February 27, 2014
The People of the State of New York, Eric T. Schneiderman, etc., et al., Plaintiffs-Respondents,
Sprint Nextel Corp., et al., Defendants-Appellants. Broadband Tax Institute and Council of State Taxation, Amici Curiae.
Williams & Connolly LLP, Washington, DC (Kannon K.Shanmugam of the bars of the State of Kansas and District of Columbia, admitted pro hac vice, of counsel), for appellants.
Eric T. Schneiderman, Attorney General, New York (Brian A.Sutherland of counsel), for respondents.
Morrison & Foerster LLP, New York (R. Gregory Roberts of counsel), for Broadband Tax Institute, amicus curiae.
McDermott will & Emery LLP, New York (Arthur R. Rosen of counsel), for Council of State Taxation, amicus curiae.
Mazzarelli, J.P., Acosta, Renwick, Freedman, Manzanet-Daniels, JJ.
Order, Supreme Court, New York County (O. Peter Sherwood, J.), entered July 1, 2013, which denied defendants' motion to dismiss the complaint in its entirety, unanimously affirmed, without costs.
The court properly denied the motion to dismiss the complaint in its entirety. Plaintiffs' complaint adequately alleges that defendants violated New York's False Claims Act (State Finance Law § 189[g]), Executive Law § 63(12) and Article 28 of the Tax Law by knowingly making false statements material to an obligation to pay sales tax pursuant to Tax Law § 1105(b)(2). Contrary to defendants' interpretation, the Tax Law provision is not preempted by the Federal Mobile Telecommunications Sourcing Act (4 USC 116 et seq.).
The court also properly rejected defendants' argument that the New York False Claims Act with respect to statements made under the Tax Law should not be given its stated retroactive effect. Defendants fail to show that the Act's sanction of civil penalties, including treble damages, is so punitive in nature and effect as to have its retroactive effect barred by the Ex Post Facto Clause (US Const, art I, § 10).