NY top court rules Sprint must face $300 million lawsuit

New York’s highest court refused to dismiss a $300 million lawsuit against Sprint-Nextel Corp. Thursday, allowing the tax-evasion case to continue.

In a 4-1 ruling, the state Court of Appeals denied Sprint’s motion to dismiss the lawsuit filed in 2012 by Attorney General Eric T. Schneiderman. The judges rejected the company’s claims that New York’s authority to tax interstate telephone calls were ambiguous, that state tax laws were pre-empted by federal ones and that Schneiderman failed to sufficiently state a cause of action. Sprint also had argued that it “cannot be held liable for knowingly violating the Tax Law because its interpretation of the relevant statute was objectively reasonable,” according to court documents.

The ruling, just the latest in the long-running lawsuit, means the case now will be heard in state Supreme Court in Manhattan, a Court of Appeals spokesman said. The top court upheld rulings by two lower courts.

The heart of Schneiderman’s accusations is that Sprint undercollected and underpaid more than $100 million in state local taxes on flat-rate access charges for wireless calling plans.

If successful, Schneiderman’s lawsuit would force to pay Sprint triple damages, or more than $300 million.

Schneiderman has said that Sprint’s competitors, Verizon, AT&T, T-Mobile and MetroPCS, “have followed the law regarding these taxes.”