The Association of U S West Retirees



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June 19, 2007



Mimi Hull, President


AUSWR Board Members and general membership




This update concerns the Brody v. Hellman, Nacchio, et al  (U S WEST Shareholder Dividend) class action filed on behalf of the public stockholders of U S WEST, Inc. against U S WEST’s former directors, Qwest Communications International, Inc., and Joseph P. Nacchio.  The case concerns the nonpayment of U S WEST’s Second Quarter 2000 dividend U S WEST announced it would pay to shareholders of record on June 30, 2000.  Since the $273 million total shareholder dividend was not paid to shareholders, all that money stayed with Qwest, after the completed merger with U S WEST.



As you know, eventually the Brody case was settled with an agreement to establish a Settlement Fund of $50 million.  Shortly after Class Counsel (4 major law firms, including the Lerach law firm based in San Diego, California) announced they were going to ask for an award of $15 million in attorney's fees, several Retirees/shareholders, including the Association of U S WEST Retirees (AUSWR), got involved and filed objections.  AUSWR contended the attorneys' fee request was excessive and that there should be further review of the undocumented $1.3 million expenses.  You can read the objections and arguments made by AUSWR, Mimi Hull, Eldon Graham and Hazel Floyd at:



Despite AUSWR's objections, the Denver District Court judge granted the attorneys everything they requested -- $15 million in fees and another $1.3 million for expenses and costs.  You can read a transcript of the arguments made during the "Fairness Hearing" and the judge's ruling made at the August 30, 2005 public hearing at:   AUSWR’s leaders decided to challenge the ruling on attorney's fees and filed an appeal before the Colorado Court of Appeals.



All of the legal briefing was filed months ago.



Yesterday, the Colorado Court of Appeals held a hearing for oral argument.  I presented arguments on behalf of the Retirees/shareholders.  The Lerach law firm had an attorney present their arguments.  The panel of three judges listened very intently.  While I cannot accurately predict the outcome, I have been asked to give my observations of yesterday's hearing.  Of course, its hard for me to be completely objective. . .   But, it appeared to me that the judges were in agreement with my argument that the 30% contingent fee award was improper because there never was any disclosure of the written fee agreement, if any.  I argued, why wasn't that fee agreement disclosed, made a part of the court record, and examined by the trial judge?  What does the fee agreement entered into with Ms. Brody, a sophisticated investor whose Son and Husband are attorneys both working in a law firm that has associated with one of the law firms involved in the Brody case and about 100 other cases say about attorney's fees?  Does the written fee agreement provide for a sliding scale fee, meaning as the settlement amount increases the percentage of contingent fee decreases?  A sliding scale contingent fee agreement is becoming more common in these mega-fund shareholder lawsuits (e.g., 30% for first 15 million recovered, 25% for next $10 million recovered, 20% for next $10 million recovered and so forth).  Close in time to the Brody case, the Lerach law firm entered into a structured written fee agreement in a shareholder case filed in Kansas that also resulted in a $50 million Settlement Fund, and that written fee agreement provided for a total fee of 17.5% of the Settlement Fund.  Shouldn't the Retirees/shareholders get the benefit of a written fee agreement if its terms dictate less than a 30% contingent fee as requested by the Lerach law firm?  Colorado law requires a written fee agreement and substantial compliance with rules concerning contingent fee agreements.



I cannot say whether or not the appellate judges were persuaded by my arguments that it was unreasonable for the trial judge to award $1.3 million for expenses without demanding the attorneys produce supporting paperwork (receipts) and conducting some review or audit.  I told the panel of judges that I didn't think any reasonable person would just write a check in response to a one sentence request from lawyers for payment of $165,000 in hotel, travel and meals.  That's a lot of groceries.  Also, I pointed out that it seemed excessive to charge 25 cents per page for every photocopy made by the law firms which collectively charged more than $100,000 for photocopies in this case.  Shouldn't there be a volume discount for photocopies?  I pointed out that it seemed unreasonable for the Settlement Fund to pay out what amounts to $1,000 per hour for each of the 3,000 total hours allegedly worked on the case by several persons employed within the law firms as 'document clerks' or 'paralegals.'  The Lerach law firm attorney argued that I am just 'nit-picking.'  In the end, I stated the Retirees/shareholders do not think these types of shareholder cases should result in the equivalent of lottery winnings for the lawyers.



AUSWR's objective, of course, is to get more of the Settlement Fund paid out to the victims -- including thousands of AUSWR members who were former U S WEST shareholders.  The Brody case Settlement Fund has already paid out the $15 million fee award, plus reimbursed all of the $1.3 million in expenses to the attorneys.  In the event AUSWR prevails with this appeal, and the attorneys fees and/or expenses are reduced, the attorneys will have to reimburse the Settlement Fund, a rare occurrence.  Meanwhile, the balance in the Settlement Fund awaiting to be distributed has accrued interest.  I anticipate the Colorado Court of Appeals will issue a written ruling in the Brody case within the next two to three months.  An email update will be provided and the same posted at:






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