Free Motion for Attorney Fees - 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-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 __________________________________________________________________________ MOTION BY INTERVENORS/OBJECTORS GRAHAM, FLOYD, HULL and AUSWR FOR AWARD OF FEES and COSTS __________________________________________________________________________ INTERVENORS/OBJECTORS ELDON GRAHAM, HAZEL FLOYD, MARY M. HULL, and the ASSOCIATION OF U S WEST RETIREES (hereinafter "Graham Objectors"), by and through their counsel Curtis L. Kennedy, hereby move for an award of attorney's fees and reimbursement of expenses. Submitted herewith in support of this motion is the Declaration of Curtis L. Kennedy (Exhibit 1). 1. On September 29, 2006, this Court entered several rulings, giving final approval

for partial settlement of this matter, awarding Lead Plaintiffs' Counsel attorney's fees and partially sustaining objections made by Graham Objectors and others. On the same day, this Court entered a judgment for the Class and entered an order administratively closing the case, pursuant to Local Rule 42.2 (Docket 1054). The Court stated any party may seek to lift the administrative closure upon a showing of good cause. On October 5, 2006, Graham Objectors filed their motion to have this case reopened (Docket 1060). 2. Statement Pursuant to Local Rule 7.1: On September 29, 2006, the

undersigned counsel wrote to lead counsel specifically named in the January 5, 2006 Class

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Notice, seeking feedback whether there would be any objection to the following request: "As you know, today, Judge Blackburn entered Docket 1054 ordering this action "administratively closed" pending resolution of the criminal charges against defendant Nacchio in USA v. Nacchio, Case No. 05-cr-00545 (D. Colo.) and that any party may seek to lift the stay and administrative closure on a showing of good cause. Intervenors-Objectors contend that today's ruling (Docket 1051) sustaining their objections to the requested $96 million fee award and costs and, thereby, reducing the award to $60 million, much as argued by IntervenorsObjectors during the May 19 "Fairness Hearing," has resulted in a benefit very favorable to the class of shareholders. Accordingly, Intervenors-Objectors wish to file a motion for reimbursement out of the $36 million enhance settlement fund the cost of their expert witness fees ­ $23,000 charged by Professor Michael Perino ­ plus a reasonable award of attorney's fees based upon a modest lodestar enhancement. Therefore, pursuant to Local Rule 7.1, this is a request that you advise whether you have any objection to Intervenors-Objectors filing a motion to lift the administrative stay so as to address the issue of an award of attorney's fees and costs for Intervenors-Objectors. While, we are not seeking a bonanza, it would seem best to get this issue resolved before the settlement fund is distributed. Please let me know. Thank you." The only response was that given by Attorney Mike Dowd who stated as follows: "Lead plaintiffs have no objection to the Graham Objectors filing a motion seeking an order lifting the stay for the limited purpose of allowing Objectors to file a motion seeking attorneys' fees and related expenses in connection with their Objections to Plaintiffs' Motion for Attorneys' Fees and Reimbursement of Expenses. Plaintiffs do note, however, that they intend to oppose any such request for attorneys' fees and expenses by Objectors, if this Court lifts the stay to permit the filing of such a motion." 3. Graham Objectors contend the contribution their counsel made, by providing an

adversarial context in which this Court could evaluate the fairness of attorneys' fees, was substantial, and since their objections were partially sustained, in so far as the $96 million fee request was reduced to $60 million and there was a reduction in the requested expenses, the Class Settlement Fund and Class of shareholders benefitted and, therefore, the Court should consider an award of attorney's fees and reimbursement of related costs to Graham Objectors' counsel. This issue ought to be timely resolved before final distribution of the Class Settlement -2-

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Fund. I. A. ARGUMENT

The Court Should Grant Graham Objectors an Award of Attorney's Fees and Expenses, Since They Substantially Prevailed With their Objections Saving the Settlement Fund $36 Million Attorney's Fees and $200,000 In Costs.

4.

As Graham Objectors argued when requesting intervention, the adversarial

process is often "diluted" or entirely "suspended" during fee proceedings, and fee requests often go unchallenged. Goldberger v. Integrated Res. Inc., 209 F.3d 43, 52 (2nd Cir. 2000). Lead Plaintiffs, having previously negotiated a fee arrangement with Lead Counsel, did not oppose the $96 million fee request. And none of the numerous Defendants in this action had any incentive to oppose the $96 million fee request, since Defendants are not the least impacted by the way in which the Settlement Fund is carved up and distributed. Thus, it was desirable for this Court to have Class members participate in
the fairness hearing and the debate over attorney's fees to be charged to the Settlement Fund. See Reynolds v. Beneficial Nat'l Bank, 288 F.3d 277, 288 (7th Cir. 2002) (allowing attorneys' fees for objector's attorneys because "[i]t is desirable to have as broad a range of participants in the fairness hearing as possible because of the risk of collusion over attorneys' fees and the terms of settlement generally"); Crawford v. Equifax Payment Servs., Inc., 201 F.3d 877, 881 (7th Cir. 2000) (calling it "vital that district courts freely allow the intervention of unnamed class members who object to proposed settlements"); see also In re Prudential Ins. Co. Am. Sales, 278 F.3d 175, 202 (3d Cir. 2002) (observing that "a lawyer with objector status plays a highly important role for the class and the court because he or she raises challenges free from the

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burden of conflicting baggage that Class Counsel carries"). 5. Objectors' counsel who contributes materially to the Fairness Hearing

proceedings should be provided a fee charged to the Settlement Fund. Gottlieb v. Barry, 43 F.3d 474, 490-91 (10th Cir. 1994) (fee awarded to objectors because objectors' arguments "did in fact result in a reduction of certain fee and expense awards, and thereby benefitted the class"); Uselton v. Commercial Lovelace Motor Freight, Inc., 9 F.3d 849, 854 (10th Cir.1993) (affirming award of fees paid from the common fund to objectors' counsel based on benefit conferred to class). See also Fisher v. Procter & Gamble Mfg. Co., 613 F.2d 527, 547 (5th Cir. 1980); White v. Auerbach, 500 F.2d 822, 828 (2nd Cir. 1974) (objectors entitled to attorney fees for improving settlement). 6. Generally speaking, there is no question that objectors are entitled to

compensation for improvements to a settlement resulting from their objections. See, e.g., In re Cendant PRIDES Corp. Litig., 243 F.3d 722, 743-44 (3rd Cir. 2001) (concluding that attorneys' fees were appropriate for objector, represented by counsel, that successfully appealed attorneys' fee award for class counsel). While within this case there were about a half dozen objections opposing Class Counsel's fee application, Graham Objectors offer detailed and substantive grounds, together with an expert opinion report, in support of their opposition. Graham Objectors appeared through counsel at the Fairness Hearing and argued that a fee within the range of $60 to $80 million was far more appropriate in this case, for a number of reasons (Docket 1027, Tr. at 36:21-24, 37:15-16, 40:1-3 and 42:10-12). Graham Objectors were the only Class members objecting to expenses. The Court did reduce about $200,000 of expenses, particularly excessive in-house photocopying charges.

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7.

Here, after sustaining some of Graham Objectors' material objections, the Court

awarded Lead Counsel $36.2 million less than they requested. Courts have awarded fees where objectors' counsel has fought against an exhorbitant fee award. See In re Elan Securities Litigation, 385 F. Supp.2d. 363, 376-77 (S.D. N.Y 2005), where the Court awarded objectors' counsel fees after reducing Lead Counsel's requested award from 20% to 12% ­ Court awarded Objectors' counsel $121,575 in legal fees (representing an $81,050 lodestar and a 1.5 multiplier) along with un-reimbursed expenses of $4,001.41). In Bowling v. Pfizer, Inc., 922 F. Supp. 1261, 1285 (S.D. Ohio 1996) Public Citizen, an amicus, was awarded $105,037.46 out of a $100 million settlement fund; In In re Domestic Air Transp. Antitrust Litigation, 148 F.R.D. 297, 359 (N.D.Ga., 1993) the court awarded objectors' counsel fees of $718,030.20, plus expenses of $92,327.04. 8. Similarly, in this case, Graham Objectors presented the Court with references to

assist the Court in crafting an award that is consistent with a pattern of moderation. Graham Objectors's written and oral presentations were submitted so as to help preserve more of the Settlement Fund for the class members. Graham Objectors contend they should be reimbursed for their expenses, especially their expert witness fees, on the same grounds that those expenses were incurred in order to confer a substantial benefit on the Settlement Fund and class members. Petrovic v. Amoco Oil Co., 200 F.3d 1140, 1156 (8th Cir. 1999). 9. Assessment of attorney's fees in this class action is discretionary with the district

court. There can be no question that Graham Objectors played a useful and constructive role and worked to benefit the Settlement Fund and the Class of shareholders. Should the Court not award attorney's fees and expenses to Graham Objectors' counsel, there will be no incentive for

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objectors to make legitimate and substantive legal arguments in opposition to excessive attorney's fees requested to be charged against a class action settlement fund.

B.

The Requested $300 Lodestar Hourly Rate is Very Reasonable; the Detailed Time Expended Was Necessary; the Modest Expenses Were Necessary.

10.

This Court has ample experience awarding reasonable attorney hourly fees based

upon the prevailing market rates in the Denver community. This Court can determine an applicable hourly rate relying on its superior knowledge of rates for lawyers with comparable skill and experience practicing in the Denver area. See Case v. Unified Sch. Dist. No. 233, 157 F.3d 1243 (10th Cir. 1998); Praseuth v. Rubbermaid, Inc., 406 F.3d 1245, 1259 (10th Cir.2005) (approving the district court's determination of the applicable hourly rate by "relying on its knowledge of rates for lawyers with comparable skill and experience practicing" in the relevant market). The undersigned counsel has over 23 years experience with complicated federal court litigation, and a significant amount of work is on behalf of U S WEST/QWEST retirees, many of whom were members of the Class. (See Exhibit 2 - resume filed herewith). In Bat v. A.G. Edwards & Sons, Inc., 2006 WL 446078 (D. Colo. February 21, 2006), Magistrate Judge Boland noted that an hourly rate of $350 for an attorney with 24 years experience is within the prevailing market rate for the Denver area. The undersigned counsel has requested payment at his current hourly rate of $300. Earlier this year, Chief Judge Lewis T. Babcock entered an order awarding the undersigned counsel fees based upon an hourly rate of $300.00 in the case of Hull v. United States Department of Labor, Case No. 04-cv-1264 (D. Colo. May 30, 2006) (See Exhibit 3 - slip opinion at p. 10). 11. None of the time spent by Graham Objector's counsel was irrelevant and, -6-

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certainly, there is no attempt to gouge the Settlement Fund. There is no evidence of excessiveness or redundancy. Also, Professor Michael Perino's charges ($23,930.46) for his expert opinion services and photocopying costs ($140) were all necessarily incurred. The undersigned counsel expended a total of 90 hours on behalf of Graham Objectors at the rate of $300 for a lodestar of $27,000. The requested fee award is $40,500, based upon a modest multiplier of 1.5. II. CONCLUSION

For the aforesaid reasons and those reasons set forth in the Declaration of Curtis L. Kennedy submitted herewith as Exhibit 1, the Court should award Graham Objectors' counsel attorney's fees in the amount of $40,500, plus expenses of $24,070.46. Dated: October 10, 2006. s/ Curtis L. Kennedy Curtis L. Kennedy 8405 E. Princeton Avenue Denver, Colorado 80237-1741 Telephone: (303) 770-0440 Fax: (303) 843-0360 Email: [email protected] Attorney For INTERVENORS/OBJECTORS ("Graham Objectors")

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CERTIFICATE OF SERVICE I hereby certify that on the 10th day of October, 2006, a true and correct copy of the above and foregoing document was electronically filed with the Clerk of the Court using the CM/ECF system and a courtesy copy was emailed to counsel of record in accordance with the January 5, 2006 Class Notice as follows: Keith F. Park, Esq. Michael J. Dowd, Esq. LERACH COUGHLIN STOIA GELLER RUDMAN & ROBBINS LLP 655 West Broadway, Suite 1900 San Diego, CA 92101-3301 [email protected] Lead Counsel for Plaintiffs Alfred Levitt, Esq. BOIES, SCHILLER & FLEXNER LLP 5301 Wisconsin Ave., N.W., Suite 800 Washington, DC 20015 Tele: 202-895-7567 Fax: 202-237-6131 [email protected] Counsel for Settling Defendant Qwest John Freedman, Esq. ARNOLD & PORTER LLP 555 Twelfth Street, N.W. Washington, DC 20004-1202 [email protected] Tele: 202-942-5316 Fax: 202-942-5999 Counsel for Defendant Arthur Andersen LLP and a copy of the same was sent via email to OBJECTORS - Association of U S WEST Retirees, Eldon H. Graham, Hazel A. Floyd and Mary M. Hull.

s/ Curtis L. Kennedy

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