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Case ID: 4966 | Stocks | 01/05/2007
A Kansas judge has certified a massive securities case against Sprint Nextel Corp. as a class action, opening the possibility of a huge damage award against the company.
Johnson County District Judge Kevin Moriarty ruled that the case met the criteria for a class action, including “numerosity” of claimants and common issues of law and fact. The potential size of the class — holders of Sprint’s PCS common stock before Sprint exchanged the shares in April 2004 for shares of FON stock — could reach into the tens of thousands. At the time the FON and PCS tracking stocks were combined, there were more than 1 billion shares of PCS stock and more than 1 billion shares of FON stock outstanding. Moriarty’s ruling is significant because most of the individual claims in the case are probably too small to make individual lawsuits economically feasible. The ruling allows for thousands of potential claimants to pool their claims and seek damages in the billions of dollars. The judge's ruling comes just a few weeks after he turned down Sprint’s motion for summary judgment, paving the way for a jury trial scheduled to begin in April 2007. The plaintiffs sued Sprint and its board of directors in 2004 (before its merger with Nextel Corp.) over the recombination of Sprint’s FON and PCS tracking stocks in April of that year. The plaintiffs, Garco Investments LLP, Carlson Capital LP and other Sprint shareholders, charged that the recombination was unfair to PCS shareholders because it greatly undervalued PCS shares in comparison with FON shares. Sprint split its common stock into the two tracking stocks in November 1998. FON was designed to track its wireline business, and PCS was designed to track its wireless business. Sprint recombined them because the company said it was changing its focus to sell all of its services on a bundled basis. Among other claims, the plaintiffs say that Sprint and members of its board of directors breached their fiduciary duties under state law by passing on intracompany charges in ways designed to enhance FON’s value and depreciate PCS’ value. As an example, they say that FON overcharged interest on debt allocated to PCS, creating “phantom revenue” for FON and a “matching expense” for PCS. The lawsuit seeks to represent Sprint Nextel Corporation Shareholders. At Lawcash.com, it is our goal to keep you informed about important legal cases, class actions and settlements. Our lawyers offer free legal evaluations in tort cases, class actions, personal injury, and other lawsuits because we are dedicated to helping you resolve your legal complaints. Other Stocks Cases of Interest Who will look out for stockholders if corporate executives and boards don’t? Several class actions have been filed against the directors of petroleum companies Pennzoil-Quaker State Company by stockholders who allege that the directors breached their fiduciary duties to them in agreeing to the 2002 Pennzoil-Quaker State and Shell Oil Company merger. The parties have reached a tentative $2.3 million settlement of a class action filed against dietary supplements maker PharmaPrint, Inc. (Pink Sheets: PPRT, formerly OTCBB: PPRT) and certain of its officers and directors by stockholders who purchased the company's common stock between July 1 and November 15, 1999. A class action has been filed against First BanCorp (FBP), certain of its officers and directors by stockholders who purchased the company's common stock between October 20, 2003 and August 25, 2005. The action claims that the defendants violated federal securities laws by issuing a series of material misrepresentations to the market over this time period, thereby artificially inflating the price of the company's securities. The stockholders seek to recover compensatory damages for the loss of value of their stock. Several class actions have been filed against Italian dairy giant Parmalat Finanziaria S.p.A (Pink: PARAF.PK, formerly OTCBB: PARAF) and certain of its officers and directors by stockholders who purchased the company's common stock between January 5, 1999, and December 29, 2003. The actions claim that the defendants violated federal securities laws by issuing a series of material misrepresentations to the market over this time period, thereby artificially inflating the price of the company's securities. The stockholders seek to recover compensatory damages for the loss of value of their stock. A class action has been filed against Ramp Corporation (RCOCQ.OB), certain of its officers and directors by stockholders who purchased the company's common stock between April 14, 2004 and May 20, 2005. The action claims that the defendants violated federal securities laws by issuing a series of material misrepresentations to the market over this time period, thereby artificially inflating the price of the company's securities. The stockholders seek to recover compensatory damages for the loss of value of their stock. Kahn Gauthier Swick, LLC ("KGS") announces that shareholders of Sterling Financial Corporation ("Sterling" or the "Company") (NasdaqGS:SLFI - News) who purchased shares of the Company between April 27, 2004 and May 25, 2007 have until July 24, 2007 to move for appointment as Lead Plaintiff in a securities fraud class action lawsuit currently pending in the United States District Court for the Southern District of New York. No class has yet been certified in this action. |
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