Subject: Good Progress in IXC/Broadwing Litigation; PRIVILEGED AND CONFIDENTIAL--ATTORNEY WORK PRODUCT AND ATTORNEY-CLIENT PRIVILEGED
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Date: Tue, 29 Feb 2000 12:45:00 -0800 (PST)

A bulletin from desolate, windy Laramie:  Today we finished the second day of 
our hearing on our request for a preliminary injunction against Broadwing, 
regarding all its cuts of our system in WY and CO.  

We put on our 3rd thru 5th witnesses today (including me, regarding EBS 
background, attempts to secure a construction coordination agreement, and our 
irreparable harm, and Brad, regarding the cuts, industry norms in avoiding 
damage to existing facilities, and other topics).  Broadwing then put on its 
own in-house attorney.  Before we could cross-examine him (he made some 
inaccurate statements that we were champing at the bit to address), the judge 
broke in to say that we would reconvene Friday morning to finish Broadwing's 
case and then have closing arguments.  The judge warned  both parties, 
though, that he was disgusted with all the cuts and "all that cable being 
ripped out of the ground," and said he was very disappointed that the two 
companies couldn't resolve this problem on their own.  (I think the judge 
really liked the concept of a construction coordination agreement, such as 
the one we signed with AT&T (which we described in detail), and it bothered 
the judge a lot, I think, that Broadwing wouldn't negotiate such an agreement 
with us.)  The judge looked at Broadwing's counsel and said, "Believe me, if 
you come back to this hearing on Friday and haven't settled this matter, one 
of you will go away very unhappy from my courtroom; it will be very expensive 
for you."  He then left the courtroom, but returned a moment later to add, 
"Listen to me:  if you don't settle this yourselves, it will cost you a whole 
lot more than the cost to pothole cable across the whole state of Wyoming."  
(Pretty strong stuff from a judge, during the middle of a hearing!)

Then the judge left for good, and the Broadwing folks came over to us; while 
trying to act cool, they seemed rattled by their perception that the judge 
was warning them to settle with us, or else be shut down via injunction.  I 
told them that we wanted to settle the matter if we could do so and still 
protect our system.  I reminded them that they had already broken their 
earlier promise to us (that if our inspectors said Broadwing's plow was too 
close to EBS' cable, Broadwing's contractor would stop construction until all 
parties agreed it was safe to restart), so I wasn't sure how EBS could get 
comfortable with any new Broadwing promise.

We all agreed to try to negotiate a settlement agreement, starting tomorrow.  
Our side then broke for dinner and to plan strategy.  We hope that Broadwing 
will be motivated to make some accommodation with us, although they and their 
counsel have shown us that they are quite capable of being irrational.  Our 
wish list is (1) our construction coordination agreement, (2) Broadwing pays 
our actual costs for temporary and permanent repairs of cuts, such repairs 
and cable replacement being at our discretion, (3) Broadwing pays a 
liquidated damage amount (we're thinking of asking for $250,000 per cut, but 
would probably settle for less ***(Ted, can you give me a damage number that 
might fairly reflect our loss of reputation and lost business, if Broadwing 
cuts us again while we're lit and serving customers?), (4) we come to a 
settlement agreement by early afternoon Thursday (so we'll have time to set 
travel plans for the Friday hearing).  Steve Black (one of our two H&H 
lawyers) is preparing a first draft of an EBS proposal, while we fly back to 
Portland tomorrow morning.

An important point:  Broadwing still has to put on most of its case, if we 
don't settle.  It is possible that the tide could turn, though unlikely.  It 
is even possible that all persons present for both sides misinterpreted the 
judge's leaning, or the judge could change his mind.  For those reasons, I 
would love to secure a good settlement, while our leverage seems the 
greatest.  The elimination of the remaining litigation risk, in my mind, is 
worth giving up some of our wish list.

I would like to tell you, David, that Brad was excellent.  I didn't know 
about his long experience in teaching classes on cable installation, etc.; 
that experience was most impressive in our proving that Broadwing has grossly 
departed from industry standards.  Our counsel both stated (and I agree) that 
Brad came across as confident and knowledgeable, and he established strong 
credibility.  We didn't have time to put Ron on, but his comments and help 
with strategy were most helpful.  Our contractors with the line locating 
service and Mr. Beamis were all terrific; we should give them some nice Enron 
present after this is over (it's my understanding that they lost 
opportunities to work and be paid, by agreeing to testify for us, and they 
were very motivated, strong allies).  Steve and Dave, our Holland and Hart 
lawyers, are excellent.  They picked the right judge, have the right 
experience, and have good intuition.  All in all, I think our effort was well 
worthwhile and was done right.  For my money, Enron came off looking 
professional and reasonable, and Broadwing came off looking like a cheap 
fly-by-night.  My deep thanks to all of you who contributed to this effort.  

Please make sure that everyone in your respective groups keeps a lid on any 
outside conversations about this lawsuit, since it's not over.

Here's hoping that we can strike a good settlement (though I'm not afraid of 
a Friday hearing).  Maybe it's not over yet, but it sure looks good from here!

Kenton