In federal court documents filed today, the Lead Plaintiff in a class action securities lawsuit against K12 Inc. (NYSE:LRN) voluntarily and permanently dismissed the claims it made about the academic performance and educational quality of K12-managed schools.
The stipulation of dismissal by the Lead Plaintiff in the class action will state that “substantial fact and expert discovery to date does not support the academic performance and educational quality claims on the merits.” This discovery included “voluminous document production … totaling 132,355 documents comprising 1,032,725 pages,” deposition testimony of K12 corporate representatives and of ten additional witnesses, along with several expert reports.
The allegations the Lead Plaintiff will dismiss for lack of merit include:
- Concealment of K12’s academic performance and annual growth measures
- Excessive and burdensome student-teacher ratios
- Improper grading and attendance policies at K12-managed schools
- Hiring of unqualified teachers who were not properly certified
- Failure of special education programs to meet government standards
- Misleading high parent satisfaction scores
The remaining claims, which relate to the disclosure of student enrollment and retention data at K12-managed schools, will be dismissed as part of a proposed settlement agreement. Under the settlement, $6.75 million will be paid into a settlement fund by K12’s insurance carriers for stockholders in the class. The company continues to deny each and all of the claims and all charges of wrongdoing or liability. Furthermore, the company stands by its stated position that it operates schools with high integrity and a focus on strong academic performance for all students.
Nate Davis, Executive Chairman of K12 Inc., stated, “Ending the litigation on these terms is a powerful vindication of K12 and a pragmatic resolution for the company. The plaintiff is representing before a court of law what K12 has always maintained: that the claims in this lawsuit regarding our academic standards, student-teacher ratios, grading and attendance policies – allegations unfairly echoed in the media and other forums – could not be supported on the merits.”