(Adds details from ruling, byline)
By Martha Graybow
NEW YORK Aug 5 Apollo Group Inc APOL.O, a
for-profit education company, has won the dismissal of a jury
verdict that ordered it to pay millions of dollars in damages
to shareholders for securities law violations.
A federal jury in Arizona had ruled in the investors' favor
in January, but a federal judge overturned that verdict on
Monday, finding there was insufficient evidence at trial to
support the jury's decision.
The case was a rare example of a shareholder class-action
lawsuit that went to trial. Most investor lawsuits are either
settled or dismissed before they go to trial.
In another recent class-action case, a federal jury in
Oakland, California found late last year that former executives
of JDS Uniphase Corp JDSU.O did not commit securities fraud
or insider trading.
Apollo has been wrangling with investors in the lawsuit
since 2004, when shareholders first brought allegations
contending the company artificially inflated its stock price by
failing to properly disclose the status of a U.S. Department of
Education's program review at the University of Phoenix, an
In overturning the verdict, Judge James Teilborg of U.S.
District Court in Arizona said the plaintiffs did not prove
that their stock losses were caused by material
misrepresentations made by the company.
The investors "failed to prove that Apollo's actions caused
investors to suffer any harm," the judge wrote. "Therefore,
Apollo is entitled to judgment as a matter of law."
The jury's verdict was for up to $5.55 per share in
damages, though a precise amount of damages was never set,
Apollo said. The company said that damage estimates from a
plaintiff's expert had ranged from about $175 million to $280
A lawyer for the Policemen's Annuity and Benefit Fund of
Chicago, the lead plaintiff in the case, said on Tuesday that
his clients planned to appeal.
"We think it was an error for the judge to take the verdict
away from the jury," said an attorney for the pension fund,
Jeffrey Barrack. "We will take whatever steps necessary to see
that the jury's verdict stands."
The company had long argued in the case that the disclosure
of the government report, which involved issues of payments to
recruiters, had not caused any major movement in Apollo's stock
Apollo General Counsel P. Robert Moya said in a statement
that it has always been the company's position "that the
plaintiffs in the case did not suffer any damages arising from
the disclosure of the initial government report."
(Reporting by Martha Graybow and Helen Chernikoff; Editing by
Lisa Von Ahn, Richard Chang)