Washington Post 2009 Annual Report Download - page 44

Item 3. Legal Proceedings.
Kaplan, Inc., a subsidiary of the Company, is a party to a previously disclosed class action antitrust lawsuit filed on April 29,
2005, by purchasers of BAR/BRI bar review courses from fall 1997 through July 2006 in the U.S. District Court for the
Central District of California. On February 2, 2007, the parties filed a settlement agreement with the court, together with
documents setting forth a procedure for class notice. The court approved the terms of the settlement on July 9, 2007. Certain
class members filed an appeal to the case to the U.S. Court of Appeals for the Ninth Circuit. On April 23, 2009, the Ninth
Circuit affirmed the approval of the settlement. The Ninth Circuit also vacated the district court’s award of attorney’s fees
to class counsel and counsel to various objectors to the settlement and remanded to the U.S. District Court to consider the
attorney’s fees issue anew. That issue continues to be litigated; however, the attorney’s fees award will be paid from the
escrowed settlement funds, so Kaplan should not be affected by the ultimate determination of the attorney’s fees issue.
Effectiveness of the settlement is subject to court approval. On February 6, 2008, Kaplan was served with another purported
class action lawsuit in the U.S. District Court for the Central District of California alleging claims substantially similar to those
alleged in the previously settled lawsuit but on behalf of a putative class that included all persons who purchased a bar
review course from BAR/BRI in the United States after the July 2006 cut-off for class membership in the prior action. West
Publishing Corporation, which owns BAR/BRI, is a co-defendant. On April 15, 2008, the court granted defendants’ motion
to dismiss. On May 20, 2008, the plaintiffs filed an appeal. The appeal is pending in the U.S. Court of Appeals for the
Ninth Circuit. On November 20, 2009, Kaplan entered into a stipulation of settlement with the plaintiffs that would resolve
the case as to Kaplan on a class-wide basis. The stipulation of settlement requires court approval to become effective. On
April 29, 2009, Kaplan was served with a purported class action lawsuit by a purchaser of Kaplan’s LSAT preparation
course, alleging that in 1997, BAR/BRI and Kaplan entered into a market allocation agreement in violation of U.S. antitrust
laws. Kaplan has moved to dismiss this complaint and will continue to vigorously defend this lawsuit.
On June 17, 2008, teachers at Kaplan Aspect, which is now operated within Kaplan International Colleges, filed a
complaint in California Superior Court in San Francisco against Kaplan, Inc. and Aspect Education, Inc. alleging wage
and hour violations on behalf of a putative class of California teachers. In January 2009, the parties reached an
agreement to settle the claims in the action, as well as similar claims for a class of Kaplan Aspect teachers in states
outside California. On January 21, 2010, the parties received preliminary approval of that settlement in the California
Superior Court and will seek approval of the non-California claims in a separate action that has not yet been filed.
In 2007, the Company became aware of several state attorneys general who have opened inquiries or investigations
into arrangements between lenders and institutions of higher education. Subsidiaries of the Company received requests
for information from the Attorneys General of the states of Arizona, Iowa and Maryland regarding relationships with
student loan providers. The Company also became aware of similar requests from members of the U.S. Congress to at
least one lender with regard to its relationship with the Company and its subsidiaries, as well as other institutions of
higher education. The Company believes that these governmental authorities are conducting wide-ranging inquiries of
student lending practices generally, which, among other things, led to new legislation and other regulatory proposals and
changes in 2008. The Company believes that it was not the sole recipient of this type of information request. The
Company’s subsidiaries responded to these information requests and cooperated fully with these inquiries. The
Company’s subsidiaries received no further requests for such information during 2009.
On or about January 17, 2008, an Assistant U.S. Attorney in the Civil Division of the U.S. Attorney’s Office for the Eastern
District of Pennsylvania contacted Kaplan Higher Education’s CHI-Broomall campus and made inquiries about the Surgical
Technology program, including the program’s eligibility for Title IV federal financial aid, the program’s student loan defaults,
licensing and accreditation. The inquiry is presently proceeding on an “informal, voluntary basis.” Kaplan responded
to the information requests and is fully cooperating with the inquiry. The U.S. Department of Education is also conducting a
Program Review at the CHI-Broomall campus. CHI-Broomall and Kaplan have responded to a preliminary report issued by
the Department of Education, are responding to a February 12, 2010 request by the Department of Education for additional
information and are fully cooperating with its Program Review. The U.S. Attorney’s Office has informed Kaplan Higher
Education that it may make further information requests upon the completion of the Department of Education Program Review.
Several Kaplan subsidiaries are also subject to four complaints that include, among other allegations, claims under the
federal False Claims Act (31U.S.C. § 3729, et seq.), relating to eligibility for Title IV funding. The U.S. Government
declined to intervene in all four cases, which are captioned:
United States of America ex rel. Carlos Urquilla-Diaz, et al. v. Kaplan University et al. (unsealed March 25, 2008); United
States of America ex rel. Jorge Torres v. Kaplan Higher Education Corp. (unsealed April 7, 2008); United States of America
ex rel. Victoria Gatsiopoulos et al. v. ICM School of Business & Medical Careers et al. (unsealed September 2, 2008); and
United States of America ex rel. Charles Jajdelski v. Kaplan Higher Education Corp. et al. (unsealed January 6, 2009).
30 THE WASHINGTON POST COMPANY