Qwest Communications International Inc. has agreed to pay an extra $40 million to settle a class-action securities fraud lawsuit filed by shareholders, according to a regulatory filing.
In addition, former Qwest CEO Joe Nacchio and former Chief Financial Officer Robert Woodruff would contribute a total of $5 million out of insurance proceeds, according to a filing with the Securities and Exchange Commission.
The stipulation, which needs federal court approval, was signed Monday and disclosed in Qwest’s second quarter report.
U.S. District Judge Robert Blackburn had approved a $400 million settlement in 2006, but Nacchio and Woodruff were excluded from the settlement. The two appealed and said 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 to leave Nacchio and Woodruff exposed to further litigation.
Qwest spokeswoman Diane Reberger said Wednesday that the company 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, called the development positive. “Anything Qwest can do to reduce future liabilities is a good thing, and to get anything out of Nacchio and Woodruff is also a good thing,” Phelps said.
Qwest and U S West closed their merger in 2000.
Michael Dowd, an attorney for the plaintiffs, didn’t immediately respond to an e-mail for comment.
Qwest said it could terminate the agreement if a certain number of plaintiffs opt out of the settlement.
Topics Lawsuits
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