Qwest has agreed to a $50 million settlement in a class-action lawsuit alleging it improperly avoided paying a $273 million quarterly dividend to investors who held shares of US West before the companies merged in 2000.
Denver District Judge John Coughlin approved a preliminary agreement Friday and scheduled a final settlement conference for Aug. 30.
Qwest denied the allegations but agreed to settle to avoid the possibility of a large verdict and to avoid spending more money in defending the case, spokesman Bob Toevs said.
“We believe that Qwest’s conduct and the conduct of the others involved in this case was legal and in the best interests of shareholders,” he said.
New York City shareholder Adele Brody sued in 2000, claiming US West had said in a June 5, 2000, announcement that shareholders of record as of June 30, 2000, would receive a dividend of 53.5 cents per share. Two days later, the company said the dividend would be payable to shareholders of record as of July 10 – after the merger – and Qwest planned to slash the dividend to 5 cents per share, the lawsuit said.
In the settlement, US West stockholders as of the June 30, 2000, merger date will receive portions of about two-thirds of the $50 million settlement.
The plaintiffs’ attorneys plan to request up to 30 percent of the settlement amount, plus up to $1.7 million for expenses, according to court filings.
“It was a hotly litigated case that almost reached trial, and we’re very proud of the settlement we’ve gotten on behalf of the investors,” said Denver attorney Kip Shuman.
It was unclear how many stockholders would be eligible for settlement proceeds.
Qwest also is in settlement discussions in a larger class-action securities-fraud case. The company recently put $750 million into a reserve fund for its estimated litigation costs.
“I believe they have to do their best to settle,” said Nelson Phelps, executive director of the Association of US West Retirees.
