Retirees balk at Qwest
Irked by lawyers' 30% cut, group wants court to put off settlement
By John Accola, Rocky Mountain News
Saturday, August 6, 2005
A group of U S West retirees, hoping to cull a California law firm's proposed 30 percent cut for legal fees, is asking a Denver judge to reject a $50 million class-action settlement with Qwest Communications.
"While the attorneys seek to make multimillions of dollars, the class of shareholders . . . stand to receive less than 10 cents per share," said the Association of U S West Retirees in a court motion Friday. The group said the case has a "stink like a three-day-old unrefrigerated dead fish."
Curtis Kennedy, the association's Denver attorney, questions the amount of time and effort national law firm Lerach Coughlin put into a 2000 shareholder suit that alleged Qwest breached its fiduciary duty by failing to pay a 53 cents per share dividend after the merger with U S West five years ago.
Qwest denied wrongdoing but agreed in June to the $50 million settlement - still a fraction of the $273 million Lerach Coughlin lawyers said U S West shareholders were entitled to, not including lost interest and reimbursement of attorney fees.
Kennedy says the lead plaintiff firm and other outside attorneys it used on the case want the court to approve $15 million for legal fees, plus $1.7 million for expenses and costs. That would leave $33.3 million to be distributed among thousands of plaintiff shareholders in the class.
Kennedy said the association's officers and members are "tired of seeing these shareholder lawsuits settled at pennies on the dollar and the attorneys walking off with two or three times their hourly rate."
The 20,000-member association wants Denver District Judge John Coughlin to postpone a final settlement hearing set for Aug. 30, saying it would be unfair to sign off on any agreement until class members have adequate opportunity to review the terms and lawyers' hourly records.
Calls to Lerach Coughlin's San Diego offices Friday were not returned. The 150-person law firm specializes in representing institutional investors and shareholders with complaints against public companies.
According to its Web site, Lerach Coughlin has collected $20 billion "on behalf of defrauded investors, consumers and companies, as well as victims of human-rights violations."
The association maintains attorney time records have yet to be submitted to the court, nor has an accounting of the $50 million, which Lerach Coughlin is holding in an escrow account. Kennedy said Lerach Coughlin attorneys told him last week that kind of detail probably wouldn't be provided to the court until a week before the final settlement hearing.
At the very least, Kennedy contends a Web site should have been dedicated to the case, posting the 87-page settlement agreement and October claims deadline.
In Thursday's motion, the association complains none of the "obscenely enriched" individually named co-defendants, including ousted Qwest CEO Joe Nacchio and former U S West chief Sol Trujillo, are contributing to the settlement.
Qwest is the "single source of recovery," with most of the settlement coming out of a $200 million insurance fund Qwest reached with its liability insurers in November 2003.
"Succeeding in a shareholder action where at least half of the recovery comes from insurance proceeds should not be the equivalent of holding a winning lottery ticket," said the association about the $16.7 million requested for legal fees, expenses and costs.
accolaj@RockyMountainNews.com or 303-892-2666