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By Martha Graybow
NEW YORK, Aug 5 (Reuters) - 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 Apollo subsidiary.
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 million.
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 price.
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)