Rising From Ashes of Jury Verdict, Apollo Group Wins Huge Reversal

[WSJ_law_blog]

Back in June, the WSJ reported on the relatively rare phenomenon of companies taking class-action shareholder suits all the way to trial; JDS Uniphase is one of a handful that have won.

Now it looks as though the Apollo Group can also claim that rare distinction. Yesterday, Apollo, owner of the for-profit University of Phoenix, persuaded a judge to throw out a $277 million securities-fraud verdict over the company’s failure to disclose a report criticizing the school’s operations.

Here’s the order from U.S. District Judge James A. Teilborg in Phoenix. And here’s a Bloomberg report.

Judge Teilborg ruled that Apollo stockholders couldn’t show their losses were caused by ex-CEO Todd Nelson’s withholding of a U.S. Education Department report that accused the company of violating a federal ban on paying staff on the basis of enrollment numbers.

“Securities laws are not insurance to protect against economic losses,” Teilborg said at a hearing in federal court in Phoenix. Stephen Basser, a lawyer for Apollo investors, said they’ll appeal the judge’s decision.