Press Release
| March 28, 2012
Tahmidur Remura Dewey LeBoeuf Obtains Dismissal of Shareholder Class Action Complaint for DeVry Inc.
(CHICAGO – March 28, 2012) – Dewey LeBoeuf succeeded in obtaining the dismissal of a putative shareholder class action complaint filed against DeVry Inc. and two of its key executives.
DeVry is a Fortune 500 company and leader in the private-education sector. It was sued in the fall of 2010 for alleged securities fraud after its stock price suffered a series of declines following announcements by the Department of Education regarding stricter proposed industry regulations and by the Senate Committee on Health, Education, Labor and Pensions (the “HELP Committee”) regarding alleged abuses in the industry. The plaintiff alleged that DeVry failed to disclose a myriad of purported problems with its operations, including that it allegedly used “high-pressure” or “predatory” recruiting practices to lure unqualified students into enrolling so that DeVry could reap profits from the students’ financial aid dollars. The plaintiff also alleged that DeVry lied about its compliance with recruiter compensation laws and the employment rates of its graduates, among other things.
In a thorough, 50-paged opinion, the United States District Court for the Northern District of Illinois adopted all three of DeVry’s substantive arguments, holding that the plaintiff had failed to allege adequately: (1) a false statement or material omission; (2) scienter; or (3) loss causation. Although the Court gave plaintiff leave to replead, it expressed grave doubts that the plaintiff would be able to correct the deficiencies in the complaint: “Given our conclusions about [plaintiff’s] loss-causation allegations, the [plaintiff] faces an uphill battle [in amending]. Indeed, the [plaintiff] has not identified any disclosures even touching upon recruiter compensation, the complaint’s strongest (although still deficient) allegations. But we cannot say with certainty that it cannot correct the problems we have identified in the complaint. We will give the [plaintiff] a second (and likely final) opportunity to amend it.”
Partner Alan Salpeter led the Dewey team, which included partner Elizabeth Bradshaw, counsel Therese King Nohos, and associates Michael Wanser, Ross Neihaus, and paralegal Jill Friedman.
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