Sprint settles investor class action over subscriber growth for $3.75M

Sprint class action settlement overview: 

• Who: Sprint agreed to pay $3.75 million to end a class action settlement with investors.
• Why: The investors allege they were misled by the company about the number of new subscribers it got.
• Where: The Sprint class action settlement was filed in a New York federal court.

Sprint will pay $3.75 million to end claims it misled investors about the number of new customers it gained.

Investor plaintiffs Isaac Solomon and Francine Canion filed a memorandum seeking approval of the class action settlement with Sprint Corporation Sept. 22 in a New York federal court. 

In it, the telecom giant agreed to pay $3.75 million to resolve claims relating to Sprint’s growth reporting. 

According to investors, Sprint’s stock price declined after a letter to the Federal Communications Commission was made public in April 2019, revealing that promotional lines, non-phone devices and customers moving from prepaid to postpaid services accounted for much of the company’s growth—not actual new customers. 

The investors said Sprint and its executives led them to believe hundreds of thousands of new subscribers were added when, in reality, the numbers were largely caused by existing customers getting new devices and free phone lines.

Sprint finalized a merger with T-Mobile in April 2020.

Investors urge judge to approve proposed Sprint settlement

The stockholders urged Judge Vyskocil to grant approval of the settlement. 

“The proposed settlement provides a cash payment of $3,750,000 for the benefit of the settlement class,” the memo states. “This is an excellent result given the significant risks of continued litigation. Moreover, after consultation with experts on damages, plaintiffs believe that the maximum damages that the settlement class could recover for the claims allowed to proceed to discovery … are approximately $30.3 million.”

The investors said the damages were fair considering they may not be able to prove that the entirety of the stock price drop was caused by fraud on Sprint’s part. 

Lawyers for the investors told the court they plan to seek a fee award that does not exceed a third of the gross settlement fund.

Meanwhile, in June, a consumer filed a class action lawsuit alleging that the April 2020 merger between T-Mobile and Sprint was an anticompetitive acquisition and collectively cost U.S. small businesses and AT&T and Verizon subscribers billions of dollars.

What do you think of the Sprint class action settlement? Let us know your thoughts in the comments! 

The plaintiffs are represented by Omar Jafri, Patrick V. Dahlstrom and Brian P. O’Connell of Pomerantz LLP.

The Sprint settlement is Solomon et al. v. Sprint Corp. et al., Case No. 1:19-cv-05272, in the U.S. District Court for the Southern District of New York.

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