United States District Court, D. Colorado
JAMES AMEDEE, On Behalf of Himself and All Others Similarly Situated, Plaintiff,
LEVEL 3 COMMUNICATIONS, INC., JEFF K. STOREY, JAMES O. ELLIS, JR., KEVIN P. CHILTON, STEVEN T. CLONTZ, IRENE M. ESTEVES, T. MICHAEL GLENN, SPENCER B. HAYS, MICHAEL J. MAHONEY, KEVIN W. MOONEY, PETER SEAH LIM HUAT, and PETER VAN OPPEN, Defendants.
RAYMOND P. MOORE UNITED STATES DISTRICT JUDGE
matter is before the Court on the following: (1)
Plaintiff's Unopposed Motion for Preliminary Approval of
Class Action Settlement and Brief in Support (the
“Motion to Approve”) (ECF No. 31); and (2) Joint
Motion to Strike Response of Dean Houser to Plaintiff's
Motion for Preliminary Approval, or in the Alternative to
Establish a Deadline for Reply (the “Motion to
Strike”) (ECF No. 39). Upon consideration of the
motions, the court record, and the applicable rules and case
law, and being otherwise fully advised, the Court (1) denies
without prejudice Plaintiff's Motion to Approve; and (2)
grants the Motion to Strike.
case arises from the merger by which CenturyLink, Inc. (via
certain wholly-owned subsidiaries) acquired Defendant Level 3
Communications, Inc. (“Level 3”), and the
disclosures which preceded such merger. Briefly, this is what
January 17, 2017, Plaintiff filed his class action complaint
on behalf of public stockholders of Level 3 to enjoin the
vote on a proposed transaction in which Level 3 would be
acquired by CenturyLink. Plaintiff alleged that the proposed
transaction resulted from an inadequate process; Level 3
“insiders” stood to gain handsomely from the
proposed transaction; and the Schedule 14A Preliminary Proxy
Statement filed with the U.S. Securities and Exchange
Commission (“SEC”), which recommended that Level
3 shareholders vote in favor of the proposed transaction,
omitted and/or misrepresented material information. Based on
such allegations, Plaintiff asserted Defendants (consisting
of Level 3 and its Board of Directors) violated Sections
14(a) and 20(a) of the Securities Exchange Act of 1934, and
Rule 14a-9. In his complaint, Plaintiff sought class
certification and to enjoin the stockholder vote on the
proposed transaction and, if the proposed transaction was
consummated, for rescission or rescissory damages.
represented in the Motion to Approve, after the filing of the
complaint, the parties engaged in settlement discussions;
reached an agreement-in-principle memorialized in a
Memorandum of Understanding (the “MOU”) dated
February 9, 2017, where Defendants agreed to disclose certain
additional information concerning the merger
(“Supplemental Disclosures”) to Level 3
shareholders prior to the shareholder vote. Thereafter, on
February 13, 2017, Level 3 and CenturyLink filed a joint
definitive proxy statement/prospectus included in a
registration statement on Form S-4 with the SEC (the
“Definitive Proxy”). The Definitive Proxy
included the Supplemental Disclosures.
March 16, 2017, approximately 81.2% of Level 3's
outstanding shares of common stock voted in favor of
approving the merger.
the merger, Plaintiff represents, he conducted additional
investigation (including taking depositions) to confirm the
terms of the proposed settlement (i.e., the non-monetary
benefit of requiring that CenturyLink provide the
Supplemental Disclosures in exchange for an expansive release
related to the merger) were fair and reasonable.
November 1, 2017, the merger closed. Thereafter, the parties
entered into a Stipulation of Settlement (ECF No. 31-2) and
filed the Motion to Approve that is now before this Court.
Under the Motion to Approve, a non-opt-out class would settle
this action based on what has occurred - the issuance of the
Supplemental Disclosures - with no monetary (or nonmonetary)
ANALYSIS: THE MOTION TO STRIKE
October 23, 2018, Dean Houser, an alleged shareholder of
Level 3 stock during the relevant time period, filed an
“objection” to the Motion to Approve. Mr.
Houser's objection was filed long after the due date for
any responses to the Motion to Approve, and without leave of
Court. Hence, the parties filed their Motion to Strike,
arguing Mr. Houser's objection was untimely. Mr. Houser
fails to respond to the Motion to Strike. Upon review, the
Court agrees. Accordingly, the Motion to Strike is granted
and Mr. Houser's objection is stricken.
federal court has an independent obligation to examine its
own jurisdiction at every stage of the proceeding.
Amazon, Inc. v. Dirt Camp, Inc., 273 F.3d 1271, 1276
(10th Cir. 2001). Based on the Court's review of the
papers, a question of mootness is raised.
federal courts' jurisdiction extends only to actual cases
or controversies. Garcia v. Bd. of Educ. of Albuquerque
Pub. Sch., 520 F.3d 1116, 1123 (10th Cir. 2008).
“This means that, throughout the litigation, the
plaintiff must have suffered, or be threatened with, an
actual injury traceable to the defendant and likely to be
redressed by a favorable judicial decision.”
Spencer v. Kemna, 523 U.S. 1, 7 (1998) (internal
quotations and citation omitted). “Mootness is
implicated when a case or controversy, originally present,
ceases to exist.” Smallwood v. Scibana, 227
Fed.Appx. 747, 748 (10th Cir. 2007) (unpublished).
“Mootness is the most notable exception to that general
rule [that subject matter jurisdiction, once properly
attached, does not vanish]; the jurisdiction of a federal
court evaporates when subsequent events terminate the
controversy extant at the inception.”
Smallwood, 227 Fed.Appx. at 748 (citing
Pittsburg County Rural Water Dist. No. 7 v. City of
McAlester, 358 F.3d 694, 706 (10th Cir. 2004) (further
case, the primary relief sought was an injunction - to enjoin
the stockholder vote on the proposed transaction. But, that
stockholder vote has already occurred, and apparently with
the consent of Plaintiff; thus, that relief sought may not be
had. As an alternative, if the proposed transaction was
consummated, Plaintiff sought rescission or rescissory
damages. But, the transaction went forward with Plaintiff and
Plaintiff's counsel's blessing. It would be
disingenuous to now seek to rescind that which they let go
forward. And, of course, the Stipulation of Settlement was
filed under Rule 11 of the Federal Rules of Civil Procedure
and specifically stated Plaintiff “is agreeing to the
Settlement only because the Supplemental Disclosures
resulting from the Action and the Settlement permitted Level
3's shareholders to make a materially more fully informed
decision as to whether to vote for or against the
Merger.” (ECF No. 31-2, p. 24.) Thus, it appears rescission
(or rescissory damages) based on alleged nondisclosures are
not being - and cannot now be - sought. Accordingly,
Plaintiff shall show cause why this case should not be
dismissed without prejudice as moot.
as the Motion to Approve has been pending a long time (due to
the Court's docket and not to any action by the parties),
the Court addresses the Motion to Approve, should Plaintiff
convince the Court this matter is not moot.
ANALYSIS: THE MOTION TO APPROVE
reviewing the Motion to Approve, the Court considers the
Class Action Fairness Act, 28 U.S.C. § 1711 et seq.
(“CAFA”); the Private Securities Litigation
Reform Act, 15 U.S.C. § 78u-4 (“PSLRA”); and
Fed.R.Civ.P. 23. Upon such review, the Court finds the Motion
to Approve wanting in several respects.
juncture, the Court finds the requirements under CAFA appear
to be satisfied.See ECF No. 33 (Defendants'