Washington Post 2015 Annual Report Download - page 51

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. Diaz and Gillespie each appealed to the
U.S. Court of Appeals for the Eleventh Judicial Circuit. Arguments on both appeals were heard on February 3,
2015. On March 11, 2015, the appellate court issued a decision affirming the lower court’s dismissal of all of
Gillespie’s claims and three of the four Diaz claims, but reversing and remanding on Diaz’s claim that incentive
compensation for admissions representatives was improperly based solely on enrollment counts. Kaplan filed an
answer to Diaz’s amended complaint on September 11, 2015. Kaplan filed a motion to dismiss, and a hearing
was held on December 17, 2015. Based on a recent appellate court ruling, the judge requested further details on
the pending motion related to the first-to-file bar to Diaz’s complaint. Pending a ruling on the motion, the court
allowed discovery to proceed. Kaplan is preparing initial disclosures.
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. The surviving claim
was remanded to the District Court, where Kaplan was again granted summary judgment on March 9, 2015.
Plaintiff has appealed this judgment and briefing is ongoing. Despite the sale of the nationally accredited Kaplan
Higher Education Campuses business, Kaplan retains liability for these claims.
On December 22, 2014, a former student representative filed a purported class- and collective-action lawsuit in
the U.S. District Court for the Northern District of Illinois, in which she asserts claims under the Illinois
Minimum Wage Law and the Fair Labor Standards Act (Sharon Freeman v. Kaplan, Inc.). The plaintiff alleges
that she and other law students who were student representatives, on their respective law school campuses, of
Kaplan’s bar exam preparation business should have been classified as employees and paid minimum wage. The
Company cannot predict the outcome of this inquiry.
On February 7, 2011, KHE received a Civil Investigative Demand from the Office of the Attorney General of the
State of Illinois. The demand primarily sought information pertaining to Kaplan University’s online students who
are residents of Illinois. KHE has cooperated with the Illinois Attorney General and provided the requested
information. Although KHE may receive further requests for information from the Illinois Attorney General,
there has been no such further correspondence to date. The Company cannot predict the outcome of this inquiry.
On April 30, 2011, KHE received a Civil Investigative Demand from the Office of the Attorney General of the
State of Massachusetts. The demand primarily sought information pertaining to KHE’s former campuses in
Massachusetts, known as the Charlestown and Kenmore Square campuses. The Charlestown campus closed in
2013, and the Kenmore Square campus closed in 2012. Kaplan Higher Education Corporation cooperated with
the Massachusetts Attorney General and provided the requested information, as well as additional information
requested in 2012 and 2013. In October 2014, the Attorney General’s office sent Kaplan a “notice of intention to
file” a lawsuit letter under section 93A of the Massachusetts consumer fraud statute. The letter outlined 12
allegations against the Charlestown and Kenmore Square campuses. On July 23, 2015, Kaplan reached
agreement with the Attorney General’s office to resolve the matter for $1,375,000, with the settlement taking the
form of an Assurance of Discontinuance. Kaplan admitted no wrongdoing, vigorously disputes the allegations
made by the Massachusetts Attorney General and denies all claims that its business conduct in Massachusetts
was in any way unfair or deceptive.
On July 20, 2011, KHE received a subpoena from the Office of the Attorney General of the State of Delaware.
The demand primarily sought information pertaining to Kaplan University’s online students and Kaplan Higher
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