Plaintiffs’ attorneys can collect 30 percent of a $50 million settlement between Qwest and shareholders who didn’t receive a quarterly dividend they were promised in 2000, a judge ruled Tuesday.
The Association of US West Retirees had objected to $15 million in fees that San Diego-based Lerach Coughlin Stoia Geller Rudman & Robbins and several other firms sought, calling it exorbitant. The retirees group also said an additional $1.7 million in expenses was high.
“We think what they have asked for is nothing less than a windfall,” association attorney Curtis Kennedy told Denver District Judge John Coughlin during a hearing Tuesday morning on the fairness of the settlement. “Times are changing. Shareholders are starting to see they need to stand up and object because these attorneys’ fees are getting out of hand.”
But Coughlin, not related to anyone at Lerach Coughlin, ruled that 30 percent is a customary legal fee in class-action suits. He said the attorneys earned it by taking a risky case that other lawyers wouldn’t take and by pursuing it over five years to the eve of trial.
The parties reached a settlement the day before a trial was to begin in early June, and Coughlin gave it his preliminary approval June 24. On Tuesday, Coughlin approved the final settlement, as well as the attorneys’ charges.
Lerach Coughlin attorney Michael Dowd said the law firms, which include Denver-based Dyer & Shuman, Los Angeles-based Weiss & Lurie and New York-based Milberg Weiss Bershad & Schulman, earned their fees by risking their time and money on an uncertain outcome. The firms’ lawyers and paralegals logged nearly 16,000 hours on the case.
Each side had compelling evidence supporting its case, making it nearly impossible to predict how a jury would respond, Dowd said.
When the case was settled, he said, “all of the work was done. We were ready to try this case. If any case ever deserved a 30-percent fee award, it’s this case.”
About a dozen US West retirees attended Tuesday’s hearing.
“I was very disappointed that the judge ruled the way he did,” said Jack Beattie, 63, who retired in 1996 from US West. “It seemed to me that we had a reasonable request.”
Kennedy said $15 million amounts to 2.5 times the attorneys’ hourly rates, and that 1.5 would be more reasonable.
In the suit, shareholders claimed that they were improperly deprived of most of a $273 million dividend, 53.5 cents per share, at the time of the US West-Qwest merger.
US West had announced June 5, 2000, that shareholders of record as of June 30, 2000, would receive the dividend. Two days later, the company said the dividend would be payable to shareholders of record as of July 10 – after the merger. Qwest later paid a 5-cent dividend.
Under the settlement, US West stockholders as of the June 30, 2000, merger date will receive portions of about two-thirds of the $50 million.
US West’s insurance providers will pay half and Qwest will pay half from operating revenues, attorneys said Tuesday.
Staff writer Greg Griffin can be reached at 303-820-1241 or ggriffin@denverpost.com.
