A state appeals panel has rejected an objector’s attempt to rewrite a settlement that two years ago ended a false marketing class action against the company that operates DeVry University and other for-profit colleges.
The panel also specifically rejected an attempt to trim $15.7 million in fees for the lawyers who led that class action.
In 2018, six students sued Adtalem Global Education and DeVry University, which operate DeVry and Keller Graduate School of Management, alleging misleading and deceptive statements about graduates’ income and employment improperly aided recruiting efforts and led to increased tuition costs between 2008 and 2016.
Benjamin Richman
| Edelson P.C.
After the group and DeVry reached a preliminary settlement in early 2020, Richardo Peart objected. But Cook County Circuit Court Judge Michael Mullen denied those objections, approved the settlement and gave class attorneys 35 percent of the settlement pool, more than $15.7 million. Peart brought his argument to the Illinois First District Appellate Court, which issued its opinion May 4.
Justice Margaret Stanton-McBride wrote the opinion; Justices Robert Gordon and Eileen Burke concurred.
Legal troubles for DeVry, one of the country’s largest for-profit colleges, began in 2016 when the Federal Trade Commission sought an injunction and tuition refunds. The FTC pointed to claims that 90 percent of graduates secured jobs within six months of earning a diploma and DeVry bachelor’s degree holders earned an average of 15 percent more than those from other schools within one year of graduation.
The U.S. Department of Education also looked into DeVry’s marketing practices, according to the panel. Late in 2016, DeVry settled with both agencies by committing $100 million to tuition refunds and debt relief. The FTC started mailing refund checks in July 2017.
DeVry also settled a securities lawsuit for $27.5 million, committed $2.25 million in consumer restitution in New York and $455,000 with Massachusetts. Its settlement for the Illinois lawsuit included a $44.95 million fund to be paid through a prorated formula based on credit hours, with an additional payout for students unable to secure employment in their field within six months of graduation: $500 for associate degree holders and $1,000 for those with bachelor’s degrees.
Of 444,039 known class members, 53,132 submitted claims, which the claims administration said was an “exceptional” response. Another 866 class members opted out while Peart and three others objected. Peart said he would prefer to pursue debt cancellation claims while also asserting the requested attorney fees were unreasonable.
According to the panel, the settlement terms included an agreement that claims would be offset by money the class members had already received through the federal and state government settlements. Peart claimed the average FTC payment was $383.31, said he received $772.96 and argued he would be “disadvantaged” if that payout reduces or eliminates his share of the settlement.
Stanton-McBride said the record doesn’t support Peart’s contention Judge Mullen “lacked sufficient information about the offset for the payments and debt forgiveness that were claimed in other settlements with DeVry and should have engaged in further analysis of the issue, or the contention that the settlement agreement is unfair to those individuals.”
In addition to details the settlement agreement explained, the panel said, Mullen had a six-page written objection from Peart specifically raising concerns about offset from the FTC settlement.
Peart also estimated the plaintiffs’ lawyers $15.7 million fees represented overcompensation of $5.24 million.
Appellate justices disagreed.
“This is not a persuasive argument,” Stanton-McBride wrote, saying the lawyers deserve to “be compensated for their advocacy and communication with the entire class for two years and for ultimately negotiating a settlement that benefits all class members.”
The panel noted Judge Mullen awarded the percentage based on “extraordinary resolution” of the complaint despite DeVry’s “thin” liability, including career counseling and preservation of class members’ ability to pursue federal loan forgiveness.
“The record shows that the court undertook an in-depth analysis of the facts and had ample evidentiary and legal basis for the 35 percent award,” Stanton-McBride wrote.
Plaintiffs in the action were represented by attorneys Jay Edelson, Benjamin H. Richman and Michael Ovca, of Edelson P.C., of Chicago; and Robert L. Teel, of Seattle.
Adtalem has been represented by attorney Patricia Palacios, of Steptoe & Johnson, of Washington, D.C.
Peart has been represented by attorneys Robert G. Black, of Naperville; and Adam L. Hoipkemier, of Epps Holloway DeLoach & Hoipkemeir, of Watkinsville, Georgia.