City of Hialeah Employees Retirement System V. Begley, Et Al.
Bernstein Liebhard represents the City of Hialeah Employees Retirement System in a derivative action entitled City of Hialeah Employees Retirement System v. Begley, et al., No. 2017-0463-JTL (Delaware Court of Chancery). The action alleges that certain current and former directors of DeVry Education Group (“DeVry”) (currently known as Adtalem Global Education, Inc. (“Adtalem” or the “Company”) breached their fiduciary duties to DeVry by allowing and approving a misleading advertising campaign. The Federal Trade Commission (“FTC”) instituted proceedings against DeVry for misleading students through the campaign. After a federal judge upheld the FTC’s claims, DeVry settled with the FTC for $100 million. The City of Hialeah alleges that the directors’ breaches of fiduciary duties caused DeVry to suffer harm comprised of, inter alia, the $100 million settlement with the FTC.
After two years of litigation, document discovery, deposition discovery, and a mediation session, the parties have agreed to a settlement of the action whereby, Defendants have agreed to pay $16,000,000.00 to Adtalem. In addition to the monetary settlement, the Company has agreed to institute certain corporate governance reforms including, the creation of a board committee related to advertising, the proliferation of information for the purpose of reporting violations of the Company’s code of conduct, and limitations on the directors’ service on the boards of unaffiliated public companies.
The settlement will become final upon the final settlement hearing, which has yet to be scheduled.