Sprint Nextel faces a rash of new legal and financial troubles. A second federal judge has agreed to grant class-action status to a lawsuit filed by former employees who say the carrier's faulty computer system cheated them out of commission compensation. In addition, the company's debt was downgraded to "junk" status.
U.S. District Judge John Lungstrum certified a class-action lawsuit on Wednesday, following a similar certification in federal court in late November. This most recent lawsuit was initially filed in U.S. District Court in Kansas on behalf of employees of Sprint's Business Direct Channel. The suit claims the company's computer system glitches cost thousands of Sprint employees between $500 and $1,000 a month for five years, with the total estimated cost of the losses at $5 million. Sprint has until Dec. 22 to provide a list of the names of employees who were potentially affected by the glitches.
Sprint's financial position was also downgraded, as the rating's agency Moody's cut the company's debt to "junk" status and changed its outlook on Sprint from "under review" to "negative." However, Moody's did describe Sprint's liquidity as "very good" over the next year and said that the company's $4 billion cash balance is not likely to weaken. Sprint has about $3 billion in outstanding debt. Standard & Poor's lowered its rating on Sprint's debt to junk earlier this year.
For more:
- see this article on the lawsuit
- see this article on Sprint's downgrade
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