July 17, 2007
Mimi Hull, President
ASSOCIATION OF U S WEST RETIREES
AUSWR Board Members and general membership
This update concerns the Consolidated Federal Shareholder Cases pending in Denver Federal Court - the series of cases wherein there has been a partial settlement and a $400 million Settlement Fund established to be used along with the $250 million plus fund established by the SEC for payment to shareholders who endured losses due to the horrific Qwest securities debacle under the Joe Nacchio regime. The securities fraud cases are still pending against former Qwest CEO Joseph P. Nacchio and CFO Robert S. Woodruff.
Of course, everyone is aware that AUSWR and several retiree members filed objections to the Lead Counsel's request that they be paid $96 million out of the $400 million recovery. We contended such a pay day would be way out of line and the award should be reduced to about $60 million at best. We also argued that some of the requested costs were excessive and unreasonable. Ultimately, Judge Blackburn decided Lead Counsel (Lerach law firm and others) should be paid $60 million, and, indeed, they have already been fully paid that sum from the Settlement Fund.
The Settlement Fund is awaiting the go ahead to distribute the funds which are earning interest to shareholders who timely submitted written claims. But, all of that money has been tied up because -- you guessed it -- Joseph Nacchio and Robert Woodruff filed appeals complaining the settlement was unfair because it didn't include a release of all claims against them. The appeals are pending in the Tenth Circuit Court of Appeals. Perhaps, a decision will be entered by the end of this year. No settlement funds will be paid to Qwest shareholders until after all legal proceedings concerning the pending appeals are ended. There is no telling when; its anyone's guess. But, the funds will continue to accrue interest.
Meanwhile, AUSWR and the individual objectors (Eldon Graham, Hazel Floyd and Mimi Hull) asked for an award of fees based upon my 90 billable lawyer hours and expert witness fees incurred in our effort to influence the outcome for a reduced fee award and reduced cost reimbursement to Lead Counsel. But, before our October 10, 2006 request could be addressed by Federal Judge Blackburn, the Lerach law firm filed a report with the Court on October 30, 2006, stating they would agree to pay the requested fees and costs (i.e., $64,570.60) out of their stash -- out of the $60 million they received. We promptly advised the Court that we accepted Lead Counsel's offer. But, Lead Counsel awaited an order from Judge Blackburn before they would make the promised payment.
Today, Judge Blackburn entered his order addressing this matter stating, "If lead counsel [Lerach law firm] has not already paid the amount sought by Graham, Floyd, Hull, and AUSWR, then I direct that lead counsel pay 64,570.60 dollars to counsel for objectors Graham, Floyd, Hull and AUSWR on or before August 20, 2007. Given lead counsel's offer, the motion of Graham, Floyd, Hull and AUSWR for an award of attorney fees and costs, and their motion to alter the judgment to include the award, should be denied as moot." Judge Blackburn continued in his order denying fees to anyone else. A copy of his July 17, 2007 order is attached hereto and, soon, will be posted at the AUSWR website: http://www.uswestretiree.org/legal2.htm#consolidated
Whenever Lead Counsel (Lerach law firm) makes payment to me, I will promptly reimburse AUSWR for the fees the retiree organization has already paid to me for my 90 hours of work, plus approximately $24,000, the cost expended for Professor Michael A. Perino's expert services.
In the end, this is just another example of your retiree organization making a worthwhile legal challenge and getting full return on your investment.
Attachment: (Order regarding Attorney's Fees - 6 pages)