examples."

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Plaintiff alleges that Mr. Tempest's September 10, 2001 letter to the Denver Post "confirms Tempest's ability to control Qwest's disclosures, his ability to speak on behalf of Qwest, and his familiarity with Qwest's accounting procedures." (Pl. Mot. at 9-10.) Plaintiff cites no legal authority in support of the specious conclusion that writing a letter to a newspaper constitutes "the power to direct or cause the direction of the management and policies of" the alleged securities law violators in this case, namely those at Qwest responsible for accounting and financial disclosures. Adams v. Kinder-Morgan, Inc., 340 F.3d 1083, 1108 (10th Cir. 2003) (quoting Maher, 144 F.3d at 1305). A letter to a newspaper does not establish that Mr. Tempest controlled any alleged primary violators ­ all it shows is that he wrote a letter to the Denver Post. No court to Mr. Tempest's knowledge has found such an allegation sufficient (or even relevant) to support control person liability. Plaintiff also argues that in two meetings, Mr. Tempest controlled and directed Robin Szeliga's courses of action. (Pl. Mot. at 10-11.) Noticeably absent from Plaintiff's Motion, however, is any allegation that in either of these meetings, Mr. Tempest ordered any action or inaction or in any way had the power to control Ms. Szeliga. And any such allegation would be nonsensical. Ms. Szeliga was Qwest's Chief Financial Officer and was herself an Executive Vice President. (Compl. at 11.) She reported to Joseph Nacchio and was a peer, not a

subordinate, of Mr. Tempest. (See Compl. at 24, 26, 28.) Plaintiff's "specific example" is thus nothing more than a record of a meeting at which Mr. Tempest was in attendance and in no way supports a claim of control person liability. Finally, Plaintiff cites an anonymous letter. (Pl. Mot. at 11.) On its face, the letter states that "[Nacchio and Tempest] did not order specifically [sic] subordinates to do unethical or

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illegal acts." (Pl. Mot. at 11) (emphasis added). Further, Plaintiff cites no legal authority for the audacious proposition that an unidentified person can establish that Mr. Tempest had the "power to direct or cause the direction of the management and policies of a person" simply by expressing the unexplained desire that he be fired. Adams, 340 F.3d at 1108; Maher, 144 F.3d at 1305. III. CONCLUSION In sum, despite having had access to millions of pages of documents and scores of thousands of pages of deposition testimony, Plaintiff is unable to allege that Mr. Tempest had control over alleged securities law violators. This should not be surprising, as even the Lead Plaintiffs in the In re Qwest Communications Int'l, Inc. Securities Litigation class action case did not allege that Mr. Tempest was a control person. (See In re Qwest, Fifth Consol. Amended Compl. at 409-10.) Plaintiff's Motion is an attempt to rewrite history, omitting the part in which it failed to respond to Mr. Tempest's motion to dismiss. The Court properly dismissed Plaintiff's Section 20(a) claim from this action and Plaintiff's Motion has not proven otherwise. Accordingly, Mr. Tempest respectfully requests that the Court deny Plaintiff's motion.

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Dated: November 11, 2005

s/ Paul H. Schwartz______ James E. Nesland Jeffrey A. Smith COOLEY GODWARD LLP James E. Nesland / Paul H. Schwartz / Jeffrey A. Smith 380 Interlocken Crescent, Suite 900 Broomfield, CO 80021-8023 Telephone: (720) 566-4000 FAX: (720) 566-4099 E-mail: [email protected] [email protected] [email protected] Attorneys for Defendant Drake S. Tempest

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CERTIFICATE OF SERVICE I hereby certify that on November 11, 2005, I electronically filed the foregoing DEFENDANT DRAKE S. TEMPEST'S OPPOSITION TO PLAINTIFF'S MOTION FOR RECONSIDERATION with the Clerk of Court using the CM/ECF system which will send notification of such filing to the following e-mail addresses: Timothy G. Atkeson Michael J. Barry Frederick J. Baumann Jeffrey A. Berens Nicholas M. Billings Terry W. Bird Bruce F. Black Jessica R. Brody Spencer A. Burkholz Kwame A. Clement David L. Cook John F. Cove, Jr. Marguerite S. Dougherty Michael J. Dowd Mark T. Drooks Stephanie E. Dunn Thomas E. Egler Clyde A. Faatz, Jr Christopher J.W. Forrest John A. Freedman Walter W. Garnsey, Jr Terence C. Gill Kirsten E. Gillibrand Michael J. Grudberg Mark C. Hansen Marcy M. Heronimus Scott M. Himes Michael J. Hoffman Kevin B. Huff Shelby Hunt Lee F. Johnston Roberta A. Kaplan James D. Kilroy Gary M. Kramer Alfred P. Levitt Martin D. Litt [email protected] [email protected]; [email protected] [email protected]; [email protected] [email protected] [email protected] [email protected] [email protected]; [email protected] [email protected] [email protected]; [email protected] [email protected]; [email protected] [email protected] [email protected]; [email protected] [email protected] [email protected]; [email protected] [email protected]; [email protected] [email protected]; [email protected] [email protected]; [email protected] [email protected]; [email protected]; [email protected] [email protected]; [email protected]; [email protected] [email protected] [email protected]; [email protected] [email protected]; [email protected]; [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected]; [email protected] [email protected] [email protected]; [email protected]; [email protected] [email protected]; [email protected] [email protected]; [email protected] [email protected] 9

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James M. Lyons David Meister James D. Miller Robert N. Miller Blain D. Myhre Sharan Nirmul Cindy C. Oliver Neil Peck Elissa J. Preheim Kimberly W. Price Thomas V. Reichert Eric T. Rillorta Kenneth F. Rossman, IV Scott Saham David L. Schwarz David W. Shapiro Holly Stein Sollod Charles A. Stillman Jesus M. Vazquez, Jr. Jennifer H. Weddle David A. Zisser

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

and I hereby certify that a copy of the foregoing DEFENDANT DRAKE S. TEMPEST'S OPPOSITION TO PLAINTIFF'S MOTION FOR RECONSIDERATION was placed in the United States Mail, postage prepaid, addressed to:

Jonathan D. Schiller, Esq. David R. Boyd, Esq. Boies, Schiller & Flexner, LLP 5301 Wisconsin Avenue, N.W. Washington, DC 20015 Geoffrey C. Jarvis, Esq. Grant & Eisenhofer, P.A. 1201 North Market Street, Suite 2100 Wilmington, DE 19801 Scott B. Schreiber, Esq. Arnold & Porter 555 Twelfth Street, NW Washington, DC 20004-1206

Ty Cobb, Esq. Hogan & Hartson 1200 17th Street, Suite 1500 Denver, CO 80202 Vincent J. Marella, Esq. Bird, Marella, Boxer & Wolpert, APC 1875 Century Park East, 23rd Floor Los Angeles, CA 90067

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s/ Paul H. Schwartz James E. Nesland Jeffrey A. Smith COOLEY GODWARD LLP James E. Nesland / Paul H. Schwartz / Jeffrey A. Smith 380 Interlocken Crescent, Suite 900 Broomfield, CO 80021-8023 Telephone: (720) 566-4000 FAX: (720) 566-4099 E-mail: [email protected] [email protected] [email protected] Attorneys for Defendant Drake S. Tempest

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