Free Brief in Opposition to Motion - District Court of Colorado - Colorado

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UNITED STATES DISTRICT COURT DISTRICT OF COLORADO Civil Case No. : 04-cv-00781-REB-PAC Consolidated with Civil Case No. 06-cv-02189 MDL 1788

SHRINERS HOSPITALS FOR CHILDREN, a Colorado Corporation, Plaintiff, v. QWEST COMMUNICATIONS INTERNATIONAL, INC., et. al., Defendants.

PLAINTIFF'S MEMORANDUM IN OPPOSITION TO DEFENDANTS QWEST COMMUNICATIONS INTERNATIONAL, INC. and QWEST CAPITAL FUNDING, INC. MOTIONS TO DISMISS THE COMPONENT COMPLAINT IN CIVIL ACTION 06-CV-02189

I. Walton Bader BADER & BADER, LLP Attorneys for Plaintiff 50 Main Street Suite 1000 PMB 1029 White Plains, NY 10606 Telephone: 914-682-0072

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TABLE OF CONTENTS (Page 1 of 2) MEMORANDUM TOPIC PAGE(S) OF PLAINTIFF'S MEMORANDUM WHERE TOPIC APPEARS 1 2 3 4

PRELIMINARY STATEMENT THE PLAINTIFF'S POINTS THE PROCEDURAL HISTORY OF THIS CONSOLIDATED ACTION POINT ONE: THE REFUSAL OF THIS COURT TO PERMIT AMENDMENT OF THE ORIGINAL COMPLAINT FILED IN THIS ACTION BECAME MOOT WHEN THE CLASS SET FORTH IN THE PUTATIVE CLASS COMPLAINT WAS DULY CERTIFIED BY THE COURT OVER OPPOSITION BY CERTAIN OBJECTING PARTIES UNDER "THE LAW OF THE CASE" DOCTRINE THE DETERMINATION AS TO WHETHER THE "TOLL" OF THE RELEVANT STATUTE OF LIMITATIONS UPON THE FILING OF A PUTATIVE CLASS ACTION IS GOVERNED BY JUDGE KRIEGER'S DETERMINATION OF THE QUESTION. THE "TOLLING" OF THE RELEVANT STATUTE OF LIMITATIONS BY REASON OF THE FILING OF A PUTATIVE CLASS ACTION COVERS ALL CLAIMS SET FORTH IN THE CLASS ACTION AND RELATED CLAIMS. THE PLAINTIFF CONSENTS THAT DEFENDANT QWEST CAPITAL FUNDING BE WITHDRAWN WITHOUT PREJUDICE. ACTUAL RELIANCE IS NOT A REQUIREMENT FOR LIABILITY UNDER NEGLIGENT MISREPRESENTATION IN THE STATE OF COLORADO.

POINT TWO:

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POINT THREE:

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POINT FOUR:

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POINT FIVE:

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TABLE OF CONTENTS (Page 2 of 2) MEMORANDUM TOPIC PAGE(S) OF PLAINTIFF'S MEMORANDUM WHERE TOPIC APPEARS 13

POINT SIX:

SUFFICIENT FACTS ARE ALLEGED IN SHRINERS II AND SHRINERS I TO CONSTITUTE FRAUD. THE QWEST DEFENDANTS ARE LIABLE FOR BREACHES OF FIDUCIARY DUTIES AND RELATED CLAIMS. LEAVE TO AMEND THE COMPLAINT IN SHRINERS II IS SOUGHT BY THE PLAINTIFF IF THE COURT FINDS ANY OF THE COUNTS IN THIS COMPLAINT DEFICIENT. IN THE EVENT THAT THIS COURT DETERMINES THAT THE CONFLICT BETWEEN JUDGE BLACKBURN'S AND JUDGE KRIEGER'S HOLDINGS ON THE TOLLING QUESTION ARE MATERIAL TO THE ISSUES ON THIS MOTION THE PLAINTIFF SUBMITS THAT A CERTIFICATE OF APPEAL SHOULD BE GRANTED IN THIS CASE. THE QWEST DEFENDANTS' MOTION TO DISMISS THE SHRINERS II COMPLAINT SHOULD BE DENIED EXCEPT THAT THE DEFENDANT QWEST CAPITAL FUNDING SHOULD BE DISMISSED WITHOUT PREJUDICE. IN ADDITION IF THE COURT FINDS ANY OF THE COUNTS OF THE SHRINERS II COMPLAINT INSUFFICIENT LEAVE TO AMEND IS REQUESTED.

POINT SEVEN:

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POINT EIGHT

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POINT NINE

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CONCLUSION:

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TABLE OF CASES (PAGE 1 OF 1) CASE CITED PAGE(S) OF PLAINTIFF'S MEMORANDUM WHERE CASE APPEARS 3, 4, 10 8 12

American Pipe and Construction Company vs. State of Utah. et. al., 414 US 538, 38 L. Ed. 2nd 713, 94 Sup. Ct. 756, (1974) Anthonv vs. Baker, 10 Cir., 955 F. 2d. 1395,1397 (1992) Bailey vs. Huqqins Diagnostic & Rehabilation Center. et. al., 952 P. 2nd 768, 772 Colorado Court of Appeals, 96 CA 0586 (1997) cert. denied to Colorado Supreme Court) Baker Group. L.C. vs. Burlinqton N. & Santa Fe Rv ., 228 F. 3d. 883, 886 (8 Cir., 2000) Crown Cork & Seal Company, Inc., 462 US 435 (1983)

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Erie RR Company vs. Tompkins, 304 US 64, 58 Sup. Ct. 817, 82 10, 12 L Ed 1188) In Re Owest Communications International. Inc. Securities Litiqation Schimmer vs. State Farm Mutual Auto Insurance. Civil Action 05CV-02513 -MSK 2006 WL 2361810 (D.C. Colo.) filed August 15, 2006 6, 7, 9 3, 7, 9

Teachers Retirement System of Louisiana vs. Linda G. Alvarado. 10 et. al., Case Number 05 CV 3649 (Colorado District Court, Denver World Com Securities Litiqation. (United States District Court Southern District of New York, Docket Number 02-CIV-3280 (DLC) 3, 9

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TABLE OF STATUTES AND RULES CITED (PAGE 1 OF 1) Rule 15 FRCP Rule 12 FRCP 28 USC 1292(b) Page 5

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UNITED STATES DISTRICT COURT DISTRICT OF COLORADO Civil Case No. : 04-cv-00781-REB-PAC Consolidated with Civil Case No. 06-cv-02189 MDL 1788 SHRINERS HOSPITALS FOR CHILDREN, a Colorado Corporation : Plaintiff, v. QWEST COMMUNICATIONS INTERNATIONAL,: INC., et. al.,: Defendants.

PLAINTIFF'S MEMORANDUM IN OPPOSITION TO DEFENDANTS QWEST COMMUNICATIONS INTERNATIONAL, INC. and QWEST CAPITAL FUNDING, INC. MOTIONS TO DISMISS THE COMPONENT COMPLAINT IN CIVIL ACTION 06-CV-02189

PRELIMINARY STATEMENT This is a Motion made by the defendants QWEST COMMUNICATIONS INTERNATIONAL, INC. and QWEST CAPITAL FUNDING, INC., hereinafter designated as the QWEST defendants, to dismiss the entire constituent Complaint in Civil Action 06-cv-02189, designated by the parties as SHRINERS II, and now consolidated into Civil Action 04-cv-00781-REB-PAC, now designated by the parties as SHRINERS I. Other than the plaintiff's consent to withdraw the defendant QWEST CAPITAL FUNDING, INC. without prejudice, the plaintiff submits that this motion should be in all respects denied.

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PLAINTIFF'S POINTS 1. The refusal of this Court to permit amendment of the original complaint

filed in this action became moot when the class set forth in the putative class complaint was duly certified by the court over opposition by certain objecting parties. 2. Under "The Law of the Case" doctrine the determination as to whether the

"toll" of the relevant Statute of Limitations upon the filing of a putative class action is governed by Judge Krieger's determination of the question. 3. The "tolling" of the relevant Statute of Limitations by reason of the filing of

a putative class action covers all claims set forth in the class action and related claims. 4. The plaintiff consents that the defendant QWEST CAPITAL FUNDING be

dismissed without prejudice. 5. Actual reliance is not a requirement for liability under negligent

misrepresentation in the State of Colorado. 6. fraud. 7. The QWEST defendants are liable for Breaches of Fiduciary duties and Sufficient facts are alleged in SHRINERS II and SHRINERS I to constitute

related claims. 8. Leave to Amend the Complaint in SHRINERS II is sought if the Court finds

any of the Counts in that Complaint deficient. 9. In the event that this Court determines that the conflict between Judge

Blackburn's and Judge Krieger's' holdings on the Tolling question are material to the

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issues on this motion the plaintiff submits that a Certificate of Appeal should be granted in this case. THE PROCEDURAL HISTORY OF THIS CONSOLIDATED ACTION While the QWEST defendants set forth portions of the procedural history of this Consolidated Action they fail to properly point out certain significant information: 1. That the SHRINERS II Complaint was not filed until after the certification

of a class was made by the Court in the pending class action as required by the Court in World Com Securities Litiqation, (United States District Court Southern District of New York, Docket Number 02-CIV-3280 (DLC). 2. Subsequent to Judge Blackburn's decision on the "tolling" question, Judge

Krieger made a contrary decision as follows in Schimmer vs. State Farm Mutual Auto Insurance, Civil Action 05-cv-02513-MSK 2006 WL 2361810 (D.C. Colo.) filed August 15, 2006 (USDC Colorado) which held as follows: "To deny a putative class member the benefit of class action tolling because he elected to protect his rights in a separate action before a ruling was made on class certification is inconsistent with the premise for the premise for the tolling doctrine. " Judge Krieger held that the decision in American Pipe and Construction Company vs. State of Utah, et, al., 414 US 538, 38 L. Ed. 2nd 713, 94 Sup. Ct. 756, (1974) was controlling. 3. The plaintiff was not required to move to amend its complaint in

SHRINERS I but could file a new Complaint in SHRINERS II in accordance with Baker Group, L.C. vs. Burlinqton N. & Santa Fe Ry, 228 F. 3d. 883, 886 (8 Cir. 2000).

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POINT ONE THE REFUSAL OF THIS COURT TO PERMIT AMENDMENT OF THE ORIGINAL COMPLAINT FILED IN THIS ACTION BECAME MOOT WHEN THE CLASS SET FORTH IN THE PUTATIVE CLASS COMPLAINT WAS DULY CERTIFIED BY THE COURT OVER OPPOSITION BY CERTAIN OBJECTING PARTIES. The moving defendants claim that all of the claims in SHRINERS II are time barred based on a misreading of Judge Blackburn's decision in SHRINERS I where he denied the plaintiff leave to amend SHRINERS I to include the claims presented in the putative class action complaint which was filed in 2001. At the time that Judge Blackburn rendered this decision he was obviously unaware of the contrary subsequent decision made by Judge Krieger of this Court. Because Judge Blackburn chose to follow Judge Cote's decision as persuasive although not controlling it must be noted that Judge Cote did not hold that a party filing an individual action could never rely on the "tolling" of the relevant Statute of Limitation by reason of an attempt to file an individual action prior to the formal certification of a class by the appropriate Court. Such a holding would clearly conflict with the US Supreme Court's holding in American Pipe, supra. Thus Judge Blackburn merely held, in denying the plaintiff leave to amend the SHRINERS I Complaint to include class claims set forth in the putative uncertified class action, was merely that such claims could not be presented until a class was certified in the said class action. Thus when a class was so certified the plaintiff was then permitted to assert those claims in SHRlNERS II. 4

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Since the individual defendants in SHRlNERS II were not the same as in SHRlNERS I the plaintiff believed that the filing of a new complaint in SHRlNERS II with an eventual consolidation with the complaint in SHRlNERS I was the proper procedure to follow. By consolidating SHRlNERS II with SHRlNERS I a separate trial of the liability of the individual defendants in SHRlNERS II would avoid possible confusion between the liability of the individual defendants in SHRlNERS II with the claims involving other individual defendants in SHRlNERS I. Procedurally because it was the QWEST defendants who moved to consolidate SHRlNERS II with SHRlNERS I they permitted the allegations common to SHRlNERS I and SHRlNERS II to "relate back" to the filing date of SHRlNERS I. Rule 15 FRCP reads in part as follows: "(c) RELATION BACK OF AMENDMENTS. An amendment of a pleading relates back to the date of the original pleading when (1) ..., or (2) the claim or defense asserted in the amended pleading arose out of the conduct, or attempted to be set forth in the original pleading," Hence the allegations of SHRINERS II are not only covered by the "tolling" doctrine having been made in SHRINERS II after certification of the class by the Court in the class complaint but are also covered by the "relation back" doctrine covered by the filing of SHRINERS I. Because the Court had provisionally certified a class in the putative class action, setting forth a time period for class members to "opt out" therefrom, that the plaintiff duly "opted out" therefrom within the appropriate time period, that the Court, over objections, approved the class certification, that a judgment was

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eventually entered approving the class certification, and where SHRINERS II was filed after the Court approval of the class certification, the prior decision of Judge Blackburn became moot and the plaintiff in SHRINERS II is entitled to a "toll" of the relevant Statutes of Limitation as of the filing in 2001 of the putative class action. Thus SBRINERS II, with respect to the Statute of Limitation questions takes the 2001 date of the putative class action and not the October 2006 date of its actual filing. The QWEST defendants also rely on the decision of Judge Blackburn in In Re Owest Communications International, Inc. Securities Litiqation relating to the individual complaint filed by the plaintiff ABP. This decision was rendered in March 2005 relating to the ABP Amended Complaint filed by ABP in July 2004. The Court notes that the date of this decision and the date of filing of the ABP Amended Complaint both antedate the certification of the Court in the putative class action and the decision of Judge Krieger contrary to Judge Blackburn's decision in SHRINERS I. Judge Blackburn held in ABP that the two year Statue of Limitations involved with respect to the Federal Claims alleged therein commenced to run in February 2004. However he also held that the filing of the Amended Complaint in July 2004 was timely because ABP was given a reasonable time after the commencement of the running of the appropriate Statute of Limitations in February 2002. (The State claims in the ABP Complaint would be covered by a three year Statute of Limitations and would have been timely filed in July 2004.) By July, 2004, SHRINERS I was already filed and, under ABP, claims similar to those in the ABP case would have been timely filed had an

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amended complaint containing these claims been also filed by July, 2004. The initial complaint containing Colorado State Claims was filed in a Colorado State Court prior to July 2004. The case was removed to this Court by the QWEST COMMUNICATIONS defendant as containing a claimed "Federal Question". (Cf. Docket Number 04-RB781). The Amended Complaint in SHRINERS I was also filed in this Court prior to July 2004. Thus any reliance upon ABP by the QWEST defendants is misplaced. It is also noted that the basic claims in SHRINERS II involve the claims set forth in the putative class action. The QWEST defendants fail to specify what claims in SHRINERS II are not contained in the putative class action and what claims are only set forth in the ABP Amended Complaint. While the filing of putative class actions are published on various internet sites, non securities class actions are not. SHRINERS I was not consolidated with the cases set forth in the Qwest Communications Securities Litigation, nor has SHRINERS II been so consolidated. Hence the first notice that the plaintiff herein received with respect to the ABP Amended Complaint was received on January 15, 2006 when the QWEST defendants made the present dismissal motion. Therefore any notice received by the plaintiff with respect to the ABP Amended Complaint must be limited to January 15, 2006. The ABP plaintiffs could not rely on the "toll" of the relevant Statute of Limitations because of Judge Blackburn's decision in SHRINERS I. The filing of the Amended Complaint in ABP antedated the certification of the class in the putative class action and Judge Krieger's decision in Schimmer vs. State Farm Mutual Auto Insurance, supra. Had the ABP plaintiffs attempted to rely on the "toll" of the relevant Limitation Statutes

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by relying on the filing of the putative class action prior to class certification, their claims would have been dismissed. However, the plaintiff herein relies on the "toll" of the relevant Statutes of Limitation by the filing of the putative class action because the class involved has now been certified.

POINT TWO UNDER "THE LAW OF THE CASE" DOCTRINETHE DETERMINATION AS TO WHETHER THE "TOLL" OF THE RELEVANT STATUTE OF LIMITATIONS UPON THE FILING OF A PUTATIVE CLASS ACTION IS GOVERNED BY JUDGE KRIEGER'S DETERMINATION OF THE QUESTION. The QWEST defendants claim that the general doctrine of "The Law of the Case" prevents a party from obtaining a different decision from one coordinate Judge on a legal question already decided by another coordinate Judge. (An Appellate Court can obviously reverse a decision of a lower court judge.) Based upon the above claim the Qwest defendants argue that Judge Blackburn's decision in SHRINERS denying leave to amend SHRINERS I to assert claims set forth in the putative class complaint is binding on the plaintiff with respect to SHRINERS II. A discussion of the law of the case doctrine is found in Anthonv vs. Baker, 10th Cir, 955 F. 2d 1395, 1397 (1992), and states that the law of the case doctrine prevents the re-litigation of a matter already decided by the appropriate Court. However the above decision also points out that the law of the case doctrine will only cover matters that were specifically decided by the Court in the previous matter. As the plaintiff pointed out in the discussion under POINT ONE above, all that Judge Blackburn 8

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decided in SHRINERS I was that he would not permit plaintiff to amend its complaint to allege the claims set forth in the putative class action because he was persuaded by Judge Cote's opinion in World Com that an individual action containing the claims set forth in a putative uncertified class action would not be-entitled to claim a "toll" of the relevant Statutes of Limitation applicable to such claims. Once the putative class action was certified and plaintiff, a member of the now certified class, duly "opted out" therefrom, the prior determination of Judge Blackburn became moot and was no longer applicable to the case. SHRINERS II was filed only after the Court certified a class in the putative class action and the case was initially assigned to Judge Krieger of this Court. Judge Krieger had previously ruled in Schimmer vs. State Farm Mutual Auto Insurance, supra, that the "toll" of the relevant Statute of Limitations by reason of the filing of a putative class action was effective involving any member of the putative class regardless of the time of class certification. Thus if SHRINERS II remained under Judge Krieger's jurisdiction the plaintiff would be entitled to a "toll" of the relevant Statutes of Limitation with respect to all claims presented in the prior putative class action from the filing date in 2001 of the putative class action. The QWEST defendants then sought to consolidate SHRINERS II with SHRINERS I before Judge Blackburn. Since Judge Blackburn already had the actions consolidated before him in the QWEST COMMUNICATIONS INTERNATIONAL, INC. Securities Litigation, the QWEST defendants' application was unopposed by the plaintiff. However the consolidation of SHRINERS II with SHRINERS I did not permit any change in the

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determination of the legal question involved under The Law of the Case doctrine since otherwise Judge-shopping would not be eliminated. POINT THREE THE "TOLLING" OF THE RELEVANT STATUTE OF LIMITATIONS BY REASON OF THE FILING OF A PUTATIVE CLASS ACTION COVERS ALL CLAIMS SET FORTH IN THE CLASS ACTION AND RELATED CLAIMS. The QWEST defendants argue that the "tolling" provisions of American Pipe, supra, cover only identical claims involved in the class action and not claims related thereto. The claims involved are claims of "fraud", "Breaches of Fiduciary Duties" and claims for "negligent misrepresentation". All of these claims are Colorado State Claims and are to be considered by this Court under the laws of the State of Colorado (Cf. Erie RR Company vs. Tompkins, 304 US 64, 58 Sup. Ct. 817, 82 L Ed 1188) In Teachers Retirement System of Louisiana vs. Linda G. Alvarado, et. al., Case Number 05 CV 3649 (copy submitted) the Colorado District Court held as follows: "Defendants respond to that argument by arguing that the tolling of the limitations period during the pendency of a class action only applies to identical claims for relief. Defendants view of the applicable tolling doctrine is too narrow. Although there is some language in lower court opinions that support defendants' arguments, the cases do not present the situation presented here where plaintiff's claims in the second case are based upon the same facts and differ only in legal theory. The better view is the one found (citing cases). " See also, Crown Cork & Seal Company, Inc., 462 US 435(1983), and American Pipe, supra.

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In the present case the operative facts involved in the claims attacked by the QWEST defendants are similar in operative facts to the claims alleged in the putative class action but differ therefrom only in legal theory. These claims contained in SHRINERS II are thus covered by the tolling doctrine and the relevant Statutes of Limitation are tolled with the filing of the present certified class action. The State Claims in SHRINERS II are also encompassed within SHRINERS I and, even aside from the "operative facts" doctrine and the "relation back" doctrine is within the Colorado three year Statute of Limitations under the Rule set forth by Judge Blackburn in the ABP case. POINT FOUR THE PLAINTIFF CONSENTS THAT DEFENDANT QWEST CAPITAL FUNDING BE WITHDRAWN WITHOUT PREJUDICE. Because of the various problems of the inclusion of the defendant QWEST CAPITAL FUNDING in this litigation, particularly because this defendant was not sued by the class plaintiffs, the plaintiff herein withdraws its claims in SHRINERS II against QWEST CAPITAL FUNDING without prejudice. However any wrongdoing by QWEST CAPITAL FUNDING which can be attributed to QWEST COMMUNICATIONS INTERNATIONAL would still be actionable. POINT FIVE ACTUAL RELIANCE IS NOT A REQUIREMENT FOR LIABILITY UNDER NEGLIGENT MISREPRESENTATION IN THE STATEOF COLORADO.

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SHRINERS I and SHRINERS II were consolidated by the Court pursuant to a motion made by the QWEST defendants. Therefore any determination made in SHRINERS I by the Court is also applicable to SHRINERS II. The claims in SHRINERS I for negligent misrepresentation are similar to one another in SHRINERS I and SHRINERS II. The QWEST defendants have not indicated in their moving papers how the claims for negligent misrepresentation in SHRINERS II differ from such claims in SHRINERS I. Thus under "The Law of the Case" Doctrine the plaintiff's claims for negligent misrepresentation have already been sustained by the Court. In any event the law with respect to the requirements to support a claim for negligent misrepresentation varies in the various States. The claims for negligent misrepresentation in this case are based on the law of Colorado where the acts involved in this complaint occurred. This Court is bound by Colorado Law by reason of Erie vs. Tompkins, supra. The Colorado State Law regarding the legal requirements relating to claims for negligent misrepresentation is as follows: Claims for negligent misrepresentation are based on negligence and not on fraud, and the rules of liability are those based on negligence and not upon the rules of liability fraud. These rules require (1) a duty owed by the defendant to the plaintiff and (2) the violation of that duty on the part of the defendant, and are set forth in Bailev vs. Huqqins Diaqnostic & Rehabilation Center, et. al., 952 P. 2d 768, 772 (Colorado Court of Appeals 96 CA 0586 (1997), cert. denied, to Colorado Supreme Court.) Colorado State Law also requires that the plaintiff seeking recovery on the basis of negligent

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misrepresentation must also have some type of reliance on the negligent conduct committed by the defendant, but it does not have to be actual reliance. As set forth in Bailey such reliance can be reasonable reliance. Thus, for example, in the present case, if the plaintiff relied on the public market value of the QWEST securities before he purchased them, or purchased them by reference to the public market price charts which are based on the prices paid for QWEST securities for a period prior to the plaintiff's purchase of them, or relied on the integrity of the market prices of QWEST securities, such actions would constitute the "reasonable reliance" required by the laws of the State of Colorado. POINT SIX SUFFICIENT FACTS ARE ALLEGED IN SHRINERS II AND SHRINERS I TO CONSTITUTE FRAUD. SHRINERS I and SHRINERS II were consolidated by the Court pursuant to a motion made by the QWEST defendants. Therefore any determination made in SHRINERS I by the Court is also applicable to SHRINERS II. The claims in SHRINERS I for fraud are similar to one another in SHRINERS I and SHRINERS II. The QWEST defendants have not indicated in their moving papers how the claims for fraud in SHRINERS II differ from such claims in SHRINERS I. Thus under "The Law of the Case" Doctrine the plaintiff's claims for fraud have already been sustained by the Court. However, for the information of the Court, the claims for fraud set forth in SHRINERS II are valid. Fraud claims require the following: a. Misrepresentation of a material fact. 13

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b. Reliance on such misrepresentation by the plaintiff. c. Scienter on the part of the defendant. d. Resulting damage to the plaintiff by reason of the fraud. The Complaint in SHRINERS II is replete with more than sufficient allegations with respect to the fraud committed by the defendants based upon the charges made against them in the Complaint. The plaintiff submits that the fraud allegations of the complaint in SHRINERS II are more than sufficient. The QWEST defendants' claim of insufficiency with respect to this Count is based upon the alleged failure to allege "reliance", which is an element necessary to establish fraud. However, the allegations of the Complaint alleging "fraud on the market" are sufficient to establish the sufficiency of this claim aside from the fact that the SHRINERS II Complaint is replete with any other allegations necessary to establish fraud as this Court has previously noted with respect to SHRINERS I. POINT SEVEN THE QWEST DEFENDANTS ARE LIABLE FOR BREACHES OF FIDUCIARY DUTIES AND RELATED CLAIMS. The QWEST defendants seek to dismiss all claims in SHRINERS II relating to the claims of breaches of fiduciary duties on the part of the defendants. These claims also involve the imposition of a constructive trust against the defendants and claims against the defendants for unjust enrichment. The plaintiff agrees with the QWEST defendants that if its claims for breaches of fiduciary duties are not sustained, the claims for the placing of a constructive trust

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against the defendants and the claims for unjust enrichment follow. The plaintiff further agrees with the QWEST defendants that the requirements for breaches of fiduciary duties are the following: a. The establishment of a fiduciary duty on the part of the QWEST defendants. b. The breach of such duty. c. The resulting damages to the plaintiff. The QWEST defendants point out that under Delaware State Law, the law claimed to cover the question involved, there is normally no breach of fiduciary duties on the part of a corporate defendant where the complaining party is merely a purchasing stockholder or a purchasing creditor of a corporation. This is essentially true. However it is also "Hornbook Law" that officers and directors of a corporation owe fiduciary duties to the present stockholders thereof. Officers and directors of a corporation also owe fiduciary duties to the corporation so that the corporation itself owes fiduciary duties to its present stockholders as well. Thus if the purchases by the plaintiff of the stock and bonds of QWEST were performed when the plaintiff was not a stockholder the position set forth by the QWEST defendants would be correct. However, as a stockholder of QWEST COMMUNICATIONS INTERNATIONAL this corporation owes fiduciary duties to the plaintiff. The issue in this Count, which is one of first impression anywhere, is that when a corporation owes fiduciary duties to a present stockholder and issues false and fraudulent reports in order

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to induce such present stockholders to purchase more of that corporation's securities, it has committed a breach of the fiduciary duties owed to the stockholders of the corporation. The plaintiff submits that where this issue has not been previously involved anywhere it is inappropriate to be passed upon on a Rule 12 Motion to Dismiss. POINT EIGHT LEAVE TO AMEND THE COMPLAINT IN SHRINERS II IS SOUGHT BY THE PLAINTIFF IF THE COURT FINDS ANY OF THE COUNTS IN THIS COMPLAINT DEFICIENT. The Plaintiff seeks leave to amend the SHRINERS II Complaint if the Court finds any of the Counts therein deficient. POINT NINE IN THE EVENT THAT THIS COURT DETERMINES THAT THE CONFLICT BETWEEN JUDGE BLACKBURN'S AND JUDGE KRIEGER'S HOLDINGS ON THE TOLLING QUESTION ARE MATERIAL TO THE ISSUES ON THIS MOTION THE PLAINTIFF SUBMITS THAT A CERTIFICATE OF APPEAL SHOULD BE GRANTED IN THIS CASE. In the presentation of this Opposing Memorandum the plaintiff has taken the position that despite the conflict between Judge Blackburn's and Judge Krieger's determination of the "tolling" question there is no actual conflict with respect to the "tolling" question because of the subsequent certification of a class by this Court subsequent to Judge Blackburn's determination. The certification of the class involved in the related class action is now on appeal to the Tenth Circuit and if this Court believes that the conflict between the decisions of

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Judge Blackburn and Judge Krieger should be resolved by the Court of Appeals the plaintiff believes that a Certificate of Appeal under 28 USC 1292(b) should be granted. CONCLUSION THE QWEST DEFENDANTS' MOTION TO DISMISS THE SHRINERS II COMPLAINT SHOULD BE DENIED EXCEPT THAT THE DEFENDANT QWEST CAPITAL FUNDING SHOULD BE DISMISSED WITHOUT PREJUDICE. IN ADDITION IF THE COURT FINDS ANY OF THE COUNTS OF THE SHRINERS II COMPLAINT INSUFFICIENT LEAVE TO AMEND IS REQUESTED.

Respectfully submitted,

s/ I. Walton Bader I. Walton Bader BADER & BADER, LLP Attorneys for Plaintiff 50 Main Street Suite 1000 PMB 1029 White Plains NY 10606 Telephone 914-682-0072 Fax 914-682-0072

s/ Charles G. Michaels Charles G. Michaels Local Attorney for Plaintiff 4605 South Yosemite #21 Denver Colorado 80237 Telephone 303-837-0800 Fax 303-484-4737

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