Free Motion for Attorney Fees - District Court of Colorado - Colorado

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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO

Civil Action No. 00-cv-1864-REB-BNB (Consolidated with 00-cv-1908-REB-BNB, 00-cv1910-REB-BNB, 00-cv-1919-REB-BNB, 00-cv-1945-REB-BNB, 00-cv-1954-REB-BNB, 00-cv-1957-REB-BNB, 00-cv-1963-REB-BNB, 00-cv-1996-REB-BNB, 00-cv-2040-REBBNB, 00-cv-2074-REB-BNB, 00-cv-2149-REB-BNB, 00-cv-2243-REB-BNB, and 00-cv2316-REB-BNB) In re ICG COMMUNICATIONS, INC. SECURITIES LITIGATION This Document Relates To: All Actions

LEAD PLAINTIFFS' MOTION IN SUPPORT OF AWARD OF ATTORNEYS' FEES AND REIMBURSEMENT OF LITIGATION EXPENSES

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TABLE OF CONTENTS

TABLE OF AUTHORITIES.......................................................................................... iii-vi I. II. PRELIMINARY STATEMENT............................................................................... 1 ARGUMENT ......................................................................................................... 6 A. Lead Counsel Are Entitled to the Reasonable Fees Requested...................................................................................... 4 Under the PSLRA and Tenth Circuit Precedent, Lead Counsel Are Entitled to a Fee Based on a Percentage of the Fund ...................... 5 Lead Counsel's Fee Request is Well Within the Range of Reasonableness of Other Percentage Awards ................................... 6 1. The Time and Labor Involved....................................................... 7 2. The Novelty and Difficulty of Questions Raised by the Litigation ........................................................... 12 The Skill Required to Perform The Legal Services Properly..................................................................... 16 The Preclusion of Other Employment By Attorneys Due to Acceptance of the Cases ............................................. 17 The Customary Fee for Similar Work....................................... 17 Whether There Was a Prearranged Fee.................................. 18 Time Limitation Imposed by Client or Circumstances .............. 19 The Amount Involved and the Results Obtained...................... 20 The Experience, Reputation and Ability of the Attorneys......... 20

B.

C.

3.

4.

5. 6. 7. 8. 9.

10. The Undesirability of the Case................................................. 21 11. Awards in Similar Cases .......................................................... 22

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D.

The Fee Requested Is Also Fair and Reasonable Under a Lodestar/Multiplier Analysis..................................................... 22 There Have Been No Objections to the Fee Request to Date............... 24 The Expenses Requested Were Reasonable And Necessary to the Prosecution of this Action .......................................... 25

E. F.

III.

CONCLUSION.................................................................................................... 26

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TABLE OF AUTHORITIES CASES Alyeska Pipeline Serv. Co. v. Wilderness Society, 421 U.S. 240 (1975)........................................................................................ 4 Arenson v. Board of Trade, 372 F. Supp. 1349 (N.D. Ill. 1974)................................................................. 16 Associated Builders & Contractors, Inc. v. Orleans Parish Sch. Board, 919 F.2d 374 (5th Cir. 1990) ......................................................................... 25 Blum v. Stenson, 465 U.S. 886 (1984)........................................................................................ 8 Boeing Co. v. Van Gemert, 444 U.S. 472 (1980)........................................................................................ 4 Bratcher v. Bray-Doyle Independent Sch. District No. 42, 8 F.3d 722 (10th Cir. 1993) ........................................................................... 25 Brown v. Phillips Petroleum Co., 838 F.2d 451 (10th Cir. 1988) ................................................................ passim Camden I Condominium Association v. Dunkle, 946 F.2d 768 (11th Cir. 1991) ......................................................................... 6 Consumers Gas & Oil, Inc. v. Farmland Industrial, Inc., 863 F. Supp. 1357 (D. Colo. 1993) ................................................................. 5 Coram Healthcare Corp. Sec. Litig., Master File No. 95-N-2074 (D. Colo. Jan. 24, 1997) ..................................... 18 Dura Pharms., Inc. v. Broudo, 544 U.S. 336 (2005).................................................................................. 2, 14 Florin v. Nationsbank, N.A., 34 F.3d 560 (7th Cir. 1994) ............................................................................. 6 Gottlieb v. Barry, 43 F.3d 474 (10th Cir. 1994) ................................................................... 4, 5, 7

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Gottlieb v. Wiles, 150 F.R.D. 174 (D. Colo. 1993)..................................................................... 25 Gottlieb v. Barry, 43 F.3d 474 (10th Cir. 1994) ......................................................................... 25 Harris v. Marhoefer, 24 F.3d 16 (9th Cir. 1994) ............................................................................. 25 In re Cendant Corp. Litig., 264 F.3d 201 (3d Cir. 2001) ...................................................................... 5, 19 In re Continental Ill. Sec. Litig., 962 F.2d 566 (7th Cir. 1992) ......................................................................... 22 In re Coram Healthcare, Master File No. 95-N-2074 (D. Colo. Jan. 24, 1997) .................................... 23 In re Equity Funding Corp. Sec. Litig., 438 F. Supp. 1303 (C.D. Cal. 1977).............................................................. 16 In re GMC Pick-Up Truck Fuel Tank Products Liability Litig., 55 F.3d 768 (3d Cir. 1995) .............................................................................. 6 In re Global Crossing Sec. & ERISA Litig., 225 F.R.D. 436 (S.D.N.Y. 2004)................................................................ 3, 19 In re Intelcom Group, Inc. Sec. Litig., C.A. No. 95-D-1166 (D. Colo. Mar. 21, 1997) ............................................... 18 In re King Resources Co. Sec. Litig., 420 F. Supp. 610 (D. Colo. 1976) ........................................................... 16, 21 In re Lucent Techs, Inc. Sec. Litig., 327 F. Supp. 2d 426 (D.N.J. 2004) ......................................................... 16, 19 In re Resort Income Investors, Inc. Sec. Litig., Master File No. 95-B-1665 (D. Colo. Mar. 13, 1998)..................................... 18 In re Samsonite Corp. Sec. Litig.n, C.A. No. 98-K-1878 (D. Colo. July 25, 2000) ................................................ 23 In re Storage Tech. Sec. Litig., Case No. 92-B-750 (D. Colo. Dec. 1, 1995) .................................................. 24

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In re Thirteen Appeals Arising out of the San Juan Dupont Plaza Hotel Fire Litig., 56 F.3d 295 (1st Cir. 1995) ............................................................................. 6 In re Warner Commc'ns Sec. Litig., 618 F. Supp. 735 (S.D.N.Y. 1985), aff'd, 798 F.2d 35 (2d Cir. 1986) ............ 15 In re WorldCom, Inc. Sec. Litig., 388 F. Supp. 2d 319 (S.D.N.Y. 2005) ..................................................... 16, 19 Johnston v. Comerica Mortg. Corp., 83 F.3d 241 (8th Cir. 1996) ............................................................................. 6 Markus v. The North Face, Inc., C.A. No. 99-Z-47 (D. Colo. May 1, 2001) ................................................ 18, 23 Mills v. Electric Automobile-Lite Co., 396 U.S. 375 (1970)........................................................................................ 4 Rasner v. First World Commc'ns Inc., No. 00-K-1376 (D. Colo. Jan. 19, 2005) ........................................................ 18 Rawlings v. Prudential Bache Properties, Inc., 9 F.3d 513 (6th Cir. 1993) ........................................................................... 6, 7 Ressler v. Jacobson, 149 F.R.D. 651 (M.D. Fla. 1992) ................................................................... 25 Robbins v. Koger Properties, 116 F.3d 1441 (11th Cir. 1997) ..................................................................... 15 Rosenbaum v. MacAllister, 64 F.3d 1439 (10th Cir. 1995) ..................................................................... 4, 5 Savoie v. Merchants Bank, 166 F.3d 456 (2d Cir. 1999) ............................................................................ 6 Schaffer v. Evolving System, Inc., C.A. No. 98-WY-1338-CB (D. Colo. Oct. 4, 1999)................................... 18, 24 Schwartz, et al. v. Celestial Seasonings, Inc., No. 95-K-1045 (D. Colo. Apr. 25, 2000) ........................................................ 18

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Sonnenfeld v. City & County of Denver, Colorado, C.A. No. 95-Z-468 (D. Colo. Dec. 8, 1997).................................................... 18 Swedish Hospital Corp. v. Shalala, 1 F.3d 1261 (D.C. Cir. 1993) ........................................................................... 6 Third Circuit Task Force Report, 108 F.R.D. 237 (3d Cir. 1985) ......................................................................... 6 Uno Ltd. Partnership, et al. v. Coeur D'Alene Mines Corp., No. 97-WY-1431-CB (D. Colo. Aug. 11, 1999).............................................. 18 Vaszlavik v. Storage Tech. Corp., No. 95-B-2525 (D. Colo. Mar. 9, 2000) ......................................................... 18

UNREPORTED DECISIONS Kurzweil v. Philip Morris Cos., Nos. 94 civ. 2373, 94 civ. 2546, 1999 U.S. Dist. LEXIS 18378 (S.D.N.Y. Nov. 24, 1999) ............................... 24 Miller v. Woodmoor Corp., Nos. 74-F-988, 76-F-567, 1978 U.S. Dist. LEXIS 15234 (D. Colo. Sept. 28, 1978) ............................... 13 In re Qwest Comm. Int'l, Inc. Sec. Litig., No. 01-1451-REB, 2006 U.S. Dist. LEXIS 71267 (D. Colo. Sept. 28, 2006) ........................ passim

FEDERAL STATUTES 15 U.S.C. § 78u-4(a)(6) ........................................................................................ 5 SEC Rule 10b-5 ................................................................................................. 21

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I.

PRELIMINARY STATEMENT Lead Counsel, Bernstein Litowitz Berger & Grossmann LLP ("Bernstein Litowitz")

and Berman DeValerio Pease Tabacco Burt & Pucillo ("Berman DeValerio") (collectively, "Lead Counsel"), for Lead Plaintiffs, Strategic Market Analysis Fund, Retirement Systems of Alabama, and the Policemen's Annuity and Benefit Fund of Chicago (collectively, "Lead Plaintiffs"), respectfully submit this motion for an award of attorneys' fees and reimbursement of out-of-pocket expenses in connection with the prosecution of this litigation (the "Litigation") against J. Shelby Bryan ("Bryan") and William S. Beans, Jr. ("Beans") (collectively, "Defendants") arising out of the alleged fraud at ICG Communications, Inc. ("ICG" or the "Company"). 1 As explained in the accompanying Motion In Support Of Final Approval of Class Action Settlement ("Settlement Motion"), Lead Counsel have succeeded in achieving an exceptional $18 million cash settlement with Defendants (the "Settlement"), just months before the commencement of trial. Indeed, this was a hard fought and strongly disputed Action, which spanned the course of nearly seven years, two consolidated complaints, numerous discovery motions, over 40 witness interviews, and extensive merits discovery, including depositions. As explained in the Settlement Motion, this case was fraught with risk for Lead Counsel because, among other things, the primary source of recovery ­ ICG, the issuer ­ was from the outset of the case in severe financial distress and, in fact, became

1

ICG is not named as a defendant because claims such as those referenced herein were discharged by the Bankruptcy Court for the District of Delaware by Order dated October 10, 2002.

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bankrupt, which severely limited the potential recovery available. Nevertheless, Lead Counsel pressed on, vigorously prosecuting the Class' claims against the Defendants, two individuals who had limited financial resources and dwindling insurance funds to fund a resolution of the Litigation. Lead Plaintiffs also faced difficulty in proving that Defendants acted with scienter. Of specific concern here was that a jury could

reasonably find, as would likely be argued by Defendants, that Defendants were not responsible for the alleged fraud at ICG and lacked any financial motivation to commit fraud, particularly because the Defendants did not sell any of their ICG stock during the Class Period. Also of concern here is that ICG never restated its financial statements, and therefore, never admitted that its financial statements during the Class Period were false. Further, Defendants would continue to argue that ICG never announced that its reciprocal revenue results were inaccurate, and never disclosed any alleged line-count inflation, therefore resulting in loss causation issues for Lead Plaintiffs under the Supreme Court's recent opinion in Dura Pharms., Inc. v. Broudo, 544 U.S. 336 (2005), which was handed down in mid-litigation and presented numerous issues of first impression relating to loss causation. See Joint Declaration of Norman Berman and Jeffrey N. Leibell in Support of the Proposed Settlement, Plan of Allocation and Award of Attorneys' Fees and Reimbursement of Litigation Expenses ("Lead Counsel Decl.") ¶16. Accordingly, the $18 million all cash settlement is especially significant. Lead Counsel have vigorously prosecuted this action on behalf of the Class on an entirely contingent fee basis, without receiving payment of any kind for their services. For creating this substantial benefit, Lead Counsel seek a fee of 12% of the Settlement

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Fund, plus reimbursement of litigation expenses in the amount of $539,188.18. Lead Counsel's fee request, representing a negative multiplier on their lodestar (i.e., the request represents just 42.5% of Lead Counsel and Liaison Counsel's combined lodestar of $5,074,822.50), is well below the range of fees typically awarded in securities class actions in this Circuit, and is fully justified by the work performed and the result obtained. Further, the fee is the product of an arm's-length negotiation between Lead Counsel and their clients, two institutional investors and a sophisticated private investor. See Joint Declaration of William F. Kelley, John Gallagher, and Yomi Rodrig, In Support of Final Approval of Settlement, Plan of Allocation and Award to Counsel of Attorney's Fees and Reimbursement of Litigation Expenses ("Joint Client Decl."), submitted herewith, at ¶¶15, 16. Courts have held that a presumption of reasonableness should

apply to fee requests that are the product of negotiation between a lead counsel and its clients. See In re Cendant Corp. Litig., 264 F.3d 201, 220 (3d Cir. 2001); In re Global Crossing Sec. & ERISA Litig., 225 F.R.D. 436, 466 (S.D.N.Y. 2004) ("[I]n class action cases under the PSLRA, courts presume fee requests submitted pursuant to a retainer agreement negotiated at arm's length between lead plaintiff and lead counsel are reasonable."). As discussed below and in the accompanying Settlement Motion, Lead Counsel Declaration, and Joint Client Declaration, in light of the substantial recovery for the Settlement Class, the substantial risks of this Litigation, the enormous efforts of Lead Counsel, the quality of work performed, the contingent nature of the fee, the complexity

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of the case and the standing and experience of counsel, Lead Counsel respectfully submit that a fee in the amount of 12% of the Settlement Fund should be awarded to Lead Counsel; and that litigation expenses in the amount of $539,188.18 should be reimbursed in full. II. ARGUMENT A. Lead Counsel Are Entitled to the Reasonable Fees Requested

The United States Supreme Court has long recognized that, when a representative plaintiff successfully establishes a common fund in which the other class members have a beneficial interest, the costs of litigation may be spread among the fund's beneficiaries. See, e.g., Boeing Co. v. Van Gemert, 444 U.S. 472, 478 (1980) ("[A] litigant or a lawyer who recovers a common fund for the benefit of persons other than himself or his client is entitled to a reasonable attorney's fee from the fund as a whole."); Alyeska Pipeline Serv. Co. v. Wilderness Soc'y, 421 U.S. 240, 275 (1975); Mills v. Electric Auto-Lite Co., 396 U.S. 375, 392-93 (1970). The Tenth Circuit has explicitly recognized this Court's right to award attorneys' fees from a common fund in situations where, as here, the common fund is the result of the attorney's successful prosecution of the action. See, e.g., Gottlieb v. Barry, 43 F.3d 474, 482 (10th Cir. 1994); Brown v. Phillips Petroleum Co., 838 F.2d 451, 454 (10th Cir. 1988); see also Rosenbaum v. MacAllister, 64 F.3d 1439, 1444 (10th Cir. 1995) ("The Common Fund doctrine `rests on the perception that persons who obtain the benefit of a lawsuit without contributing to its costs are unjustly enriched at the successful litigant's expense.'") (citation omitted); In re Qwest Comm. Int'l, Inc. Sec. Litig., No. 01-1451-

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REB, 2006 U.S. Dist. LEXIS 71267 (D. Colo. Sept. 28, 2006); Consumers Gas & Oil, Inc. v. Farmland Indus., Inc., 863 F. Supp. 1357, 1361 (D. Colo. 1993). B. Under the PSLRA and Tenth Circuit Precedent, Lead Counsel Are Entitled to a Fee Based on a Percentage of the Fund

In enacting the Private Securities Litigation Reform Act of 1995 (the "PSLRA"), Congress determined that "[t]otal attorneys' fees and expenses awarded by the court to counsel for the plaintiff class shall not exceed a reasonable percentage of the amount" recovered for the Class. 15 U.S.C. § 78u-4(a)(6). Accordingly, Lead Counsel are

entitled to a reasonable percentage of the settlement fund obtained. Awarding attorneys' fees as a percentage of a common fund is also entirely consistent with well-established Tenth Circuit precedent. In Brown, the Tenth Circuit affirmed the propriety of awarding attorneys' fees on a percentage basis in a common fund case. Cases following Brown confirm a "preference" in the Tenth Circuit for the percentage method. For example, in Gottlieb, the court stated: In our circuit, following Brown and Uselton, either [the percentage or lodestar] method is permissible in common fund cases; however, Uselton implies a preference for the percentage of the fund method. 43 F.3d at 483 (emphasis added); see also Rosenbaum, 64 F.3d at 1445 (citing Gottlieb); Consumers Gas & Oil, 863 F. Supp. at 1361 ("[T]he Supreme Court made clear that the percentage method of com[p]uting fees was the proper approach in Common Fund cases."). Nearly all courts in this District now use the percentage

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method to award attorneys' fees in common fund cases. Indeed, the Supreme Court, other circuits and legal commentators all overwhelmingly favor this method. 2 The percentage requested here is only 12% of the settlement fund obtained from Defendants. This fee, which is the product of arm's-length negotiations between Lead Plaintiffs and Lead Counsel, is well below the normal range of awards made in contingency fee class actions within this Circuit and throughout the United States, see infra, Section C. 5, and results in Lead and Liaison Counsel receiving only 42.5% their collective lodestar. C. Lead Counsel's Fee Request Is Well Within the Range of Reasonableness of Other Percentage Awards

Regardless of the formula used to determine the amount of attorneys' fees to be awarded (lodestar/percentage of recovery), the requested fee is fair and reasonable under the Tenth Circuit's "Johnson factors" that district courts must consider to determine the reasonableness of a common fund fee award. See In re Qwest, 2006 U.S. Dist. LEXIS 71267, at * 10-11. The Johnson factors are: (1) the time and labor

Blum v. Stenson, 465 U.S. 886, 900 n.16 (1984); Third Circuit Task Force Report, 108 F.R.D. 237, 246-49, 254-59 (3d Cir. 1985) (identifying nine major flaws with lodestar method and recommending that fee awards in traditional common fund cases be based on a percentage of the recovery.) After the issuance of the Task Force Report in 1985, nearly every circuit has joined in approving the percentage-of-the-fund method in common fund cases. See, e.g., In re Thirteen Appeals Arising out of the San Juan Dupont Plaza Hotel Fire Litig., 56 F.3d 295, 30607 (1st Cir. 1995); Savoie v. Merchants Bank, 166 F.3d 456, 460 (2d Cir. 1999); In re GMC Pick-Up Truck Fuel Tank Prods. Liab. Litig., 55 F.3d 768, 820-21 (3d Cir. 1995); Rawlings v. Prudential Bache Props., Inc., 9 F.3d 513, 515-17 (6th Cir. 1993); Florin v. Nationsbank, N.A., 34 F.3d 560, 563 (7th Cir. 1994); Johnston v. Comerica Mortg. Corp., 83 F.3d 241, 246-47 (8th Cir. 1996); Camden I Condominium Ass'n v. Dunkle, 946 F.2d 768, 773-74 (11th Cir. 1991); Swedish Hosp. Corp. v. Shalala, 1 F.3d 1261, 1271 (D.C. Cir. 1993).

2

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involved;

(2)

the

novelty

and

difficulty

of

the

questions;

(3)

the

skill requisite to perform the legal service properly; (4) the preclusion of other employment by the attorney due to acceptance of the case; (5) the customary fee; (6) any prearranged fee; (7) time limitations imposed by the client or the circumstances; (8) the amount involved and the results obtained; (9) the experience, reputation, and ability of the attorneys; (10) the undesirability of the case; (11) the nature and length of the professional relationship with the client; and (12) awards in similar cases. Id. at *12-13; see also Gottleib, 43 F.3d at 482-83 ("[W]e held that the twelve factors originally developed in Johnson . . . for statutory fee cases apply equally to percentage fee [cases]"; "[W]hichever method is used, the court must consider the twelve Johnson factors"). The Tenth Circuit has also recognized that "rarely are all of the Johnson factors applicable" in a common fund case. Brown, 838 F.2d at 456; see also Uselton, 9 F.3d at 853 (stating that "applicability and weight" of the Johnson factors will "undoubtedly be different" in common fund and statutory fee determinations). Rather, the relevance of each of the Johnson factors will vary in any particular case, so the Tenth Circuit has left it to the lower court's discretion to apply the factors in view of the circumstances of the case. Brown, 838 F.2d at 456. As discussed below, the Johnson factors support the requested fee here. 1. The Time and Labor Involved

As detailed in the accompanying Settlement Motion and Declarations, Lead Counsel expended significant time, effort and resources prosecuting this Litigation, including researching and investigating claims and defenses, and conducting discovery

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and motion practice. In sum, a total of 15,306 hours, or $5,074,822.50, were devoted to the Litigation. Indeed, Lead Counsel was rapidly approaching trial at the time this

favorable $18 million recovery was negotiated for the benefit of the Class. Lead Counsel's work in this Litigation began in late 2000 when fourteen related federal securities class actions on behalf of purchasers of ICG common stock against Defendants Bryan, ICG's CEO and Chairman of the Board; Beans, ICG's President and COO; and ICG were filed. By Order dated October 25, 2001, the Court consolidated these actions and appointed Strategic Market Analysis Fund, the Retirement Systems of Alabama, and the Policemen's Annuity and Benefit Fund of Chicago as Lead Plaintiffs for this securities class action and approved the Lead Plaintiffs' selection of counsel, appointing Bernstein Litowitz and Berman DeValerio as Lead Counsel and Shuman & Berens LLP (f/k/a Dyer & Shuman LLP) as Liaison Counsel. Lead Counsel Decl. ¶11. In preparation for filing their amended complaint, Lead Counsel conducted an intensive factual investigation, including reviewing the publicly filed documents of ICG and interviewing former ICG employees and customers. Lead Counsel Decl. ¶¶4, 1214. The result of this extensive investigation formed the basis for the Consolidated and Amended Class Action Complaint, which was filed on February 15, 2002 (the "First Amended Complaint"), and alleged violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 ("Exchange Act") and Rule 10b-5. The First Amended Complaint alleges that beginning in the fourth quarter of 1999, ICG's growth, and correspondingly its stock price, was measured primarily by its

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"line count." 3

The number of lines a company leased, or its "line count," was of

paramount importance to investors because it demonstrated the Company's ability to generate revenues in the future as fixed costs associated with building out the fiber optic network of lines diminished in subsequent years. Beginning in the fourth quarter of 1999 through the end of the Class Period, ICG's purported line count grew at a breathtaking pace. The First Amended Complaint alleges that Defendants touted this growth to the investing public and raised billions of dollars in capital, all the while knowing that it was not sustainable. The First Amended Complaint further alleges that under Defendants' watch, ICG (i) repeatedly reported inflated line count data; (ii) failed to disclose the problems in its network; and (iii) failed to disclose the loss of a substantial portion of its client base. Defendants moved to dismiss the First Amended Complaint on May 14, 2002, arguing, among other things, that Lead Plaintiffs failed to allege fraud with sufficient particularity, as required under Rule 9(b) and the PSLRA, and failed to adequately plead scienter. Upon consideration of the motion and Lead Plaintiffs' opposition papers, the Court, on August 25, 2004, granted Defendants' motion in part, and denied it in part, substantially limiting the scope of Lead Plaintiffs' claims. Following the Court's order, Lead Counsel embarked on a massive investigation to cure the perceived deficiencies in the First Amended Complaint identified by the Court. Lead Counsel interviewed numerous witnesses, both in person and via

3

"Lines" are fiber optic cables that are installed to transport voice and data and leased to customers for a set term at a variable price that depends on minutes of use and associated services provided with the lines.

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conference calls.

Lead Counsel Decl. ¶¶4, 12, 13.

Concurrently, Lead Counsel

requested, reviewed and supervised the review of documents produced by Defendants and non-parties relating to the claims in the First Amended Complaint which had been sustained by the Court. As a result of their continued investigation, Lead Counsel drafted the Second Consolidated and Amended Complaint (the "Second Amended Complaint"), which included significant new evidence obtained from witnesses at high levels within ICG. Specifically, these witnesses informed Lead Counsel that from the time Beans joined the Company in July 1999, Beans and Bryan conducted monthly, and in Beans' case, weekly "executive meetings," at which Defendants instructed their staff to use a variety of methods to falsely inflate ICG's reported revenue-producing line counts and that Defendants continued to direct and require the use of these practices through the first and second quarters of 2000. The Second Amended Complaint also included new information from numerous upper-level and mid-level ICG employees allegedly confirming that Defendants continued to tout the success of ICG's new network when, instead, they should have been disclosing its fundamental flaws. On March 15, 2005, armed with the additional factual allegations gathered from their investigation, Lead Counsel filed a motion for leave to file the Second Amended Complaint. The Court approved Lead Plaintiffs' motion to file the Second Amended Complaint and, by order dated February 7, 2006, revived many of the claims it had earlier dismissed by denying Defendants' motion to dismiss in its entirety ­ with the sole

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exception of claims against Defendant Bryan concerning ICG's network problems and customer complaints, which the Court dismissed. 4 At the time the Settlement was reached, expedited discovery was well underway. Lead Counsel received, reviewed and analyzed over 140,000 pages of hard copy documents, and approximately 3,000 electronic documents produced by ICG, as well as raw data concerning ICG's line count entry and billing systems. Lead Counsel Decl. ¶¶4, 12, 13, 19, 28. Lead Counsel also reviewed thousands of pages of documents produced by non-parties, including ICG's auditor, KPMG LLP, and ICG's former customers, suppliers, and investors. Lead Counsel Decl. ¶¶26, 27. Lead Counsel also consulted with damages and technical experts in the field of telecommunications in analyzing the document production. In addition to document discovery, Lead Plaintiffs conducted more than 40 interviews with former ICG employees and customers, both inperson and via conference calls, drafted witness affidavits, and took several depositions of ICG employees. Lead Plaintiffs also responded to requests for production of

documents and interrogatories, and submitted a motion for class certification. Lead Counsel Decl. ¶¶24, 31. Lead Counsel thoroughly analyzed the document discovery and witness testimony obtained in order to have information sufficient to evaluate the merits of the case against Defendants. After conducting a thorough analysis of the strengths and weaknesses of their claims, Lead Plaintiffs and Defendants, through their respective

On March 14, 2006, the Court entered a Scheduling Order setting forth discovery and other litigation deadlines in the case, including setting a trial date of September 11, 2006. On March 17, 2006, Defendants answered the Second Amended Complaint.

4

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counsel, explored the possibility of settling the case. Lead Counsel, along with counsel for Defendants and ICG's insurers, negotiated at arms'-length in an effort to resolve this dispute. Throughout the negotiation process, counsel for the parties comprehensively debated the merits of the case and the structure and substance of a potential settlement. The negotiations were held both in person and via conference calls. Lead Counsel Decl. ¶37. The parties' negotiations culminated in a two-day mediation proceeding held on May 16 and 17, 2006, and conducted by a highly experienced and respected mediator, Jonathan Marks of MarksADR. Before the mediation session, the parties prepared

extensive mediation statements, incorporating information obtained from the substantial discovery completed. Lead Counsel Decl. ¶36. Discussions between the parties

reached an impasse on several occasions during the mediation because of differences in the parties' views concerning the merits of the case, the likelihood of success at trial, the amount of damages, and the amount of funds available for settlement. Nevertheless, after extensive negotiations, Lead Plaintiffs and Defendants reached an agreement to resolve the claims against Defendants, and the parties entered into a Stipulation of Settlement, dated as of July 10, 2006, to settle the Litigation for $18 million in cash. In sum, counsel's diligence and hard work secured an excellent recovery for the Class, and the time and labor expended by counsel confirm that the requested fee is reasonable. 2. The Novelty and Difficulty of Questions Raised by the Litigation

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Courts have long recognized that the novelty and difficulty of the issues in a case are significant factors in determining a fee award. See In re Qwest, 2006 U.S. Dist. LEXIS 71267, at * 17 ("[t]here are few simple class action cases involving securities law. This area of law may not be novel, but it generally is complex and difficult."). As noted in Miller v. Woodmoor Corp., prosecution of any class action in the securities area presents inherently complex and novel issues: The benefit to the class must also be viewed in its relationship to the complexity, magnitude, and novelty of the case . . . . Despite years of litigation, the area of securities law has gained little predictability. There are few "routine" or "simple" securities actions. Courts are continually modifying and/or reversing prior decisions in an attempt to interpret the securities law in such a way as to follow the spirit of the law while adapting to new situations which arise. Indeed, many facets of securities law have taken drastically new directions during the pendency of this action . . . . The complexity of a case is compounded when it is certified as a class action . . . . Management of the case, in and of itself, is a monumental task for counsel and the Court. Miller v. Woodmoor Corp., Nos. 74-F-988, 76-F-567, 1978 U.S. Dist. LEXIS 15234, at *11-12 (D. Colo. Sept. 28, 1978). There is no question that this litigation involved numerous complex issues of law and fact that each presented considerable risks to Lead Plaintiffs' case. Defendants steadfastly maintained that they did nothing wrong, and opposed Lead Counsel's motions at every turn, including opposing the allegations in the First Amended Complaint and Second Amended Complaint, opposing Lead Plaintiffs' motion for leave to amend the First Amended Complaint, and moving to compel discovery from Lead

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Plaintiffs. Although Lead Plaintiffs believe that their claims have merit, Lead Plaintiffs faced significant obstacles that made this case difficult from the start. For example, if the case were to proceed, Lead Plaintiffs would have the burden of proving, inter alia, that the Defendants were responsible for an omission and/or misstatement that was material, that the omission and/or misstatement impacted the market price of ICG securities, and that Defendants acted with scienter. In addition, Lead Plaintiffs also anticipated that the issues of causation and damages would be hotly contested at trial. Indeed, proving liability here would be extremely difficult because, unlike the typical financial fraud case, ICG never filed a financial restatement, and therefore never admitted that its financial statements were inaccurate. Further, in proving that

Defendants acted with scienter, Lead Plaintiffs would have to counter the fact ­ as Defendants would continue to argue ­ that Defendants lacked any financial motivation to commit fraud, particularly because they did not sell any of their ICG stock during the Class Period. Defendants would also continue to argue that ICG never announced that its reciprocal revenue results were inaccurate, and that ICG did not disclose any alleged line-count inflation, both of which could result in loss causation issues for Lead Plaintiffs under the Supreme Court's recent opinion in Dura Pharmaceuticals, Inc. v. Broudo, 544 U.S. 336 (2005), which was handed down in mid-litigation and presented numerous issues of first impression relating to loss causation. Lead Counsel Decl. ¶16.

Defendants would also continue to argue that the "internet bubble" of the 1990's, and the general decline in the telecommunications market were responsible for the rise, and

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subsequent decrease, in ICG's stock price, resulting in additional loss causation problems under Dura. Both Lead Plaintiffs and Defendants also would have submitted expert reports in support of their own damages calculations, and ultimately the issue of damages would be decided in "a battle of the experts." It is impossible to predict which expert and theory of damages the jury would accept. These complex factual and legal questions would have continued to be the subject of substantial disagreement among the parties. Absent a settlement, there was a possibility that the Class could have received a smaller recovery ­ or no recovery at all ­ had the Court or a jury accepted Defendants' arguments. Compounding those risks, Lead Plaintiffs' efforts to establish liability and damages, in all likelihood, would not end with a judgment in the district court, but would continue through one or more levels of appellate review. In complex and substantial cases such as this, even a victory at the trial stage does not guarantee ultimate success. Both trial and judicial review are unpredictable, and could adversely affect the scope of an ultimate recovery, if not the recovery itself, in this action. See In re Warner Commc'ns Sec. Litig., 618 F. Supp. 735, 747-48 (S.D.N.Y. 1985) ("Even a victory at trial is not a guarantee of ultimate success. If Lead Plaintiffs were successful at trial and obtained a judgment for substantially more than the amount of the proposed settlement, the defendants would appeal such judgment. An appeal could seriously and adversely affect the scope of an ultimate recovery, if not the recovery itself.") (citing numerous examples), aff'd, 798 F.2d 35 (2d Cir. 1986); Robbins v. Koger Props., 116 F.3d 1441,

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1446-49 (11th Cir. 1997) (reversing $81 million jury verdict for Plaintiffs in securities class action after five years of litigation). Despite the novel and difficult questions raised by this case, Lead Counsel succeeded in obtaining a significant recovery for the benefit of the Class. 3. The Skill Required to Perform The Legal Services Properly

It took considerable skill to achieve this Settlement. Counsel in securities class actions must possess expertise in federal securities laws, class actions and other federal practices and procedures. Lead Counsel assembled a team that possessed this expertise. Their combined talents allowed counsel to plead sufficiently viable claims and theories of liability to pursue this action, and bring Defendants to the negotiating table, all to the benefit of the Class members. The $18 million cash settlement is itself a testament to Lead Counsel's skill and expertise. The quality of Defendants' counsel can also be important in evaluating the quality of plaintiffs' counsel's work. 5 Here, Defendants were represented by experienced and highly capable litigators, O'Melveny & Myers LLP, with a reputation for vigorous advocacy in the defense of complex cases such as the present action. The quality of Defendants' counsel's efforts on behalf of their clients was evident not only in their work on Defendants' motions to dismiss, but in their aggressive discovery tactics and adversarial negotiating posture. Accordingly, this factor also supports the requested fee

5

See, e.g., In re WorldCom, Inc. Sec. Litig., 388 F. Supp. 2d 319, 357-58 (S.D.N.Y. 2005); In re Lucent Techs, Inc. Sec. Litig., 327 F. Supp. 2d 426, 437 (D.N.J. 2004); In re King Res. Co. Sec. Litig., 420 F. Supp. 610, 634 (D. Colo. 1976); In re Equity Funding Corp. Sec. Litig., 438 F. Supp. 1303, 1337 (C.D. Cal. 1977); Arenson v. Board of Trade, 372 F. Supp. 1349, 1354 (N.D. Ill. 1974).

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request.

See In re Qwest, 2006 U.S. Dist. LEXIS 71267, at * 19 (noting the third

Johnson factor "carries significant weight because the plaintiff class likely would not have obtained any relief without the assistance of counsel with a high level of skill and expertise. Further, lead counsel should be rewarded for their successful application of their skill and expertise."). 4. The Preclusion of Other Employment By Attorneys Due to Acceptance of the Case

There is no question that Lead Counsel were precluded from other employment due to their acceptance of this Litigation. The magnitude and complexity of this case, in addition to the intense discovery conducted here, certainly diverted counsels' attention from engaging on other contingent fee matters in their respective offices. Undoubtedly, had this case proceeded to trial, which was scheduled for September 2006, the time burden imposed on Lead Counsel would have been inordinate. Thus, this factor too favors the percentage fee request. 5. The Customary Fee for Similar Work

In Brown, the Tenth Circuit held that "the percentage reflected in a common fund award must be reasonable." Brown, 838 F.2d at 454. The 12% fee requested here ­ which results in Lead and Liaison Counsel receiving just 42.5% of their total lodestar ­ is eminently reasonable. Indeed, the following chart lists recent securities class action cases in this District where fees of 25% and greater were approved:

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Case Rasner v. First World Commc'ns Inc., No. 00-K-1376 (D. Colo. Jan. 19, 2005) Angres v. Smallworldwide PLC, No. 99-K-1254 (D. Colo. June 7, 2003) Markus v. The North Face, Inc., C.A. No. 99-Z-47 (D. Colo. May 1, 2001) In re Samsonite Corp. Sec. Litig., C.A. No. 98-K1878 (D. Colo. July 25, 2000) Vaszlavik v. Storage Tech. Corp., No. 95-B-2525 (D. Colo. Mar. 9, 2000) Schwartz, et al. v. Celestial Seasonings, Inc., No. 95-K-1045 (D. Colo. Apr. 25, 2000) Schaffer v. Evolving Sys., Inc., C.A. No. 98-WY1338-CB (D. Colo. Oct. 4, 1999) In re Einstein Noah Bagel Corp. Sec. Litig., C.A. No. 97-N-1614 (D. Colo. June 4, 1999) Queen Uno Ltd. P'ship, et al. v. Coeur D'Alene Mines Corp., No. 97-WY-1431-CB (D. Colo. Aug. 11, 1999) In re Coram Healthcare Corp. Sec. Litig., Master File No. 95-N-2074 (D. Colo. Jan. 24, 1997) In re Resort Income Investors, Inc. Sec. Litig., Master File No. 95-B-1665 (D. Colo. Mar. 13, 1998) In re Intelcom Group, Inc. Sec. Litig., C.A. No. 95-D1166 (D. Colo. Mar. 21, 1997) Sonnenfeld v. City & County of Denver, Colorado, C.A. No. 95-Z-468 (D. Colo. Dec. 8, 1997) Wolf v. E.A. Breitenbach, C.A. No. 95-D-2572 (D. Colo. May 29, 1997)

Percentage Award 6 33% of recovery plus expenses 33-1/3% of recovery 25% of recovery plus expenses 25% of recovery plus expenses 30% of recovery 33-1/3% of recovery 30% of recovery plus expenses 30% of recovery plus expenses 30% of recovery plus expenses 30% of recovery plus expenses 30% of recovery plus expenses 33-1/3% of recovery plus expenses 33-1/3% of recovery plus expenses 30% of recovery plus expenses

In comparison to the foregoing, the 12% attorneys' fee request by Lead Counsel here, which is less than half of the 30% to 33 1/3% range that courts customarily awarded in securities fraud cases in this District, is especially reasonable. 6.
6

Whether There Was a Prearranged Fee

The unpublished orders listed here are attached to the Appendix of Unreported Decisions in Support of Plaintiffs' Counsel's Motion for Final Approval of Settlement and Award of Attorneys'

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Here, Lead Plaintiffs negotiated retainer agreements with Lead Counsel that provide for a pre-arranged fee of 12% in the case of settlement of this Action. Such prearranged fee militates in favor of awarding Lead Counsel the percentage of the Settlement Fund that they have requested as a fee for their services. In re Qwest, 2006 U.S. Dist. LEXIS 71267, at *24 (presumption of reasonableness attaches to fee which lead counsel and lead plaintiffs negotiated at commencement of case); Cendant, 264 F.3d at 220 ("courts should afford a presumption of reasonableness to fee requests submitted pursuant to an agreement between a properly-selected lead plaintiff and properly-selected lead counsel"); In re Global Crossing, 225 F.R.D. at 466 ("[I]n class action cases under the PSLRA, courts presume fee requests submitted pursuant to a retainer agreement negotiated at arm's length between lead plaintiff and lead counsel are reasonable"); In re WorldCom, 388 F. Supp. 2d at 356 (same); In re Lucent Techs., Inc. Sec. Litig., 327 F. Supp. 2d 426, 433 (D.N.J. 2004) (same). It is "precisely the type of bargaining that the PSLRA anticipated and to which a court reasonably may give substantial deference." In re Global Crossing, 225 F.R.D. at 468. 7 7. Time Limitation Imposed by Client or Circumstances

Lead Counsel knew at the outset of the Litigation that this case would be laborintensive, but nevertheless consciously assumed that risk. Aside from that

consideration, there were no real "time limitations imposed by the client or

Fees and Reimbursement of Litigation Expenses. 7 This also addresses the eleventh Johnson factor, the nature and length of the professional relationship with the client, as the nature of the relationship is set forth in the retainer agreements negotiated by Lead Counsel at the outset of the Litigation.

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circumstances." Brown, 838 F.2d at 455. Thus, the seventh Johnson factor is not a consideration in this case. 8. The Amount Involved and the Results Obtained

Courts consistently recognize that the result achieved is a major factor to be considered in making a fee award. Indeed, as the Tenth Circuit stated in Brown, "in a common fund case . . . the amount involved and the results obtained . . . may be given greater weight when, as in this case, the trial judge determines that the recovery was highly contingent and that the efforts of counsel were instrumental in realizing recovery on behalf of the class." Brown, 838 F.2d at 456. By any standard, the $18 million all cash Settlement is an excellent result, which was achieved in the face of inherent contingent risks, a bankrupt Company, the obstacles presented by the PSLRA, and the numerous defenses advanced by Defendants and their able counsel. See In re Qwest, 2006 U.S. Dist. LEXIS 71267, at *24 (noting risk that company would file bankruptcy during litigation constituted substantial risk). Lead Counsel also obtained this Settlement without unnecessary

delay, thereby providing the Class with a real benefit without having to wait untold additional years with no assurances of recovering more, or anything at all. Thus, the results achieved by the Settlement ­ $18 million in cash now for the benefit of the Class ­ is an excellent result and favors the fee award. 9. The Experience, Reputation and Ability of the Attorneys

The quality of representation provided by Lead Counsel is another important factor to consider in determining the reasonableness of a requested fee. See Brown,

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838 F.2d at 454-55. It is respectfully submitted that the quality of Lead Counsel's work was excellent, as reflected in the settlement results achieved in the face of skillfully advocated defenses and complicated legal issues. From the outset of these related actions arising out of the fraud at ICG, counsel litigated the claims vigorously and skillfully to maximize recovery for the Class, prevailing on many of the contested issues presented to the Court, including Defendant's motion to dismiss the Second Amended Complaint. The quality of counsel's work should be rewarded. Accordingly, this factor also supports the requested percentage fee. 10. The Undesirability of the Case

The "undesirability," or inherent risk, of a case is a factor in determining the fee award. See In re Qwest, 2006 U.S. Dist. LEXIS 71267, at *27 ("At a minimum, this case required lead counsel to advance large amounts of time, money, and other resources to determine if any recovery might be had . . . Most attorneys are unable or unwilling to take such a financial risk."). As the court aptly observed in King Resources: The litigation also involved unique and substantial issues of law in the technical area of SEC Rule 10b-5 . . . difficult, complex and oft-disputed class action questions, and difficult questions regarding computation of damages. *** In evaluating the services rendered in this case, appropriate consideration must be given to the risks assumed by plaintiffs' counsel in undertaking the litigation. The prospects of success were by no means certain at the outset, and indeed, the chances of success were highly speculative and problematical. In re King Res. Co. Sec. Litig., 420 F. Supp. 610, 632, 636-37 (D. Colo. 1976).

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The risk of litigation includes not just the risk of no payment, but also the risk of underpayment. See In re Continental Ill. Sec. Litig., 962 F.2d 566, 569-70 (7th Cir. 1992) (reversing district court's fee award because it failed to recognize, among other things, that contingent fee counsel face considerable risk of underpayment). Even

assuming that some recovery is likely in a particular case, there is no guarantee that the recovery will be enough to fully compensate class counsel for the time and money they invested in prosecuting the case on behalf of the class. Id. Here, there was a very real and substantial risk that Lead Counsel would receive little or no compensation for the nearly seven years of work and hundreds of thousands of dollars in expenses incurred in the litigation against Defendants. Lead Counsel Decl. ¶¶56-57. 11. Awards in Similar Cases

As demonstrated by the decisions cited in Section C, 5, supra, the 12% fee requested here is fully consistent, and in fact significantly lower, than awards customarily made in similar cases in the Tenth Circuit and this District. D. The Fee Requested Is Also Fair and Reasonable Under a Lodestar/Multiplier Analysis

As Lead Counsel has demonstrated above, the 12% attorneys' fee award requested here is reasonable when compared with the percentage-of-the-fund analysis in other cases. Although Lead Counsel believe that the percentage-of-recovery method is the appropriate and preferred approach, Lead Counsel is also aware that this Court has previously awarded attorneys' fees based on a review of the reasonableness of the

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hourly rates and hours billed. "lodestar/multiplier" method.

This contemplates application of the alternative

Using the lodestar/multiplier analysis confirms that the

requested fees are fair and reasonable and should be approved. In this case, Lead and Liaison Counsel collectively expended a total of 15,306 hours resulting in a lodestar of $5,074,822.50 calculated at their customary hourly rates. These hours and fees were compiled from contemporaneous time records maintained by each attorney and each paraprofessional affiliated with the firms that participated in this case. The aggregate hours include, inter alia, time spent in the investigation and

drafting of an initial complaint, First Amended Complaint, and Second Amended Complaint; legal research and drafting in connection with numerous motions, including two motions to dismiss and a motion for class certification; a document production and review encompassing over 140,000 pages of documents and thousands of electronic files; substantial factual investigation which included interviews with over 40 former ICG employees and customers; drafting witness affidavits and conducting several depositions; and negotiation of the Settlement, which included a two-day mediation. Thus, the requested fee award of 12% of the $18 million Settlement, results in a negative lodestar multiplier, indicating that the award is eminently reasonable, especially when compared with the number of positive multipliers that are customarily awarded in this District and elsewhere. See, e.g., Markus v. The North Face, Inc., C.A. No. 99-Z-47 (D. Colo. May 1, 2001) (awarding fee equal to a 2.9 multiplier), In re Samsonite Corp. Sec. Litig., C.A. No. 98-K-1878 (D. Colo. July 25, 2000) (awarding fee equal to a 3.45 multiplier); In re Coram Healthcare, Master File No. 95-N-2074 (D. Colo.

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Jan. 24, 1997) (awarding fee equal to a 3.4 lodestar multiplier); In re Storage Tech. Sec. Litig., Case No. 92-B-750 (D. Colo. Dec. 1, 1995) (awarding fee equal to a 1.9 multiplier); Schaffer v. Evolving Systems, Inc. C.A. No. 98-WY-1338-CB (D. Colo. Oct. 4, 1999) (awarding fee equal to a 2.19 multiplier). 8 E. There Have Been No Objections to the Fee Request To Date

The reaction of Class members also supports the requested fee award. Pursuant to the Court's Order, beginning on August 11, 2006, Lead Plaintiffs caused notice to be mailed to approximately 24,344 putative Class members or nominees by first class mail ("Notice"). See Affidavit Of Anya Verkhovskaya ("Claims Admin. Aff.") ¶17, attached to the Lead Counsel Decl. at Exhibit 2. In addition, a Summary Notice of the proposed settlement was published on August 18, 2006 in the national edition of The Wall Street Journal. Id. at ¶12. The Notice advised the Class that Counsel would apply for an award of attorneys' fees in an amount not to exceed 12% of the Settlement Fund, as well as reimbursement of expenses, in an amount not to exceed $650,000, which were actually and reasonably incurred in the prosecution of the Litigation. The Notice further stated that all objections to the proposed settlement and Lead Counsel's application for attorneys' fees must be sent to the claims' administrator and postmarked no later than December 28, 2006. As of this time, with two weeks remaining before the deadline for filing objections, not one Class member has filed an objection to Lead

8

See also Kurzweil v. Philip Morris Cos., Nos. 94 civ. 2373, 94 civ. 2546, 1999 U.S. Dist. LEXIS 18378, at *7-8 (S.D.N.Y. Nov. 24, 1999) (recognizing that when cross checking the common fund approach with the lodestar method, multiplier of between 3 and 4.5 is common in federal securities cases).

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Counsel's fee and expense request. Lead Counsel Decl. ¶62. The absence of any objection to the fee request from any Class member, and the fact that Lead Plaintiffs support the fee request, is powerful evidence that the fees requested are reasonable. See, e.g., Ressler v. Jacobson, 149 F.R.D. 651, 656 (M.D. Fla. 1992) (noting that a lack of objections is "strong evidence of the propriety and acceptability of [the fee] request"). F. The Expenses Requested Were Reasonable And Necessary to the Prosecution of this Action

Lead Counsel also apply for reimbursement of litigation expenses incurred in prosecuting this action in the total amount of $539,188.18. Expenses are compensable in a common fund case if the particular costs are those typically billed by attorneys to paying clients in the marketplace. Bratcher v. Bray-Doyle Indep. Sch. Dist. No. 42, 8 F.3d 722, 725-26 (10th Cir. 1993) (holding that expenses reimbursable if such charges would normally be billed to client) (citing Bee v. Greaves, 910 F.2d 686, 690 (10th Cir. 1990)); Gottlieb v. Wiles, 150 F.R.D. 174, 185 (D. Colo. 1993), rev'd and remanded on other grounds sub nom. Gottlieb v. Barry, 43 F.3d 474, 490-91 (10th Cir. 1994) (same). 9 Here, the expenses counsel incurred relate principally to expert fees, filing fees, computerized legal research, photocopying costs, and travel expenses related to court hearings and mediation. See Lead Counsel Decl. ¶65. Each of these costs is of the type that attorneys routinely charge to paying clients. This Court should thus order that

9

Decisions in other circuits confirm this practice. Harris v. Marhoefer, 24 F.3d 16, 19 (9th Cir. 1994) (approving expenses normally charged to a fee-paying client approved); Associated Builders & Contractors, Inc. v. Orleans Parish Sch. Bd., 919 F.2d 374, 380 (5th Cir. 1990) (reimbursing all reasonable out-of-pocket expenses recoverable because costs are normally charged to fee-paying clients).

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those costs be reimbursed to Lead Counsel from the common fund. There is no question that the costs were reasonable, necessary, and directly related to the Litigation. For example, Lead Plaintiffs obtained and reviewed over

140,000 thousands of pages of documents, yielding photocopying costs (both internal and external copying), and costs relating to maintaining an electronic document repository, which enabled Lead Counsel to more effectively review, code, and search those documents. These expenses are reasonable and not unusual in documentLead Plaintiffs also

intensive securities cases like this one. Lead Counsel Decl. ¶70.

retained experts in the field of damages and telecommunications who were valuable to assist Lead Counsel in reviewing and analyzing the documents produced in this case. Lead Counsel Decl. ¶¶67-69. These experts significantly contributed to the prosecution and resolution of the case against Defendants, and the cost incurred for these experts is reasonable and not unusual in a case of this magnitude and complexity. Lead Plaintiff Decl. ¶70. Further, Lead Counsel have conferred with Lead Plaintiffs who agree that these costs are reasonable. Joint Client Decl. ¶17. As with the fee request, to date, no objection has been received as to Lead Counsel's request for reimbursement of litigation expenses, which was stated in the Notice as "not to exceed $650,000." III. CONCLUSION For the foregoing reasons, Lead Counsel respectfully request that the Court approve of an award of the requested attorneys' fees and reimbursement of litigation expenses.

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DATED: December 13, 2006

Respectfully submitted, _s/ Jeffrey A. Berens______________ Kip B. Shuman Jeffrey A. Berens SHUMAN & BERENS LLP 801 East 17th Avenue Denver, Colorado 80218 Tel: (303) 861-3003 Fax: (303) 830-6920 [email protected] Liaison Counsel For Lead Plaintiffs and The Class

Max W. Berger Jeffrey N. Leibell Eric T. Kanefsky BERNSTEIN LITOWITZ BERGER & GROSSMANN LLP 1285 Avenue of the Americas New York, NY 10019 Tel: (212) 554-1400 Fax: (212) 554-1444 Attorneys For Lead Plaintiffs Retirement Systems of Alabama and Policemen's Annuity and Benefit Fund of Chicago And The Class

Norman Berman Bryan A. Wood Julie A. Richmond BERMAN DEVALERIO PEASE TABACCO BURT & PUCILLO One Liberty Square Boston, MA 02109 Tel: (617) 542-8300 Fax: (617) 542-1194 Attorneys For Lead Plaintiff Strategic Market Analysis Fund And The Class

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