Washington Post 2013 Annual Report Download - page 50

The Slate Group leases office space in Washington, DC. SocialCode leases office space in Washington, DC, New York
City, San Francisco, CA and Seattle, WA.
Item 3. Legal Proceedings.
On February 6, 2008, a purported class-action lawsuit was filed in the U.S. District Court for the Central District of
California by purchasers of BAR/BRI bar review courses, from July 2006 onward, alleging antitrust claims against Kaplan
and West Publishing Corporation, BAR/BRI’s former owner. On April 10, 2008, the court granted defendants’ motion to
dismiss, a decision that was reversed by the Ninth Circuit Court of Appeals on November 7, 2011. The Ninth Circuit
also referred the matter to a mediator for the purpose of exploring a settlement. In the fourth quarter of 2012, the parties
reached a comprehensive agreement to settle the matter. The settlement was approved by the District Court in September
2013 and is expected to be administered in 2014.
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 KHE’s Broomall campus and made inquiries about the Surgical Technology
program, including the program’s eligibility for Title IV U.S. Federal financial aid, the program’s student loan defaults,
licensing and accreditation. Kaplan responded to the information requests and fully cooperated with the inquiry. The ED
also conducted a program review at the Broomall campus, and Kaplan likewise cooperated with the program review.
On July 22, 2011, the U.S. Attorney’s Office for the Eastern District of Pennsylvania announced that it had entered into a
comprehensive settlement agreement with Kaplan that resolved the U.S. Attorney’s inquiry, provided for the conclusion of
the ED’s program review and also settled a previously sealed U.S. Federal False Claims Act (False Claims Act) complaint
that had been filed by a former employee of the CHI-Broomall campus. The total amount of all required payments by
Broomall under the agreements was $1.6 million. Pursuant to the comprehensive settlement agreement, the U.S. Attorney
inquiry has been closed, the False Claims Act complaint (United States of America ex rel. David Goodstein v. Kaplan,
Inc. et al.) was dismissed with prejudice and the ED will issue a final program review determination. At this time, Kaplan
cannot predict the contents of the pending final program review determination or the ultimate impact the proceedings may
have on the Broomall campus or the KHE business generally.
During 2013, certain Kaplan subsidiaries were subject to two other unsealed cases filed by former employees that
include, among other allegations, claims under the False Claims Act relating to eligibility for Title IV funding. The U.S.
Government declined to intervene in all cases, and, as previously reported, court decisions either dismissed the cases in
their entirety or narrowed the scope of their allegations. The two cases are captioned: United States of America ex rel.
Carlos Urquilla-Diaz et al.v. Kaplan University et al. (unsealed March 25, 2008) and United States of America ex rel.
Charles Jajdelski v. Kaplan Higher Education Corp. et al. (unsealed January 6, 2009).
On August 17, 2011, the U.S. District Court for the Southern District of Florida issued a series of rulings in the Diaz case,
which included three separate complaints: Diaz, Wilcox and Gillespie. The court dismissed the Wilcox complaint in its
entirety; dismissed all False Claims Act allegations in the Diaz complaint, leaving only an individual employment claim;
and dismissed in part the Gillespie complaint, thereby limiting the scope and time frame of its False Claims Act
allegations regarding compliance with the U.S. Federal Rehabilitation Act. On October 31, 2012, the court entered
summary judgment in favor of the Company as to the sole remaining employment claim in the Diaz complaint. On
July 16, 2013, the court likewise entered summary judgment in favor of the Company on all remaining claims in the
Gillespie complaint. As of December 2013, the Diaz and Gillespie rulings were on appeal to the U.S. Court of Appeals
for the Eleventh Judicial Court, where the Company will seek affirmation of the judgments in its favor.
On July 7, 2011, the U.S. District Court for the District of Nevada dismissed the Jajdelski complaint in its entirety and
entered a final judgment in favor of Kaplan. On February 13, 2013, the U.S. Circuit Court for the Ninth Judicial Circuit
affirmed the dismissal in part and reversed the dismissal on one allegation under the False Claims Act relating to eligibility
for Title IV funding based on claims of false attendance. As of December 2013, this case had been remanded to the
District Court, where discovery is expected to take place in 2014 as to the remaining allegation in the complaint.
On October 21, 2010, Kaplan Higher Education Corporation received a subpoena from the office of the Florida
Attorney General. The subpoena sought information pertaining to the online and on-campus schools operated by KHE in
and outside of Florida. KHE has cooperated with the Florida Attorney General and provided the information requested in
the subpoena. Although KHE may receive further requests for information from the Florida Attorney General, there has
been no such further correspondence to date. The Company cannot predict the outcome of this inquiry.
On December 21, 2010, the U.S. Equal Employment Opportunity Commission (EEOC) filed suit against Kaplan Higher
Education Corporation in the U.S. District Court for the Northern District of Ohio alleging racial bias by Kaplan in
requesting credit scores of job applicants seeking financial positions. In March 2011, the court granted in part the
Company’s motion to dismiss the complaint. On January 28, 2013, the court entered summary judgment in favor of
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