Sprint Corp., Overland Park, Kan., today lost an effort to dismiss a class-action lawsuit. Kevin P. Moriarity, state district judge in Johnson City, Kan., ruled that hedge fund manager Carlson Capital can proceed with its case alleging Sprint; former CEO William Esrey; and company directors breached fiduciary duty. Lead plaintiff Carlson estimates the liability to be between $5 billion and $10 billion, according to a statement from Jay Eisenhofer, partner of Grant & Eisenhofer, the law firm representing Carlson.
The suite is over the "company's handling of a complex conversion of stock in which two separate tracking stocks - PCS and FON - were 'recombined' into a consolidated common stock, bringing substantial profit to directors and management at the expense of other shareholders left out of the transaction," according to the statement.
Carlson manages a total of $4.4 billion for institutional investors. The number of Sprint shares the firm holds could not be learned by press time.
"We are disappointed by the court's ruling," said Laura Lisec, Sprint spokeswoman. "We will turn our attention to developing facts that will show the plaintiff's claims to be without merit."