Free Motion to Consolidate Cases - District Court of Colorado - Colorado

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

Document 1035

Filed 08/15/2006

Page 1 of 13

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO Civil Action No. 01-CV-1451-REB-PAC (Consolidated with Civil Action Nos. 01-CV-1472, 01-CV-1527, 01-CV-1616, 01-CV1799, 01-CV-1930, 01-CV-2083, 02-CV-333, 02-CV-374, 02-CV-507, 02-CV-658, 02CV-755, 02-CV-798, and 04-CV-238) In re QWEST COMMUNICATIONS INTERNATIONAL INC. SECURITIES LITIGATION

QWEST COMMUNICATIONS INTERNATIONAL INC.'S MOTION TO CONSOLIDATE

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

Document 1035

Filed 08/15/2006

Page 2 of 13

Defendant Qwest Communications International Inc. ("Qwest") respectfully moves this Court pursuant to Federal Rule of Civil Procedure 42(a), Local Rule 42.1, and this Court's prior orders, to consolidate for all pre-trial purposes Denver Employees Retirement Plan v. Qwest Communications International Inc., et al., 06-CV-1539-REBBNB ("Denver Employees Retirement Plan Action")1 with In re Qwest Communications International Inc. Securities Litigation, Civil Action No. 01-CV-1451-REB-PAC ("In re Qwest"). In support of this motion, Qwest states as follows: 1. On September 12, 2001, this Court consolidated three securities cases with In re Qwest. The Court subsequently consolidated two more securities cases on September 18, 2001 and October 4, 2001, respectively. Again, on May 6, 2002, this Court consolidated four more securities cases and ordered: "That any later filed cases that the court deems to be sufficiently related to these cases shall be consolidated with these cases."2 May 6, 2002, Order at 6 (Docket No. 78) ("May 6 Consolidation Order"). Thereafter, the Court consolidated two additional actions, bringing the current total to 11 consolidated securities class actions.3 Finally, in addition to the class actions, one

1

A copy of the complaint filed in the Denver Employees Retirement Plan Action is attached hereto as Exhibit A.
2

Earlier, on September 12, 2001, this Court consolidated three cases with In re Qwest and ordered further consolidation of "any related actions that may be filed before the Court." Sept. 12, 2001, Order (Docket No. 9) at 2.
3

For the relevant consolidation orders, see Docket Nos. 9 (Sept. 12, 2001), 11 (Sept. 18, 2001), 16 (Oct. 4, 2001), 78 (May 6, 2002), 84 (June 26, 2002), 85 (July 2, 2002), and 610 (Mar. 29, 2005). 1

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

Document 1035

Filed 08/15/2006

Page 3 of 13

individual action ­ Stichting Pensioenfonds ABP v. Qwest Communications International Inc. ­ was also consolidated with In re Qwest.4 2. On August 7, 2006, the Denver Employees Retirement Plan Action was filed. 3. As demonstrated below, the core allegations underlying In re Qwest and the Denver Employees Retirement Plan Action are substantially similar: Allegation Qwest issued false and misleading statements and financial results. In re Qwest ¶¶ 3, 5, 6-8, 19, 26, 88, 106, 121-125, 226-380 Denver Employees Retirement Plan ¶¶ 3, 6, 15, 33-, 35, 70, 73, 75, 78, 88-89, 122, 200293, 333, 366, 368, 375382, 387, 390-392, 394395, 400-401, 403-409, 422-424, 429, 434-435, 439-440, 445-446. ¶¶ 5-6, 66, 95, 100, 116, 119-120, 122, 125, 127, 135-136, 138, 143, 145148, 151, 155, 157-158, 160, 163, 166-167, 224, 234, 256, 283, 335, 340, 348, 356, 388 ¶¶ 115, 186 ¶¶ 72-94, 122, 126, 144149, 203-204, 212, 214, 216, 220, 224, 234, 242, 256, 282-283, 351-353

Qwest violated GAAP.

¶¶ 9, 122, 125-130, 137138, 149, 152-153, 309

Qwest management pressured employees to meet financial targets. Qwest manipulated IRU sales.

¶ 171 ¶¶ 5, 65-89, 126-130, 274, 294, 309, 356

4

See In re Qwest Communications International Inc. Secs. Litig., 01-CV-1451REB-PAC, Docket No. 610, Order Granting Defendants' Motion To Consolidate (D. Colo. Mar. 29, 2005).

2

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

Document 1035

Filed 08/15/2006

Page 4 of 13

Allegation Qwest entered into secret side agreements with other companies to inflate revenue. Qwest improperly reported revenue from reciprocal transactions to inflate revenue. Qwest entered into reciprocal transactions with Cable & Wireless to inflate revenue. Qwest entered into reciprocal transactions with Enron to inflate revenue. Qwest entered into reciprocal transactions with Flag to inflate revenue. Qwest entered into reciprocal transactions with Global Crossing to inflate revenue. Qwest entered into equipment transactions with KMC to manipulate financial results. Qwest entered into equipment transactions with Calpoint to inflate revenue. Qwest fraudulently reported the impact on revenues from the equipment transaction with Genuity, which allowed Qwest to overstate its income for the year. Qwest fraudulently reported the impact on revenues from the equipment transaction with Arizona School Facilities Board which allowed Qwest to overstate its income for the year.

In re Qwest ¶¶ 38, 157-162, 167-173

Denver Employees Retirement Plan ¶¶ 22, 182-184, 194

¶¶ 6, 9, 17, 65-89, 126130, 329 ¶¶ 38, 80, 126, 160162, 294 ¶¶ 65, 75-76, 85, 88, 129, 343 ¶¶ 163-166 ¶¶ 65, 75-75, 83, 87, 126, 128, 167-173, 329, 356 ¶¶ 90-94, 122, 131-132, 174, 191, 196-198, 258, 263, 266, 329, 355, 357, 385 ¶¶ 174, 191, 196-198, 337 ¶¶ 38, 112-113, 126, 191-194, 274, 309

¶¶ 72-99, 120, 148149,155-157, 229, 256 ¶¶ 5, 85, 175-77, 242 ¶¶ 5, 90-93, 283, 345 ¶¶ 5, 178-181 ¶¶ 5, 62, 88-89, 92, 170, 173, 182-183, 345 ¶¶ 5, 95-99, 120, 150, 155, 157, 224, 229, 271, 297 ¶¶ 150, 156-57, 279 ¶¶ 5, 25, 117, 150-152, 234, 242, 256

¶ 111

¶¶ 5, 116, 150, 154, 192

3

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

Document 1035

Filed 08/15/2006

Page 5 of 13

Allegation Qwest was able to inflate Directory Services revenues by accelerating the publication dates of certain directories and lengthening the time for other directories. Qwest failed to properly account for its investment in KPNQwest. Qwest avoided recording charges of $2.1 billion from losses on PP&E. Qwest executives and senior management engaged in insider trading which motivated them to commit fraudulent acts. Qwest was forced to restate its earnings as a result of fraudulent schemes.

In re Qwest ¶¶ 7, 9(d), 31, 80, 98107, 181, 199-200, 269, 284, 294

Denver Employees Retirement Plan ¶¶ 5, 103-12, 242

¶¶ 9(b), 12, 136-44, 210 ¶¶ 145-51 ¶¶ 381-84

¶¶ 5, 51, 68, 120, 122-31, 160, 234, 242, 263 ¶¶ 5,120,132-138, 234, 242 ¶¶ 10, 198-99, 234, 326-330

¶¶ 180-225

¶¶ 8, 44, 65-68, 73,112, 122, 139-62, 165-67

The nearly identical nature of allegations means that discovery in In re Qwest has focused, and will focus, on the same factual issues at issue in the Denver Employees Retirement Plan Action. In addition to the myriad common factual issues involved in the two cases, there are also substantially overlapping parties ­ namely, all of the defendants named at various times in the Fifth Consolidated Amended Class Action Complaint in In re Qwest have been named as defendants in the Denver Employees Retirement Plan Action.5 Finally, it need not be the case that all claims and parties are
5

Defendants Jacobsen, Weisberg, and Wilks, were named as defendants in Lead Plaintiffs' Fifth Amended Consolidated Complaint, but were subsequently dismissed on October 15, 2004 (Docket No. 518).

4

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

Document 1035

Filed 08/15/2006

Page 6 of 13

identical in order for consolidation to be appropriate. As this Court acknowledged in its March 29, 2005 Order Granting Defendants' Motion To Consolidate Stichting Pensioenfonds ABP v. Qwest, et al. (Docket No. 610), even where an action involves some parties not named in the consolidated action or asserts some claims not asserted in the consolidated action, where the additional claims "involve proof of the same type" as the claims at issue in the consolidated action, such that there are "questions of law and fact [in] common," "these differences do not make consolidation unreasonable or inefficient." Id. at 2. Given the significant similarities and commonalities between Denver Employees Retirement Plan Action and In re Qwest, the two actions are "sufficiently related" that consolidation is required by the May 6, 2002 Consolidation Order. 4. Federal Rule of Civil Procedure 42(a) also supports pre-trial consolidation of In re Qwest and Denver Employees Retirement Plan Action. That rule provides "[w]hen actions involving a common question of law or fact are pending before the court, ... it may order all the actions consolidated; and it may make such orders concerning proceedings therein as may tend to avoid unnecessary costs or delay." Fed. R. Civ. P. 42(a). The objective of the rule is "to give the court broad discretion to decide how cases on its docket are to be tried so that the business of the court may be dispatched with expedition and economy while providing justice to the parties." Breaux v. Amer. Family Mut. Ins. Co., 220 F.R.D. 366, 367 (D. Colo. 2004); see also Katz v. Realty Equities Corp. of New York, 521 F.2d 1354, 1358 (2d Cir. 1975).

5

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

Document 1035

Filed 08/15/2006

Page 7 of 13

5. Undersigned counsel has conferred with counsel for Lead Plaintiffs and counsel for the Denver Employees Retirement Plan pursuant to D.C.Colo.L.R. 7.1. Both Counsel for Lead Plaintiffs and counsel for the Denver Employees Retirement Plan have indicated that they do not oppose the relief requested. 6. A proposed order is attached. Wherefore, Qwest respectfully requests that Denver Employees Retirement Plan v. Qwest Communications International Inc., et al, 06-CV-1539-REB-BNB, be consolidated with In re Qwest Communications International Inc. Sec. Litig., Civ. A. No. 01-CV-1451-REB-PAC for all pre-trial purposes.

DATED: August 15, 2006

Respectfully submitted,

_/s/ Alfred P. Levitt______________ Jonathan D. Schiller David R. Boyd Alfred P. Levitt Kenneth F. Rossman IV BOIES, SCHILLER & FLEXNER LLP 5301 Wisconsin Avenue, N.W. Washington, DC 20015 Telephone: (202) 237-2727 Facsimile: (202) 237-6131 Terence C. Gill SHERMAN & HOWARD, L.L.C. 633 Seventeenth Street, Suite 300 Denver, CO 80202 Telephone: (303) 297-2900 Facsimile: (303) 298-0940 Counsel for Qwest Communications International Inc. 6

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

Document 1035

Filed 08/15/2006

Page 8 of 13

CERTIFICATE OF SERVICE I hereby certify that on this 15th day of August, 2006, a copy of the foregoing DEFENDANT QWEST COMMUNICATIONS INTERNATIONAL INC.'S MOTION TO CONSOLIDATE 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 e-mail addresses: X. Jay Alvarez Timothy G. Atkeson [email protected] [email protected] Counsel for Lead Plaintiffs Counsel for Defendants Arthur Andersen & Iwan Counsel for Plaintiff Stichting Pensioenfonds ABP Local Counsel for Lead Plaintiffs Counsel for Defendant Szeliga Counsel for Defendants Arthur Andersen & Iwan Counsel for Lead Plaintiffs Counsel for Defendant Woodruff Counsel for Defendants Arthur Andersen & Iwan Counsel for Defendant Woodruff Counsel for

Michael J. Barry

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

Jeffrey A. Berens Terry W. Bird Jessica Brody

Spencer A. Burkholz John K. Carroll Kwame A. Clement

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

David L. Cook Jennifer L. Coon

[email protected] [email protected]

7

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

Document 1035

Filed 08/15/2006

Page 9 of 13

[email protected] Merrill G. Davidoff [email protected]

Defendant Szeliga Counsel for Plaintiff New Jersey Dept. of Treasury Counsel for Lead Plaintiffs Counsel for Defendant Szeliga Counsel for Defendant Smith Counsel for Lead Plaintiffs Counsel for Defendant J. Kozlowski in the SEC matter Local Counsel for Plaintiff Stichting Pensioenfonds ABP Local Counsel for Plaintiff Stichting Pensioenfonds ABP Counsel for Defendants Arthur Andersen & Iwan Local Counsel for Defendant Qwest Communications Int. Inc.

Michael J. Dowd Mark T. Drooks Stephanie E. Dunn Thomas E. Egler Kevin D. Evans

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

Clyde A. Faatz, Jr.

[email protected]

Christopher J. W. Forrest John A. Freedman

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

Terence C. Gill

[email protected]

8

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

Document 1035

Filed 08/15/2006

Page 10 of 13

Marcy M. Heronimus

[email protected] [email protected]

Local Counsel for Defendant Qwest Communications Int. Inc. Counsel for Defendants Anschutz & Slater Counsel for Defendants Anschutz & Slater Counsel for Defendants Arthur Andersen & Iwan Counsel for Defendant Casey Counsel for M. Schumacher United States Attorney; Intervenor Plaintiff Counsel for Defendant Szeliga

Michael J. Hofmann

[email protected]

Kevin B. Huff

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

Shelby Hunt

Richard Jacobson Gary M. Kramer William J. Leone

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

Vincent J. Marella David Meister James D. Miller Robert N. Miller Barbara C. Moses Edward S. Nathan

[email protected] Counsel for Defendant Woodruff [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] Counsel for Defendant Woodruff Counsel for Defendant Smith Counsel for Defendant Mohebbi Counsel for Defendant Nacchio

9

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

Document 1035

Filed 08/15/2006

Page 11 of 13

James E. Nesland Sharan Nirmul

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

Counsel for Defendant Tempest Counsel for Plaintiff Stichting Pensioenfonds ABP Local Counsel for Plaintiff Stichting Pensioenfonds ABP Counsel for Defendants Arthur Andersen & Iwan Counsel for Defendant Woodruff Counsel for Defendant Szeliga Local Counsel for Defendant Nacchio Counsel for Defendants Arthur Andersen & Iwan Counsel for Defendant Mohebbi Counsel for Lead Plaintiffs Counsel for Defendants Arthur Andersen & Iwan Counsel for Defendant Tempest Counsel for Defendants Anschutz & Slater

Robin L. Nolan

Elissa J. Preheim

Kimberly W. Price Thomas V. Reichert John M. Richilano Eric T. Rillorta Ashley Rupp Scott Saham Scott Schreiber Paul H. Schwartz

[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]

David L. Schwarz

10

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

Document 1035

Filed 08/15/2006

Page 12 of 13

Joel M. Silverstein Jeffrey A. Smith

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

Counsel for Defendant Nacchio Counsel for Defendant Tempest Counsel for Defendant Nacchio Counsel for Defendant Nacchio Counsel for Defendant Casey Counsel for Alvarado, Haines, Hellman, & Stephens

Jeffrey Speiser Herbert J. Stern Michael Trager Jesus M. Vazquez, Jr.

and, I also certify that I have served same by depositing in the U.S. Mail, first-class postage prepaid, addressed to the following: Richard M. Heimann Joy A. Kruse Bruce W. Leppla Peter E. Leckman Lieff, Cabraser, Heimann & Bernstein, LLP 275 Battery Street; 30th Floor San Francisco, CA 94111-3339 Phone: 415.956.1000 Fax: 415.956.1008 Counsel for Plaintiff DERP [email protected] [email protected] [email protected] [email protected] C. Mylett PO Box 1031 Coleman, FL 33521 Plaintiff in Rogers, Mylett Matter Joe R. Whatley, Jr. Glen Connor Whatley Drake, LLC 2323 Second Avenue North Birmingham, AL 35202 Counsel for Plaintiff in ERISA matter Phone: 205.328.9576 Fax: 205.328.9669 [email protected] [email protected]

William M. Rogers 606 S. Military Trail Deerfield Beach, FL 33442 Plaintiff in Rogers, Mylett Matter

11

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

Document 1035

Filed 08/15/2006

Page 13 of 13

Robert F. Hill Ronald L. Wilcox Jennifer H. Hunt Hill & Robbins, P.C. 1441 18th Street; Suite 100 Denver, CO 80202-1256 Phone: 303.296.8100 Fax: 303.296.2388 Counsel for Plaintiff DERP [email protected] [email protected] [email protected] /s/ Jed Donaldson Jed Donaldson

12