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

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

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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) In re QWEST COMMUNICATIONS INTERNATIONAL INC. SECURITIES LITIGATION

DEFENDANT QWEST COMMUNICATIONS INTERNATIONAL INC.'S REPLY IN SUPPORT OF MOTION TO STAY MAGISTRATE JUDGE SHAFFER'S MAY 31, 2005 ORDER GRANTING LEAD PLAINTIFFS' MOTION TO COMPEL PRODUCTION OF DOCUMENTS PENDING A RULING ON QWEST'S OBJECTIONS THERETO

In their opposition brief, Lead Plaintiffs advance a series of circular arguments and inapposite cases. First, Lead Plaintiffs argue that the requested stay should be denied because the privilege was waived when Qwest produced the documents at issue to the Government. Opposition Brief at 1. Of course, whether the privilege was waived is the issue Qwest has asked Judge Blackburn to review. Lead Plaintiffs cannot assume away Qwest's motion by hypothesizing that they will prevail on the ultimate issue before Judge Blackburn ­ i.e., they cannot argue, "if we win, then we will have won." Second, Lead Plaintiffs argue that Qwest will suffer no harm if the documents at issue are produced because "a protective order exists which will preserve the confidentiality of any documents produced by Qwest in this litigation." Opposition Brief at 2. This argument also makes no sense. Qwest seeks to prevent the disclosure of the documents at issue to anyone not authorized to receive privileged Qwest material.

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High on the list of people not authorized to receive Qwest's privileged material are the Lead Plaintiffs. Indeed, under Lead Plaintiffs theory, privileged documents could always be produced to one's adversary provided there was a protective order that prevented further disclosure. While protective orders serve a useful purpose in preventing confidential business information from being disclosed outside a litigation, they are not intended to expand the group of people who can receive information subject to a claim of privilege. Further, the cases Lead Plaintiffs cite are inapposite. In the first case, United States v. Duke Energy Corp., 218 F.R.D. 468 (M.D.N.C. 2003), a Magistrate Judge found a stay was inappropriate because "summary judgment motions ha[d] already been decided and trial [was] imminent." Id. at 477. Under those circumstances, the Magistrate found that a "compromise" was appropriate: "the documents can be disclosed under the parties' protective order to plaintiff's litigation counsel," which "would allow plaintiff to prepare for litigation and, yet, preserve the confidentiality of the documents should Duke Energy wish to further pursue this matter." Id. While Qwest respectfully submits that Duke Energy was wrongly decided as a general proposition, it is clearly inapposite ­ the parties in this case have not completed summary judgment and there is no trial date, much less an "imminent trial." Thus, the extraordinary (and highly questionable) "compromise" that the Magistrate Judge struck in Duke Energy would not be supportable in this case. Lead Plaintiffs' reliance on In re Metiom Inc., 318 B.R. 263 (S.D.N.Y. 2004) is similarly misplaced. Significantly, the documents at issue in Metiom were not privileged, and the party seeking the stay the bankruptcy court's order

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did not claim the documents were privileged. Thus, the case is wholly irrelevant to the issue before this Court. 1 Finally, Lead Plaintiffs argue that they will be prejudiced if they are not promptly provided with the documents subject to Qwest's claim of privilege. This argument is predicated on Lead Plaintiffs assertion that "time is of the essence" because deposition discovery is currently scheduled to close on September 16, 2005. Lead Plaintiffs, however, have already advised Qwest that they reserve the right to seek additional deposition discovery after September 16, 2005 based on the production of any material previously withheld for privilege. Lead Plaintiffs cannot have it both ways, arguing a need for these documents in order to complete depositions by September 16, 2005 while also reserving their right to seek depositions after the September 16, 2005 deadline. In any event, Lead Plaintiffs suffer no real prejudice if they must await Judge Blackburn's decision in this matter as to whether Qwest's privilege has in fact been waived. The harm Lead Plaintiffs claim amounts to a slight delay at most, which is 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. In re Yellow Cab Co-op Ass'n, 192 B.R. 555, 558 (D. Colo. 1996) (temporary harm to nonmoving party decidedly outweighed by harm to the movant (disruption of the status quo) In arguing that mootness is not a relevant factor, Lead Plaintiffs also overlook decisions from within the Tenth Circuit recognizing the importance of that factor in assessing a request for a stay pending an appeal. In re Sunflower Racing, Inc., 225 B.R. 225, 228 (D. Kan. 1998) (the mooting of an objection "is an important factor in evaluating the potential harm" to the party seeking a stay).
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and to the public interest ("destructive competition")); see also Boughton v. Cotter Corp., 10 F.3d 746, 748 (10th Cir. 1993) (court granted temporary stay in order to resolve appeal from order for production of documents subject to defendant's claim of privilege); see also United States v. Philip Morris Inc., 314 F.3d 612, 621-22 (D.C. Cir. 2003) (granting a stay upon timely filing of objection and stating: "injury caused by the breach of the attorney-client privilege and the harm resulting from the disclosure of privileged documents to an adverse party is clear enough. . . . [and] there is no reason to believe a minor delay will substantially harm [Plaintiff]"). Similarly, the issue of privilege waiver has routinely been recognized to be sufficiently time-sensitive and important that courts have accepted interlocutory reviews of privilege determinations. See, e.g., In re Ford Motor Co., 110 F.3d 954, 962-64 (3d Cir. 1997) ("Appeal after final judgment cannot remedy the breach in confidentiality occasioned by erroneous disclosure of protected materials.... [T]he cat is already out of the bag.... [T]here is no way to unscramble the egg scrambled by the disclosure...."); In re Cont'l Ill. Sec. Litig., 732 F.2d 1302, 1307-08 (7th Cir. 1984) ("Once the Report was released, any error in releasing it would be impossible to correct."); In re Grand Jury Investigation of Ocean Transp., 604 F.2d 672, 673-74 (D.C. Cir. 1979) (per curiam) (holding that, because the district court's order "conclusively determined the question of waiver" of the attorney-client privilege, appellant "must pursue its claim of attorney-client privilege at this time in order to ensure that its claim not later become moot by reason of the documents' disclosure to third parties"); S. Methodist Univ. Ass'n of Women Law Students v. Wynne & Jaffe, 599 F.2d 707, 712 (5th Cir. 1979) ( "[B]ecause[information], once revealed, could not again be

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concealed, review following a decision on the merits would come too late...."). Obviously, these same considerations support a stay of an order requiring disclosure of materials claimed to be privileged while that order is reviewed on appeal. For the foregoing reasons, Qwest respectfully requests that the Court enter an order staying compliance with the May 31, 2005 Order pending a ruling on Qwest's objections.

DATED: July 13, 2005

Respectfully submitted,

s/Terence C. Gill_________________ Terence C. Gill SHERMAN & HOWARD, L.L.C. 633 Seventeenth Street, Suite 300 Denver, CO 80202 Telephone: (303) 297-2900 Facsimile: (303) 298-0940 Jonathan D. Schiller BOIES, SCHILLER & FLEXNER LLP 5301 Wisconsin Avenue, N.W. Washington, DC 20015 Telephone: (202) 237-2727 Facsimile: (202) 237-6131

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CERTIFICATE OF SERVICE I hereby certify that on July 13, 2005, I electronically filed the foregoing DEFENDANT QWEST COMMUNICATIONS INTERNATIONAL INC.'S REPLY IN SUPPORT OF MOTION TO STAY MAGISTRATE JUDGE SHAFFER'S MAY 31, 2005 ORDER GRANTING LEAD PLAINTIFFS' MOTION TO COMPEL PRODUCTION OF DOCUMENTS PENDING A RULING ON QWEST'S OBJECTIONS THERETO with the Clerk of the Court using the CM/ECF system which will send notification of such filing to the following e-mail addresses: Jeffrey Allen Berens [email protected] James E. Nesland [email protected]; [email protected];[email protected] Thomas E. Egler [email protected];[email protected] James Michael Lyons [email protected];[email protected] Neil Peck [email protected];[email protected];[email protected] Mark T. Drooks [email protected];[email protected] Bruce F. Black [email protected];[email protected] Stephanie Erin Dunn [email protected];[email protected] Charles A. Stillman [email protected] Timothy Granger Atkeson [email protected] John A. Freedman [email protected]

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and I hereby certify that I have served the foregoing via U.S. mail and Federal Express as indicated on this 13th day of July, 2005 to the following individuals: William S. Lerach (via Fed Ex) Lerach, Coughlin, Stoia & Robbins LLP 401 B. Street, suite 1700 San Diego, CA 92101-4297 Jason R. Llorens (via mail) Lerach, Coughlin, Stoia & Robbins LLP 9601 Wilshire Blvd. Suite 510 Los Angeles, CA 90210 Joe R. Whatley, Jr. (via mail) Whatley Drake, L.L.C. P.O. Box 10647 Birmingham, Al 35202-0647 Wesley R. Powell (via mail) Clifford Chance US LLP 31 West 52nd Street New York, NY 10019-6131 s/Debra S. Sikes

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