Free Response to Objection to Appeal of Magistrate Judge Decision - 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 LEAD PLAINTIFFS' OPPOSITION TO THE OBJECTION OF QWEST COMMUNICATIONS INTERNATIONAL INC. TO MAY 31, 2005 ORDER OF MAGISTRATE JUDGE SHAFFER CONCERNING MOTION TO COMPEL PRODUCTION OF DOCUMENTS

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TABLE OF CONTENTS Page I. Magistrate Judge Shaffer Correctly Ruled Based upon the Strong Weight of Authority that Qwest Waived the Attorney-Client Privilege and WorkProduct Protection When It Produced Documents to Governmental Agencies Which Were Investigating It .................................................................. 1 Magistrate Judge Shaffer Correctly Ruled that Qwest Waived Any Attorney-Client Privilege or Work-Product Protection for the Boies Schiller Report................................................................................................................... 6 A. Qwest Waived Any Attorney-Client Privilege or Work-Product Protection by Disclosing the Substance of the Boies Schiller Report to Andersen ............................................................................................... 7 Qwest Waived Any Attorney-Client Privilege or Work-Product Protection in the Boies Schiller Report by Producing the Iwan Memorandum to Plaintiffs ........................................................................ 10

II.

B.

III. IV.

This Court's Decision in Graham Supports the Production of Documents Which Have Already Been Voluntarily Turned over to the Government ............. 11 Conclusion.......................................................................................................... 13

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TABLE OF AUTHORITIES Page Aull v. Cavalcade Pension Plan, 185 F.R.D. 618 (D. Colo. 1998) ............................................................................ 8 Diversified Indus. v. Meredith, 572 F.2d 596 (8th Cir. 1977)................................................................................. 4 Electro Sci. Indus. v. Gen. Scanning, Inc., 175 F.R.D. 539 (N.D. Cal. 1997), aff'd, 247 F.3d 1341 (Fed. Cir. 2001) .......................................................................... 10 Gottlieb v. Wiles, 143 F.R.D. 241 (D. Colo. 1992) .......................................................................... 11 In re Columbia/HCA Healthcare Corp. Billing Practices Litig., 293 F.3d 289 (6th Cir. 2002)................................................................................. 5 In re Diasonics Sec. Litig., No. C-83-4584-RFP (FW), 1986 U.S. Dist. LEXIS 24177 (N.D. Cal. June 18, 1986) ..................................................................................... 9 In re M & L Bus. Mach. Co., 161 B.R. 689 (D. Colo. 1993) ...................................................................... passim In re Subpoenas Duces Tecum, 738 F.2d 1367 (D.C. Cir. 1984) ............................................................................ 5 In re Willkie Farr & Gallagher, No. M8-85 (JSM), 1997 U.S. Dist. LEXIS 2927 (S.D.N.Y. Mar. 14, 1997) ................................................................................ 9, 10 Khandji v. Keystone Resorts Mgmt., Inc., 140 F.R.D. 697 (D. Colo. 1992) ...................................................................... 2, 11 Lutheran Med. Ctr. v. Contractors, Laborers, Teamsters & Eng'rs Health & Welfare Plan, 25 F.3d 616 (8th Cir. 1994) ................................................................................ 11 Medinol, Ltd. v. Boston Sci. Corp., 214 F.R.D. 113 (S.D.N.Y. 2002) ........................................................................... 9 - ii -

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Page Permian Corp. v. United States, 665 F.2d 1214 (D.C. Cir. 1981) ............................................................................ 5 Ratliff v. Davis Polk & Wardwell, 354 F.3d 165 (2d Cir. 2003) ................................................................................. 5 Sedillos v. Bd. of Educ. of Sch. Dist. No. 1, 313 F. Supp. 2d 1091 (D. Colo. 2004).................................................... 2, 5, 6, 10 United States v. Arthur Young & Co., 465 U.S. 805 (1984) ......................................................................................... 8, 9 United States v. Bernard, 877 F.2d 1463 (10th Cir. 1989)............................................................................. 7 United States v. Cote, 456 F.2d 142 (8th Cir. 1972)............................................................................... 10 United States v. Graham, No. 03-CR-089-RB, 2003 WL 23198792 (D. Colo. Dec. 2, 2003)............................................................................. 1, 11, 12 United States v. Grass, No. 1:CR-02-146-01, 2003 U.S. Dist. LEXIS 5195 (M.D. Pa. Feb. 12, 2003) ...................................................................................... 5 United States v. Jones, 696 F.2d 1069 (4th Cir. 1982)............................................................................. 10 United States v. MIT, 129 F.3d 681 (1st Cir. 1997)................................................................................. 4 United States v. Ryans, 903 F.2d 731 (10th Cir. 1990)............................................................... 2, 7, 10, 11 Westinghouse Elec. Corp. v. Republic of Phil., 951 F.2d 1414 (3d Cir. 1991)................................................................................ 5

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Page SECONDARY AUTHORITIES 6 James Wm. Moore, et. al., Moore's Federal Practice ­ Civil (2005) §26.49[5][g] .......................................................................................................... 5

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Plaintiffs hereby respond to Qwest's objection to Magistrate Judge Shaffer's May 31, 2005 ruling which granted plaintiffs' motion to compel the production of 220,000 documents which had been previously produced to the SEC and the DOJ, as follows: I. Magistrate Judge Shaffer Correctly Ruled Based upon the Strong Weight of Authority that Qwest Waived the Attorney-Client Privilege and Work-Product Protection When It Produced Documents to Governmental Agencies Which Were Investigating It In objecting to Magistrate Judge Shaffer's well-reasoned decision, Qwest ignores the great weight of authority addressing the selective disclosure of privileged materials. Contrary to Qwest's objection, the law is clear, as courts have continually refused to permit a party to selectively waive the attorney-client privilege and work-product protections for its own benefit while subsequently claiming them against another party. Here, Qwest has already disclosed these allegedly privileged materials to the SEC and DOJ, in an attempt to gain beneficial treatment as a result of their pending investigations.1 The law is clear that in such circumstances "the attorney-client privilege must be applied to `prevent litigants from

1

Contrary to Qwest's assertion, defendants in this litigation also continue to attempt to garner an unfair tactical advantage as a result of Qwest's assertion of privilege, as six of the individual defendants (Qwest's controlling officers and board members) have indicated that they will be relying upon an advice of counsel defense at trial. Qwest, however, continues to block the production of documents which are relevant to this defense by asserting the privilege and that it "does not intend to assert a defense of reliance on legal counsel." If this were not enough of a tactical advantage for defendants, Qwest has not indicated that it will "never" assert the advice of counsel defense. Plaintiffs would vigorously object to such a change of course as the assertion of the advice of counsel defense after the close of discovery would clearly prejudice plaintiffs. -1-

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selectively asserting the privilege as a tactical tool for their own benefit.'" Sedillos v. Bd. of Educ. of Sch. Dist. No. 1, 313 F. Supp. 2d 1091, 1094 (D. Colo. 2004).2 The analysis here begins with the well-settled rule that "[t]he attorney-client privilege is lost if the client discloses the substance of an otherwise privileged communication to a third party." United States v. Ryans, 903 F.2d 731, 741 n.13 (10th Cir. 1990). Thus, Qwest's disclosure of these documents to governmental agencies results in a waiver of any otherwise applicable attorney-client privilege. Moreover, because these governmental agencies were investigating Qwest, they clearly stood in an adversarial relationship. As such, Qwest's disclosure of documents to these agencies also served to waive any workproduct protection. See Khandji v. Keystone Resorts Mgmt., Inc., 140 F.R.D. 697, 699 (D. Colo. 1992) ("Because the work product doctrine is intended to protect the integrity of the adversary system, a voluntary disclosure of information to an adversary constitutes a waiver of the privilege."). As discussed in Judge Shaffer's order, the decision in In re M & L Bus. Mach. Co., 161 B.R. 689 (D. Colo. 1993), which recognized a very narrow exception to this analysis, confirms that Qwest has indeed waived any attorney-client privilege and work-product protection for the subject documents. In M & L, a bank had produced documents covered by the attorney-client privilege to the U.S. Attorney to aid that agency's criminal investigation of one of the bank's former clients. The issue was whether the bank had

2

Emphasis is added and citations are omitted here and throughout unless otherwise indicated.

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thus waived the privilege in a separate civil proceeding against the bank by the former client's trustee in bankruptcy. The M & L court began its analysis by reaffirming the general rule that disclosure to a third party waives the attorney-client privilege. 161 B.R. at 693. Then, citing "the unique circumstances of this case" (id. at 696), the court found that no waiver had occurred in the civil proceeding ­ but only because: (1) the bank had produced the documents to the government under an agreement stating that no waiver in other proceedings would occur; (2) the bank was not seeking to assert the privilege against another governmental agency; and, critically, (3) the bank ­ not being the target of the government investigation ­ obtained no benefit from the production to the government: there is no evidence that the Bank's cooperation with the U.S. Attorney was for the purpose of obtaining some benefit for itself. Id. The M & L court observed that the bank was mandated to disclose the documents concerning the former client by Federal Reserve System procedures, contrasting this to the situation where targets of an SEC investigation disclose privileged documents in exchange for "`more lenient treatment.'" Id. M & L clearly stands for the proposition that a party who discloses otherwise privileged information to a governmental agency for its own benefit, waives the attorneyclient privilege in other proceedings. In this case, Qwest ­ being the target of the SEC's and the U.S. Attorney's investigations ­ obviously produced the allegedly otherwise protected documents in an attempt to obtain some benefit for itself, namely, "more lenient treatment":

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Anyone who chooses to disclose a privileged document to a third party, or does so pursuant to a prior agreement or understanding, has an incentive to do so, whether for gain or to avoid disadvantage. United States v. MIT, 129 F.3d 681, 686 (1st Cir. 1997) (party waived privilege in documents submitted to governmental agency). Accordingly, under M & L, Qwest has waived any otherwise applicable attorney-client privilege and work-product protection in the subject documents by producing them to the government.3 While the Tenth Circuit does not appear to have addressed this precise issue, the application of M & L in this manner is consistent with the holdings of a majority of other circuit and district courts that a party's disclosures to the government for its benefit results in the waiver of privilege. Indeed, while the Eighth Circuit had ruled in an early decision that disclosure to governmental agencies does not waive privilege as to other parties in Diversified Indus. v. Meredith, 572 F.2d 596, 611 (8th Cir. 1977), "[s]ubsequently, the Second, Third, Fourth, Federal and D.C. Circuits took the opposite view and ruled that such limited disclosures do destroy the privilege." MIT, 129 F.3d at 685 (also rejecting

limited/selective waiver concept). As recognized by one prominent commentator, several courts have wisely rejected the concept of limited waiver in these circumstances as patently unfair and inconsistent with traditional construction of the privilege:

3

While Qwest apparently disclosed certain documents to the SEC under a confidentiality agreement (see Ex. B to Lead Plaintiffs' Motion to Compel Production of Documents from Defendant Qwest Communications International, Inc. ("Motion to Compel")), and plaintiffs seek the documents as private litigants in a civil proceeding (see M & L, 161 B.R. at 696), the fact remains that Qwest's disclosure of the subject documents for its own benefit renders the Company unable to qualify for the limited waiver recognized in M & L.

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[S]everal courts have specifically rejected the selective waiver theory, holding that the disclosure of privileged information to any third party destroys the privilege. These courts have observed that a client should not be allowed to pick and choose among opponents, waving the privilege for some and resurrecting the claim of confidentiality to obstruct others. The preferred view rejects the doctrine of selective waiver. 6 James Wm. Moore, et. al., Moore's Federal Practice ­ Civil §26.49[5][g] (2005). These decisions rejecting the limited waiver concept are consistent with the principle, recognized in this District, that litigants should not be permitted to "`selectively assert[] the privilege as a tactical tool for their own benefit.'" Sedillos, 313 F. Supp. 2d at 1094.4 This principle is implicit in M & L's holding that privilege can be preserved only when disclosure to the government serves no benefit to the party making disclosure. Accordingly, Magistrate Judge Shaffer was correctly guided by the decisions of other courts in concluding that disclosure to the government waives both attorney-client and workproduct protection.5

4

See, e.g., Permian Corp. v. United States, 665 F.2d 1214, 1221-22 (D.C. Cir. 1981) (attorney-client privilege is not designed for such tactical employment); In re Subpoenas Duces Tecum, 738 F.2d 1367, 1370 (D.C. Cir. 1984) ("A client cannot waive that privilege in circumstances where disclosure might be beneficial while maintaining it in other circumstances where nondisclosure would be beneficial."); In re Columbia/HCA Healthcare Corp. Billing Practices Litig., 293 F.3d 289, 302 (6th Cir. 2002) (to allow selective waiver would impermissibly "transform[] the attorney-client privilege into `merely another brush on an attorney's palette, utilized and manipulated to gain tactical or strategic advantage'"). See, e.g., Westinghouse Elec. Corp. v. Republic of Phil., 951 F.2d 1414 (3d Cir. 1991) (Westinghouse's disclosure of documents to SEC and U.S. Attorney in investigations of the company waived both attorney-client and work-product protection); Columbia/HCA Healthcare, 293 F.3d 289 (corporation waived attorney-client privilege and work-product protection in documents produced to DOJ in attempt to cooperate with investigation of it); Permian, 665 F.2d 1214 (attorney-client privilege waived by disclosure of documents to -5-

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In short, Qwest made a tactical decision ­ for its own benefit ­ to disclose certain documents to the government which may have originally qualified for protection under the attorney-client privilege and/or work-product doctrine. Having done so, it may not now seek to selectively invoke those protections against plaintiffs. See M & L, 161 B.R. 689; Sedillos, 313 F. Supp. 2d 1091. II. Magistrate Judge Shaffer Correctly Ruled that Qwest Waived Any Attorney-Client Privilege or Work-Product Protection for the Boies Schiller Report At some point in late 2001/early 2002, Qwest engaged the law firm of Boies, Schiller & Flexner LLP to conduct an internal investigation into the Company's fiber-optic capacity sales, and to present its findings in a report (the "Boies Schiller Report"). Again, while plaintiffs do not concede that the Boies Schiller Report ever qualified for attorney-client privilege or work-product protection, it is clear that Qwest waived any otherwise applicable protection in two separate and independent ways, and as such, must produce the Boies Schiller Report and its underlying materials to plaintiffs.6

SEC to facilitate approval of registration statement); Subpoenas Duces Tecum, 738 F.2d 1367 (disclosure of outside counsel investigation of SEC waived both attorney-client and work-product protection); Ratliff v. Davis Polk & Wardwell, 354 F.3d 165, 170 (2d Cir. 2003) (accounting firm's disclosure of information to SEC pursuant to SEC's investigation of firm's audits waived attorney-client privilege); United States v. Grass, No. 1:CR-02-146-01, 2003 U.S. Dist. LEXIS 5195 (M.D. Pa. Feb. 12, 2003) (corporation waived attorney-client privilege by disclosing internal investigation to governmental officials).
6

According to Qwest's privilege log, Qwest also produced the Boies Schiller Report to the SEC. Thus, under the analysis discussed above, Qwest also waived any protections covering the Boies Schiller Report by providing it to the government.

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A.

Qwest Waived Any Attorney-Client Privilege or Work-Product Protection by Disclosing the Substance of the Boies Schiller Report to Andersen

Documents produced to plaintiffs by Qwest indicate that Qwest fully disclosed the entire contents of the Boies Schiller Report to Andersen auditor Mark Iwan ("Iwan"). As Qwest's Controller, Bryan Treadway ("Treadway"), testified in his deposition before the SEC: Q: A: Did you read the Boies report verbatim? I testified that ­ I actually do recall reading it. I may have paraphrased in some places, but I do recall reading. I certainly didn't add anything or leave anything out when I was reading it to Iwan. Qwest also produced to plaintiffs in this case a

Motion to Compel, Ex. E at 191.

memorandum by Iwan (the "Iwan Memorandum"), in which Iwan states that Treadway shared with him "the results" of the Boies Schiller Report and Qwest's "final conclusions" regarding the subject transactions. See Motion to Compel, Ex. F at 1. Iwan also recounts in detail the conclusions of the Boies Schiller Report and references various facts used in its compilation. See id.7 This disclosure to Andersen of the substance of the Boies Schiller Report waives any otherwise applicable attorney-client privilege concerning the Boies Schiller Report. Again, in the Tenth Circuit, "[t]he attorney-client privilege is lost if the client discloses the substance of an otherwise privileged communication to a third party." Ryans, 903 F.2d at 741 n.13; see also United States v. Bernard, 877 F.2d 1463, 1465 (10th Cir. 1989) ("Any
7

Apparently, Treadway and Iwan engaged in further, detailed discussions concerning the substance of the Boies Schiller Report. See Motion to Compel, Exs. G-J.

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voluntary disclosure by the client is inconsistent with the attorney-client relationship and waives the privilege."). Qwest cannot rightly claim that the disclosure to Iwan was itself privileged, as "`no confidential accountant-client privilege exists under federal law.'" United States v. Arthur Young & Co., 465 U.S. 805, 817 (1984). In Aull v. Cavalcade Pension Plan, 185 F.R.D. 618 (D. Colo. 1998), the court recognized that disclosure to accountants vitiates privilege in all but a narrow set of circumstances: "If the accountant is consulted in connection with the client's obtaining legal advice, the privilege extends to cover confidential documents in the accountant's possession. If the documents were turned over to the accountant for reasons totally unrelated to seeking legal advice, the accountant is viewed as an unrelated third party and the attorney-client privilege as to these formerly confidential documents is waived." Id. at 628. Under this standard, Qwest plainly waived the privilege in conveying the substance of the Boies Schiller Report to Iwan, as Iwan and Treadway both confirm that Treadway read the Boies Schiller Report to Iwan to secure a favorable audit opinion from Andersen ­ and not to facilitate any legal advice. As Treadway testified in his SEC deposition: Q: A: Did you have an understanding as to why Iwan wanted the information in the report? I am certain he knew the internal investigation and facts would be very relevant to things audit, plus our obligation as management to disclose to him prior to signing off on the audit. * * *

I think management recognized the responsibility it had to make sure auditors knew about the results of the investigation at the time we filed the 10-K for him to finish his audit.

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Motion to Compel, Ex. E at 187:21-188:17. And as Iwan testified before the SEC: "I had told the audit committee that I was not going to sign the audit opinion until I understood the results of the investigation." Motion to Compel, Ex. K at 169:24-170:1.8 One recent decision on similar facts confirms Qwest's waiver here. In In re Willkie Farr & Gallagher, No. M8-85 (JSM), 1997 U.S. Dist. LEXIS 2927, at *7-*8 (S.D.N.Y. Mar. 14, 1997), the court held that the company's disclosure to its auditors of the results of outside counsel's investigation of an alleged accounting fraud, in order "to get . . . an unqualified audit opinion," vitiated the attorney-client privilege.9 The same result is warranted here. In disclosing the substance of the Boies Schiller Report to Iwan to obtain a favorable audit opinion, Qwest "made a strategic decision to

8

It is equally clear that Qwest waived all work-product protection for the Boies Schiller Report and its supporting materials by disclosing the substance of the Boies Schiller Report to Iwan. Even if one accepts the proposition that work product may be shared among those having common interests, the Supreme Court has made it clear that when performing an audit of a public company, an outside auditor has interest sharply divergent from those of the company. Arthur Young, 465 U.S. at 818 ("`public watchdog'" function of outside auditor "demands that the accountant maintain total independence from the client at all times and requires complete fidelity to the public trust"). See also In re Diasonics Sec. Litig., No. C-83-4584-RFP (FW), 1986 U.S. Dist. LEXIS 24177, at *4 (N.D. Cal. June 18, 1986) (work-product protection waived by disclosure to auditor); Medinol, Ltd. v. Boston Sci. Corp., 214 F.R.D. 113, 117 (S.D.N.Y. 2002) (same).

Apparently, even Qwest's counsel acknowledges that when a company conveys some aspects of such an investigation to its auditor, waiver may result. See Alfred Levitt and Alan Cohen, Accountants and Accounting, Corporate Responses to Potential Illegal Conduct Identified in the Course of an Audit, Insights, The Corporate & Securities Law Advisor, Mar. 2000 ("[I]f the company reveals some aspects of the investigation to the accountants ­ e.g., a memorandum summarizing the investigation's conclusions ­ the disclosure may be deemed a waiver of privileges that the investigation would otherwise enjoy."). See Motion to Compel, Ex. L at 2.

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waive the privilege." Willkie Farr, 1997 U.S. Dist. LEXIS 2927, at *7-*8. And because Treadway conveyed to Iwan not only the Boies Schiller Report's conclusions, but also the substance of its underlying data, Qwest also waived any protection covering these underlying materials, and therefore must produce them as well to plaintiffs.10 B. Qwest Waived Any Attorney-Client Privilege or Work-Product Protection in the Boies Schiller Report by Producing the Iwan Memorandum to Plaintiffs

Even if Qwest's disclosure of the substance of the Boies Schiller Report to Andersen did not result in waiver of the attorney-client privilege and work-product protection, Qwest nevertheless waived these protections by producing the Iwan Memorandum ­ which discloses the substance of the Boies Schiller Report ­ to plaintiffs in discovery. Again, any disclosure of privileged information to a third party waives that privilege. Ryans, 903 F.2d at 741 n.13. "`The confidentiality of communications covered by the privilege must be jealously guarded by the holder of the privilege lest it be waived.'" Id. Without a doubt,

In fact, even if Treadway had revealed only the conclusion of the Boies Schiller Report to Iwan, such would nevertheless result in waiver of any protections covering the underlying materials used to compile the Boies Schiller Report. Voluntary waiver of privilege extends to all otherwise privileged documents on the same "subject matter." Sedillos, 313 F. Supp. 2d at 1094 ("`The scope of the waiver turns on the scope of the client's disclosure, and the inquiry is whether the client's disclosure involves the same "subject matter" as the desired testimony.'"). See also Electro Sci. Indus. v. Gen. Scanning, Inc., 175 F.R.D. 539, 543 (N.D. Cal. 1997) (disclosure of legal opinion's conclusion waived privilege even as to supporting details), aff'd, 247 F.3d 1341 (Fed. Cir. 2001); United States v. Cote, 456 F.2d 142, 144 (8th Cir. 1972) (when client disclosed substance of attorney's advice, waiver extended to details underlying that reported data); United States v. Jones, 696 F.2d 1069, 1072 (4th Cir. 1982) ("Any voluntary disclosure by the client to a third party waives the privilege not only as to the specific communication disclosed, but often as to all other communications relating to the same subject matter.").

10

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disclosure of the substance of the Boies Schiller Report to a litigation adversary such as plaintiffs waives any attorney-client privilege or work-product protection in the Boies Schiller Report. Id.; Khandji, 140 F.R.D. at 699; Lutheran Med. Ctr. v. Contractors, Laborers, Teamsters & Eng'rs Health & Welfare Plan, 25 F.3d 616, 622 (8th Cir. 1994) (intentional production of documents to opposing side waived privilege). And again, this waiver extends to the underlying materials of the Boies Schiller Report, as these are discussed in the Iwan Memorandum. Cf. Gottlieb v. Wiles, 143 F.R.D. 241, 249 (D. Colo. 1992) ("one may not release documents which pervasively cover a particular subject matter and then claim that the underlying supportive data is privileged"). III. This Court's Decision in Graham Supports the Production of Documents Which Have Already Been Voluntarily Turned over to the Government Qwest wrongly asserts that this Court's prior decision in United States v. Graham, No. 03-CR-089-RB, 2003 WL 23198792 (D. Colo. Dec. 2, 2003), prevents the production of documents which were turned over to the SEC and DOJ. Qwest's position is not supported by this Court's holding in Graham as the documents sought in this litigation were actually affirmatively turned over to the government. Unlike Graham, the documents here are not being sought under the "subject-matter rule" which allows the production of additional privileged materials relating to the same subject matter as the documents for which the privilege has already been waived. In Graham, a case where Qwest was not even a party, this Court held that "Qwest's disclosure of the Graham interview memoranda to the government effects a waiver of the attorney-client privilege not only as to the disclosed documents, but also as to all documents relating to the subject matter of the disclosed - 11 -

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documents." Id. at *5. In examining the subject-matter rule, this Court further held that "[i]n the act of disclosing memoranda of Graham's in-house interviews to the United States Attorney, Qwest has impliedly waived the work-product privilege as to all `fact' (or nonopinion) work-product on the same subject matter as that disclosed in the memoranda." Id. at *7. In further analyzing the "subject-matter waiver rule for the work-product privilege" the Court further ruled that "the subject-matter waiver rule does not extend to opinion workproduct." Id. at *5. Unlike the documents being sought by Graham in the criminal litigation, to which Qwest was not a party, the documents here are not being sought under the "subject-matter rule," but were themselves actually disclosed to the SEC and DOJ, in proceedings pending against Qwest, by Qwest, in an attempt to garner a benefit. Qwest is thus in a position quite distinct from the position it occupied in Graham, where it had not already turned over the documents in question, and where it was not even a party to the litigation. Furthermore, Qwest's assertion that defendants are not attempting to garner a tactical advantage from their selective disclosure is laughable, as Qwest sought to settle, and in fact settled, the SEC investigation for pennies on the dollar, and six of the Qwest insider defendants, one of whom is still the Chairman of Qwest's Board of Directors, has affirmatively indicated that they will be asserting advice of counsel as a defense at trial. Moreover, while Qwest has stated that it "does not intend to assert a defense of reliance on legal counsel," it has not definitively stated that it will never assert this defense. Obviously, plaintiffs would vigorously object to any such change of course, as admission of evidence on this issue following the close of discovery would clearly prejudice plaintiffs. - 12 -

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IV.

Conclusion For the above stated reasons this Court should uphold Magistrate Judge Shaffer's

May 31, 2005 ruling granting plaintiffs' motion to compel the production of documents previously produced to the SEC and DOJ. DATED: June 28, 2005 Respectfully submitted, LERACH COUGHLIN STOIA GELLER RUDMAN & ROBBINS LLP MICHAEL J. DOWD SPENCER A. BURKHOLZ THOMAS E. EGLER SCOTT H. SAHAM X. JAY ALVAREZ TRIG R. SMITH ANDREA N. SALOW

/S/ SCOTT H. SAHAM SCOTT H. SAHAM 401 B Street, Suite 1600 San Diego, CA 92101 Telephone: 619/231-1058 LERACH COUGHLIN STOIA GELLER RUDMAN & ROBBINS LLP RAY A. MANDLEKAR 9601 Wilshire Blvd., Suite 510 Los Angeles, CA 90210 Telephone: 310/859-3100 310/278-2148 (fax) Lead Counsel for Plaintiffs DYER & SHUMAN, LLP ROBERT J. DYER III KIP B. SHUMAN JEFFREY A. BERENS 801 East 17th Avenue Denver, CO 80218-1417 Telephone: 303/861-3003 Liaison Counsel
S:\CasesSD\Qwest\brf00022126.doc

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DECLARATION OF SERVICE BY MAIL I, the undersigned, declare: 1. That declarant is and was, at all times herein mentioned, a citizen of the

United States and a resident of the County of San Diego, over the age of 18 years, and not a party to or interested party in the within action; that declarant's business address is 401 B Street, Suite 1600, San Diego, California 92101. 2. That on June 28, 2005, declarant served the LEAD PLAINTIFFS'

OPPOSITION TO THE OBJECTION OF QWEST COMMUNICATIONS INTERNATIONAL INC. TO MAY 31, 2005 ORDER OF MAGISTRATE JUDGE SHAFFER CONCERNING MOTION TO COMPEL PRODUCTION OF DOCUMENTS by depositing a true copy thereof in a United States mailbox at San Diego, California in a sealed envelope with postage thereon fully prepaid and addressed to the parties listed on the attached Service List. 3. That there is a regular communication by mail between the place of mailing

and the places so addressed. I declare under penalty of perjury that the foregoing is true and correct. Executed this 28th day of June, 2005, at San Diego, California. /S/ KATHLEEN R. JONES KATHLEEN R. JONES

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QWEST (LEAD) Service List - 6/28/2005 Page 1 of 3 Defendant(s) Scott B. Schreiber John A. Freeman Kwame Clement Arnold & Porter 555 Twelfth Street, N.W. Washington, DC 20004 202/942-5000 202/942-5999(Fax)

(201-067)

Timothy Atkeson Joshua D. Franklin Arnold & Porter LLP 370 Seventeenth Street, Suite 4500 Denver, CO 80202-1370 303/863-1000 303/832-0428(Fax)

Terry W. Bird Vincent J. Marella Mark Drooks Bird, Marella, Boxer & Wolpert, P.C. 1875 Century Park East, 23rd Floor Los Angeles, CA 90067-2561 310/201-2100 310/201-2110(Fax) David W. Shapiro John F. Cove, Jr. Boies, Schiller & Flexner, LLP 1999 Harrison Street Oakland, CA 94612 510/874-1005 510/874-1460(Fax) Wesley R. Powell Clifford Chance US LLP 31 West 52nd Street New York, NY 10019 212/878-8000 212/878-8375(Fax)

Alfred Levitt Jonathan D. Schiller David Boyd Boies, Schiller & Flexner, LLP 5301 Wisconsin Avenue, N.W., Suite 800 Washington, DC 20015-2015 202/237-2727 202/237-6131(Fax) David Boies Boies, Schiller & Flexner, LLP 333 Main Street Armonk, NY 10504 914/749-8200 914/749-8300(Fax)

James E. Nesland Paul Schwartz Jeff Smith Cooley Godward, LLP 380 Interlocken Crescent, Suite 900 Broomfield, CO 80021-8023 720/566-4000 720/566-4099(Fax)

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

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QWEST (LEAD) Service List - 6/28/2005 Page 2 of 3

(201-067)

Bruce F. Black Michael J. Hofmann Holme Roberts & Owen LLP 1700 Lincoln Street, Suite 4100 Denver, CO 80203 303/861-7000 303/866-0200(Fax)

Mark C. Hansen Rebecca Beynon David Schwarz Kellogg, Huber, Hansen, Todd, Evans & Figel, P.L.L.C. 1615 M Street, N.W., Suite 400 Washington, DC 20036 202/326-7900 202/326-7999(Fax) Robert N. Miller Stephanie E. Dunn Perkins Coie LLP 1899 Wynkoop Street, Suite 700 Denver, CO 80202 303/291-2300 303/291-2400(Fax)

Eric S. Goldstein Roberta A. Kaplan Marguertie S. Dougherty Paul, Weiss, Rifkind, Wharton & Garrison LLP 1285 Avenue of the Americas New York, NY 10019-6064 212/373-3000 212/757-3990(Fax) Frederick J. Baumann James M. Lyons Rothgerber Johnson & Lyons LLP 1200 17th Street, Suite 3000 Denver, CO 80202-5839 303/623-9000 303/623-9222(Fax) Charles A. Stillman Kimo S. Peluso Stillman & Friedman, P.C. 425 Park Avenue New York, NY 10022 212/223-0200 212/223-1942(Fax)

Terence C. Gill Marcy M. Heronimus Sherman & Howard L.L.C. 633 Seventeenth Street, Suite 3000 Denver, CO 80202 303/297-2900 303/298-0940(Fax)

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

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QWEST (LEAD) Service List - 6/28/2005 Page 3 of 3 Plaintiff(s) Robert J. Dyer III Kip B. Shuman Jeffrey A. Berens Dyer & Shuman, LLP 801 East 17th Avenue Denver, CO 80218-1417 303/861-3003 303/830-6920(Fax)

(201-067)

William S. Lerach Spencer A. Burkholz Thomas E. Egler Lerach Coughlin Stoia Geller Rudman & Robbins LLP 401 B Street, Suite 1600 San Diego, CA 92101-4297 619/231-1058 619/231-7423(Fax)

Joe R. Whatley, Jr. Whatley Drake, LLC 2323 Second Ave., North Birmingham, AL 35203 205/328-9576 205/328-9669(Fax)

Plaintiff Stichting Pensioenfonds Counsel Jay W. Eisenhofer Geoffrey C. Jarvis Michael J. Barry Grant & Eisenhofer, P.A. 1201 North Market Street, Suite 2100 Wilmington, DE 19801 302/622-7000 302/622-7100(Fax) Clyde A. Faatz Christopher J.W. Forrest Hamilton and Faatz, A P.C. 1600 Broadway, Suite 500 Denver, CO 80202-4905 303/830-0500 303/860-7855(Fax)