CASE 0:18-cv-00296-MJD-KMM Doc. 369 Filed 06/16/21 Page 1 of 89 UNITED STATES DISTRICT COURT DISTRICT OF MINNESOTA IN RE: CENTURYLINK SALES PRACTICES AND SECURITIES LITIGATION MDL No. 17-2795 (MJD/KMM) This Document Relates to: Civil Action No. 18-296 (MJD/KMM) JOINT DECLARATION OF MICHAEL D. BLATCHLEY AND KEIL M. MUELLER IN SUPPORT OF (I) PLAINTIFFS’ MOTION FOR FINAL APPROVAL OF CLASS ACTION SETTLEMENT AND PLAN OF ALLOCATION AND (II) LEAD COUNSEL’S MOTION FOR AN AWARD OF ATTORNEYS’ FEES AND LITIGATION EXPENSES CASE 0:18-cv-00296-MJD-KMM Doc. 369 Filed 06/16/21 Page 2 of 89 TABLE OF CONTENTS Page I. INTRODUCTION .................................................................................................... 1 II. PROSECUTION OF THE ACTION ....................................................................... 8 A. Background ................................................................................................... 8 B. Appointment of Lead Plaintiff and Lead Counsel, Lead Counsel’s Extensive Investigation and Filing of the Operative Complaint, and the Denial of Defendants’ Motion to Dismiss ............................................... 9 1. Initial Proceedings .............................................................................. 9 2. Oregon Seeks to Organize the Related Cases .................................... 9 3. Drafting the Complaint..................................................................... 12 4. Defendants’ Motion To Dismiss ...................................................... 13 C. Discovery ..................................................................................................... 16 1. The Pursuit of Extensive Document Discovery from Defendants and Third Parties ........................................................... 18 2. Plaintiffs’ Review of Defendants’ and Third Parties’ Documents and Other Materials ....................................................... 25 3. Defendants’ Document Requests to Plaintiffs ................................. 29 4. Interrogatories .................................................................................. 30 5. Analysis of Witnesses and Preparation of Deposition Plan ............. 31 D. Expert Discovery ......................................................................................... 32 E. Class Certification ....................................................................................... 34 F. Defendants’ Rule 23(f) Petition .................................................................. 37 III. MEDIATION AND SETTLEMENT ..................................................................... 38 IV. RISKS OF CONTINUED LITIGATION .............................................................. 41 A. The Risks of Prosecuting Securities Actions In General ............................ 41 i CASE 0:18-cv-00296-MJD-KMM Doc. 369 Filed 06/16/21 Page 3 of 89 B. The Substantial Risks of Proving Defendants’ Liability and Damages in This Case ................................................................................. 47 1. Risks Associated With Proving Falsity and Materiality .................. 48 2. Risks Associated With Proving Scienter .......................................... 52 3. Risks Associated With Proving Loss Causation and Damages ....... 56 4. Risks After Trial ............................................................................... 60 V. THE SETTLEMENT IS FAIR, REASONABLE, AND ADEQUATE IN LIGHT OF THE POTENTIAL RECOVERY IN THE ACTION ......................... 62 VI. PLAINTIFFS’ COMPLIANCE WITH THE COURT’S PRELIMINARY APPROVAL ORDER REQUIRING ISSUANCE OF NOTICE ........................... 63 VII. PROPOSED ALLOCATION OF THE PROCEEDS OF THE SETTLEMENT ...................................................................................................... 65 VIII. THE FEE AND EXPENSE APPLICATION ......................................................... 68 A. The Fee Application .................................................................................... 69 1. Lead Plaintiff Oregon and Plaintiff Vildosola Have Authorized and Support the Fee Application ................................... 69 2. The Time and Labor Devoted to the Action by Plaintiffs’ Counsel ............................................................................................. 70 3. The Experience and Standing of Lead Counsel ............................... 74 4. The Standing and Caliber of Defendants’ Counsel .......................... 77 5. The Need to Ensure the Availability of Competent Counsel in High-Risk Contingent Securities Cases ........................................... 77 6. The Reaction of the Class to the Fee Application ............................ 79 B. The Litigation-Expense Application ........................................................... 80 IX. CONCLUSION ...................................................................................................... 85 ii CASE 0:18-cv-00296-MJD-KMM Doc. 369 Filed 06/16/21 Page 4 of 89 MICHAEL D. BLATCHLEY and KEIL M. MUELLER declare as follows: I. INTRODUCTION 1. We, Michael D. Blatchley of Bernstein Litowitz Berger & Grossmann LLP (“Bernstein Litowitz”) and Keil M. Mueller of Stoll Stoll Berne Lokting & Shlachter PC (“Stoll Berne,” and together with Bernstein Litowitz, “Lead Counsel”) submit this joint declaration (the “Joint Declaration”) in support of the motions described below.1 Lead Counsel represents the Court-appointed Lead Plaintiff, the State of Oregon by and through the Oregon State Treasurer and the Oregon Public Employee Retirement Board, on behalf of the Oregon Public Employee Retirement Fund (“Oregon”) and Court- appointed Class Representative Fernando Alberto Vildosola, as trustee for the AUFV Trust U/A/D (“Vildosola,” and together with Oregon, “Plaintiffs”), and is Court- appointed Lead Counsel for the Class. We are partners in our respective law firms and have personal knowledge of the matters stated in this declaration based on our active supervision of and participation in the prosecution and settlement of the Action. If called upon as witnesses, we would testify competently thereto. 2. We respectfully submit this declaration in support of Plaintiffs’ motion, under Rule 23(e) of the Federal Rules of Civil Procedure, for final approval of the 1 Unless otherwise defined in this declaration, all capitalized terms have the meanings defined in the Stipulation and Agreement of Settlement dated January 29, 2021 (the “Settlement Stipulation” or “Stipulation”), and previously filed with the Court. See ECF No. 354-1. Unless otherwise noted, all references to “ECF No. __” are to the docket in Craig v. CenturyLink, Inc., No. 18-cv-296 (MJD/KMM), and all references to “¶__” are to Plaintiffs’ Consolidated Securities Class Action Complaint filed on June 25, 2018 (ECF No. 143). CASE 0:18-cv-00296-MJD-KMM Doc. 369 Filed 06/16/21 Page 5 of 89 proposed settlement of the Action for $55 million in cash (the “Settlement”), which the Court preliminarily approved by its Order dated March 18, 2021 (the “Preliminary Approval Order”). ECF No. 360. 3. We also respectfully submit this declaration in support of: (i) Plaintiffs’ motion for approval of the proposed plan for allocating the proceeds of the Net Settlement Fund to eligible Class Members (the “Plan of Allocation” or “Plan”) and (ii) Lead Counsel’s motion, on behalf of all Plaintiffs’ Counsel,2 for an award of attorneys’ fees in the amount of 25% of the Settlement Fund; payment of Litigation Expenses incurred by Plaintiffs’ Counsel’s in the amount of $878,413.33; and reimbursement of Oregon’s and Mr. Vildosola’s reasonable costs and expenses directly related to their representation of the Class (the “Fee and Expense Application”).3 4. The proposed Settlement provides for the resolution of all claims in the Action in exchange for a cash payment of $55 million for the benefit of the Court- certified Class. This Settlement was achieved as a direct result of Plaintiffs’ and Lead Counsel’s efforts to diligently investigate, vigorously prosecute, and aggressively 2 Plaintiffs’ Counsel are: Lead Counsel Bernstein Litowitz and Stoll Berne; Lockridge Grindal Nauen P.L.L.P. (“Lockridge Grindal”), which is liaison counsel for Plaintiffs in the District of Minnesota; Nelson, Zentner, Sartor & Snellings, LLC (“NZS&S”), which served as liaison counsel for Lead Plaintiff while the Action was pending in the United States District Court for the Western District of Louisiana; and Motley Rice LLC (“Motley Rice”), additional counsel for the Class. 3 In conjunction with this declaration, Plaintiffs and Lead Counsel are also submitting the Memorandum of Law in Support of Plaintiffs’ Motion for Final Approval of Class Action Settlement and Plan of Allocation (the “Settlement Memorandum”) and the Memorandum of Law in Support of Lead Counsel’s Motion for an Award of Attorneys’ Fees and Litigation Expenses (the “Fee Memorandum”). -2- CASE 0:18-cv-00296-MJD-KMM Doc. 369 Filed 06/16/21 Page 6 of 89 negotiate a settlement of this Action against highly skilled opposing counsel. As discussed in more detail below, Lead Counsel’s efforts in the Action, included, among other things: i. Conducting a wide-ranging investigation concerning the allegedly fraudulent misrepresentations and omissions made by Defendants, including consulting with experts and reviewing the voluminous public record;4 ii. Drafting the operative 139-page Consolidated Securities Class Action Complaint (the “Complaint”), which was filed with the Court on June 25, 2018