AUSWR
The Association of U S West Retirees
 

 

 

Qwest adds millions to settle old lawsuit
By Jeff Smith
Rocky Mountain News
Thursday, August 7, 2008

Qwest Communications has agreed to pay an additional $40 million to settle a lingering, 7-year-old class-action securities fraud lawsuit, according to a regulatory filing Wednesday.

Former Qwest CEO Joe Nacchio and former CFO Robert Woodruff would contribute a total of $5 million out of insurance proceeds.

The stipulation involving Qwest and Nacchio/Woodruff, which needs federal court approval, was signed Monday and disclosed in Qwest's second quarter report with the Securities and Exchange Commission.

Federal Judge Robert Blackburn approved a $400 million class-action settlement in the fall of 2006.  But Nacchio and Wood ruff were excluded from the settlement and appealed, arguing Qwest was required contractually to indemnify them from civil lawsuits.

In January, a three-judge appellate panel ordered Blackburn to more fully explain why he decided it was fair to leave Nacchio and Woodruff exposed to further litigation.

Qwest spokeswoman Diane Reberger said Wednesday that the telco is "settling this matter to resolve the risks it presents and allow the prior settlement to go forward without further delay."

Nelson Phelps, executive director of the Association of U S West Retirees, said the development is positive, especially coming on the same day Qwest lowered its financial forecast.  "Anything Qwest can do to reduce future liabilities is a good thing, and to get anything out of Nacchio and Wood ruff is also a good thing," Phelps said.

It's unclear, however, whether the reworked proposed $445 million settlement will be approved.  Some shareholder groups previously argued Nacchio and Wood ruff should contribute personally to a settlement.

Michael Dowd, one of the lead attorneys for the plaintiffs, didn't immediately respond to an e-mail for comment.

Qwest said in the regulatory filing it has the right to terminate the agreement if a certain number of plaintiffs opt out of the settlement.

http://www.rockymountainnews.com/news/2008/aug/07/qwest-adds-millions-to-settle-old-lawsuit/