United States District Court, S.D. New York
April 1, 2005.
IN RE WORLDCOM, INC. SECURITIES LITIGATION. This Document Relates to: ALL ACTIONS.
The opinion of the court was delivered by: DENISE COTE, District Judge
Andersen objects to designations that the Lead Plaintiff has
made from the July 2004 deposition of Cynthia Cooper. Cooper was
the head of Internal Audit at WorldCom during the period at issue
in this trial. The following rulings address Andersen's
objections to the Lead Plaintiff's designations.
The principal area of dispute is testimony about the several
factors that prompted Internal Audit in the Spring of 2002 to
begin to perform financial audits, instead of doing just
operational audits. The Lead Plaintiff argues that that decision
was instrumental in Internal Audit's detection of the fraud at
WorldCom and its public disclosure. One of those factors about
which Cooper gave extensive testimony was her concern in the
Spring of 2002 that wireless debt was under-reserved. In the
course of discussing each of these issues, Cooper testifies about
Andersen's work and conversations with Andersen partners.
Cooper will be permitted to testify about certain of the issues
that prompted her to begin financial audits. She testified that
the factors were Andersen's indictment in the Enron scandal; the state of the Andersen workpapers reviewed in
connection with the wireless reserve audit; a confrontation with
an Andersen partner regarding the wireless reserve audit and
Andersen's workpapers; Scott Sullivan's statement that Andersen
partners felt like Internal Audit wrote "gotcha" reports; and
Andersen partner Ken Avery's statement of unhappiness that
Internal Audit took so many internal control recommendations to
the WorldCom Audit Committee while Andersen brought none to the
Audit Committee. Cooper Tr. at 312. A prior ruling has already
excluded testimony regarding Enron. All additional Enron passages
must be stricken, including 313: 20-23; 316:5-21.
Andersen contends that this testimony is not relevant since it
is not necessary to tell "the complete story of how Internal
Audit learned" of the fraud. The Lead Plaintiff is entitled to
tell the "complete" story. Should Andersen wish a limiting
instruction regarding any hearsay that remains in these passages,
it may request one.
Andersen's objection to the testimony regarding Ogden is
sustained; much of the testimony is hearsay. The following
objections are sustained:
320:4-10 (first four words) leading
329:13-330:2 no question; leading
331:19 (after word "right") no answer
336:21-338:6 hearsay 343:8-13 (linked to testimony on 336-38)
406:7-25 (linked to other stricken testimony)
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