Civil Action No. 13-cv-1620-JPO
You or someone in your family may have purchased or otherwise acquired any shares of common stock of ITT Educational Services, Inc. (“ITT” or the “Company”) at any time during the Class Period April 24, 2008 to February 25, 2013, inclusive. The Notice is being sent because Class Members have a right to know about a proposed settlement of a class action lawsuit, and about all options, before the Court decides whether to approve the Settlement. If the Court approves the Settlement, and after any objections or appeals are resolved, the Claims Administrator appointed by the Court will make the payments to those persons who timely submit claims by March 22, 2016.Back To Top
The complaint in this case asserts that in violation of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”), Defendants misled investors by allegedly misrepresenting the Company’s obligations under certain risk-sharing agreements that the Company had entered into in connection with certain third-party, private student loan programs for ITT’s students. Under those agreements, the Company would be liable to the third-parties if the Company’s students were to default on their student loans received under those programs beyond a certain threshold. The Action alleged that the Company knowingly or recklessly understated, or otherwise misrepresented, the extent of those liabilities, and that when the market learned the true extent of those liabilities, investors were harmed. The Defendants have expressly denied, and continue to deny, all of the allegations of wrongdoing or liability against them in the Action.
On July 22, 2014, the Court issued a memorandum and order (the “Motion to Dismiss Order”) granting in part and denying in part Defendants’ motion to dismiss the complaint. In the Motion to Dismiss Order, the Court found that Lead Plaintiffs adequately alleged violations of the Exchange Act against the Defendants for the majority of the alleged false statements and that the case could proceed to discovery. The Court dismissed allegations that Defendants made misleading statements regarding the Company’s ability to enter into additional risk-sharing agreements relating to private student loans.
Subsequently, the parties engaged in substantial fact discovery, including document production and depositions. Lead Plaintiffs have also filed a motion for class certification. While Lead Plaintiffs’ motion for class certification was pending, the parties jointly informed the Court that they had agreed to attempt to resolve the claims through mediation and asked the Court to suspend proceedings in the case in anticipation of that mediation. The Court granted the parties’ request, and following a formal mediation with a well-respected retired judge, the Settling Parties reached an agreement in principle to settle the Action for $16,962,500.00.Back To Top
Lead Plaintiffs and Lead Counsel believe that the claims asserted against the Defendants have merit. Lead Plaintiffs and Lead Counsel recognize, however, the expense and length of continued proceedings necessary to pursue their claims against the Defendants through continued discovery, trial and appeals, as well as the difficulties in establishing liability. Lead Plaintiffs and Lead Counsel have considered the uncertain outcome of trial and appellate risk in complex lawsuits like this one.
In light of the risks of continued litigation, Lead Plaintiffs and Lead Counsel believe that the proposed Settlement is fair, reasonable and adequate, and in the best interests of the Class. Lead Plaintiffs and Lead Counsel also believe that the Settlement provides a substantial benefit now, namely Defendants’ payment of $16,962,500.00 in cash (less the various deductions described in the Notice), as compared to the risk that the claims would produce a similar, smaller, or no recovery after summary judgment, trial and appeals, possibly years in the future.
The Defendants have expressly denied, and continue to deny, each and all of the claims alleged by Lead Plaintiffs in the Action and affirm that they have acted properly and lawfully at all times. Further, the Defendants have expressly denied, and continue to deny, all charges of wrongdoing, fault, liability, or damage against them arising out of any and all of the conduct, statements, acts or omissions alleged, or that could have been alleged, in the Action. Defendants maintain that they have strong and meritorious defenses to all of the claims alleged in this Action. The Defendants, however, also recognize the uncertainty and risks inherent in any litigation, especially in a complex case such as this. The Defendants have concluded that further conduct of the Action would be protracted and expensive, and that it is desirable that the Action be fully and finally settled in the manner and upon the terms and conditions set forth in the Settlement.Back To Top
If there were no Settlement and Lead Plaintiffs failed to establish any essential legal or factual element of their claims against the Defendants, neither Lead Plaintiffs nor members of the Class would recover anything from the Defendants. Also, if the Defendants were successful in proving any of their defenses, the Class likely would recover substantially less than the amount provided in the Settlement, or nothing at all.Back To Top
If you are a member of the Class, you are subject to the Settlement unless you timely request to be excluded. The Class consists of:
Those excluded from the Class are:
ITT, on behalf of all Defendants, have agreed to cause the Settlement Amount to be paid in cash no later than fifteen (15) business days after preliminary approval of the Settlement by the District Court. At this time, it is not possible to make any determination as to how much individual Class Members may receive from the Settlement.
The $16,962,500.00 Settlement Amount, and the interest earned thereon while it is held in escrow before distribution, is referred to as the “Settlement Fund.” The Settlement Fund, less all Taxes, Tax Expenses, Notice and Administration Costs, and attorneys’ fees and Litigation Expenses awarded to Lead Counsel (the “Net Settlement Fund”), shall be distributed based on the acceptable Proof of Claim Forms submitted by members of the Class (“Authorized Claimants”). The Net Settlement Fund will be distributed to Authorized Claimants who timely submit acceptable Proof of Claim Forms under the Plan of Allocation described in the Notice, or as otherwise ordered by the Court.
Your share of the Net Settlement Fund will depend on the number of shares (represented by valid and acceptable Proof of Claim Forms) that members of the Class submit to the Claims Administrator, relative to the Net Settlement Fund; how many shares you purchased or acquired and when you purchased or acquired them; whether you held or sold those shares; the date on which you sold those shares; and the price at which you sold them, among other factors. At this time, it is not possible to determine how much individual Class Members may receive from the Settlement.
A payment to any Authorized Claimant that would amount to less than $10.00 in total will not be included in the calculation of the Net Settlement Fund, and no payment to those members of the Class will be made.
For each Authorized Claimant, a “Recognized Loss” will be calculated. The calculation of a “Recognized Loss,” as defined in ¶ 29 in the Notice, is not intended to be an estimate of, nor does it indicate, the amount that a Class Member might have been able to recover after a trial. Nor is the calculation of a Recognized Loss pursuant to the Plan of Allocation an estimate of the amount that will be paid to Authorized Claimants pursuant to the Settlement, which depends on the total Recognized Losses of all Authorized Claimants. The Recognized Loss formula provides the basis for proportionately allocating the Net Settlement Fund to Authorized Claimants. That computation is only a method to weigh Class Members’ claims against one another. Each Authorized Claimant will receive a pro rata share of the Net Settlement Fund based on his, her or its Claim.Back To Top
If the Settlement is approved, the Court will enter a judgment (the “Judgment”). The Judgment will dismiss with prejudice the claims in the Action and will provide that Lead Plaintiffs and all other Class Members, on behalf of themselves and any of their personal representatives, spouses, domestic partners, trustees, heirs, executors, administrators, successors, assigns (or any other person or entity who has the right, ability, standing, or capacity to assert on behalf of any Class Member any of the Released Claims (or to obtain the proceeds of any recovery therefrom)) shall be deemed to have – and by operation of the Judgment shall have – fully and finally released, dismissed and forever discharged the Released Claims against the Released Parties, and shall forever be enjoined from pursuing any or all Released Claims.
There is a risk that Lead Plaintiffs and Class Members may hereafter discover facts in addition to or different from those which they now know or believe to be true with respect to the subject matter of the Released Claims, but Lead Plaintiffs shall expressly fully, finally and forever settle and release – and each Class Member shall be deemed to have, and by operation of the Judgment shall have fully, finally and forever settled and released – any and all Released Claims, known or unknown, suspected or unsuspected, contingent or non-contingent, whether or not concealed or hidden, which now exist, or heretofore have existed, upon any theory of law or equity now existing or coming into existence in the future, including, but not limited to, conduct which is negligent, reckless, intentional, with or without malice, or a breach of any duty, law or rule, without regard to the subsequent discovery or existence of such different or additional facts. Such claims are referred to as “Unknown Claims” and include any and all Released Claims, of every nature and description, that Lead Plaintiffs and/or any Class Member does not know or suspect to exist in his, her or its favor at the time of the release of the Released Parties, which if known by him, her or it, might have affected his, her or its settlement with and release of the Released Parties, or might have affected his, her or its decision not to object to this Settlement or not to exclude himself, herself or itself from the Class or to release the Released Claims. Lead Plaintiffs acknowledge, and Class Members by law and operation of the Judgment shall be deemed to have acknowledged, that the inclusion of “Unknown Claims” in the definition of Released Claims was separately bargained for and was a material element of the Settlement.
The Judgment also will provide that the Defendants and each of the other Released Parties will be deemed to have released, dismissed and forever discharged Lead Plaintiff, each and all of the Class Members, and Lead Counsel from all claims (including, without limitation, “Unknown Claims”) arising out of, relating to, or in connection with the institution, prosecution, assertion, settlement or resolution of the Action or the Released Claims. Notwithstanding the above, nothing in this Judgment shall bar any action by any of the Settling Parties to enforce or effectuate the terms of the Settlement, the Preliminary Approval Order, or this Judgment.
“Released Claims” means any and all actions, causes of action, claims (including “Unknown Claims,” as defined in the Settlement), duties, debts, demands, rights, disputes, suits, matters, damages, losses, obligations, proceedings, issues, judgments, and liabilities of every nature and description whatsoever (and including, but not limited to, any claims for damages, whether compensatory, consequential, special, punitive, exemplary or otherwise, and any fees, costs, expenses, or charges), whether known or unknown, suspected or unsuspected, fixed or contingent, foreseen or unforeseen, liquidated or unliquidated, accrued and unaccrued, matured or unmatured, at law or in equity, whether class, derivative, or individual in nature, whether or not concealed or hidden, which now exist, or heretofore have existed, or can, shall or may exist, whether arising under federal, state, common, statutory, administrative or foreign law, regulation, or at equity, that (a) Lead Plaintiffs or any Class Member has asserted in this Action, or could have asserted in this Action or in any other proceeding or forum that arise out of, relate to or are based upon, the allegations, claims, transactions, facts, matters, occurrences, events, failures, representations, statements, or omissions alleged, involved, set forth, or referred to in the Complaint; (b) would have been barred by res judicata or collateral estoppel had the Action been fully litigated to a final judgment; and (c) were, could have been, or in the future could be, asserted in any forum or proceeding or otherwise by any Class Member that relate to the purchase, sale, acquisition or holding of ITT common stock during the Class Period. Released Claims do not, however, include claims to enforce this Settlement, or claims in other actions that have already been filed as of the date of execution of the Settlement and that are not consolidated with this Action.
“Released Parties” means each Defendant and his, her or its respective past, present or future directors, officers, employees, parents, partners, members, principals, agents, owners, fiduciaries, shareholders, related or affiliated entities, subsidiaries, divisions, accountants, auditors, attorneys, associates, consultants, advisors, insurers, co-insurers, reinsurers, trustees, estates, beneficiaries, administrators, foundations, underwriters, banks or bankers, personal or legal representatives, divisions, joint ventures, spouses, domestic partners, family members, heirs, executors, or any other person or entity acting or purporting to act for or on behalf of any of the Defendants, and each of their respective predecessors, successors and assigns, and any trusts for which any of them are trustees, settlors, or beneficiaries.Back To Top
Lead Counsel has not received any payment for its services in pursuing claims against Defendants on behalf of the Class, nor has Lead Counsel been reimbursed for its out-of-pocket expenses. Before final approval of the Settlement, Lead Counsel intends to apply to the Court for an award of attorneys’ fees from the Settlement Fund in an amount not to exceed 28% of the Settlement Fund (or $4,749,500.00), plus interest at the same rate and for the same time period as earned by the Settlement Fund. At the same time, Lead Counsel also intends to apply for the reimbursement of certain expenses paid or incurred in connection with the prosecution and resolution of the Action in an amount not to exceed $750,000.00, plus interest at the same rate and for the same time period as earned by the Settlement Fund. In addition, Lead Counsel may also apply for reimbursements for, among other things, litigation-related expenses of Lead Plaintiffs in accordance with 15 U.S.C. § 78u-4(a)(4). The sums approved by the Court will be paid from the Settlement Fund. Class Members are not personally liable for the payment of these sums.Back To Top
If you purchased or acquired ITT common stock, and you are not excluded from the definition of the Class and you do not timely exclude yourself from the Class in the manner provided in the Notice, then you are a member of the Class and you will be bound by the proposed Settlement if the Court approves it, and by any judgment or determination of the Court affecting the Class. If you are a member of the Class, you must submit a Proof of Claim Form and supporting documentation to establish your entitlement to share in the Settlement. A Proof of Claim Form is included with the Notice, or you may go to the website maintained by the Claims Administrator for the Settlement to request that a Proof of Claim Form be mailed to you. You may also request a Proof of Claim Form by calling toll-free (877) 271-1547 or emailing info@ITTSecuritiesSettlement.com. Click here to obtain a copy of the Proof of Claim Form or you can also download from Lead Counsel’s website at www.cohenmilstein.com. Those who exclude themselves from the Class, and those who do not submit timely and valid Proof of Claim Forms with adequate supporting documentation, will not be eligible to share in the Settlement. Please retain all records of your ownership of, or transactions in, ITT common stock during the Class Period, as they may be needed to document your claim. Do not submit original documentation with your Proof of Claim Form – submit copies only – because materials submitted will not be returned.
As a Class Member, you are represented by Lead Plaintiffs and Lead Counsel unless you enter an appearance through counsel of your own choice at your own expense. You are not required to retain your own counsel, but if you choose to do so, such counsel must file a notice of appearance on your behalf and must serve copies of his or her notice of appearance on the attorneys listed in FAQ 13.
If you do not wish to remain a Class Member, you may exclude yourself from the Class by following the instructions in FAQ 10.
If you wish to object to the Settlement or any of its terms, the proposed Plan of Allocation, or Lead Counsel’s application for attorneys’ fees and reimbursement of Litigation Expenses, and if you do not exclude yourself from the Class, you may present your objections by following the instructions in FAQ 13.Back To Top
Each Class Member will be bound by all determinations and judgments in this lawsuit, including those concerning the Settlement and the releases contained therein, whether favorable or unfavorable, unless such person or entity mails, by first class mail (or its equivalent outside the U.S.), or otherwise delivers a written request for exclusion from the Class, addressed to:
ITT Securities Settlement
PO Box 3058
Portland, OR 97208-3058
The exclusion request must be received by no later than February 16, 2016. Each request for exclusion must clearly indicate the name, address and telephone number of the person or entity seeking exclusion, that the sender requests to be excluded from the Class in In re ITT Educational Services, Inc. Securities Litigation, Case No. 13-cv-1620-JPO (S.D.N.Y.), and must be signed by such person or entity. Such persons or entities requesting exclusion are also required to provide the following information:
Please keep a copy of everything you send by mail, in case it is lost during shipping.
If a person or entity requests to be excluded from the Class, that person or entity will not receive any benefit provided for in the Settlement.
You cannot exclude yourself from the Class by telephone or by email.Back To Top
Objecting is simply telling the Court that you do not like something about the Settlement. You can object to the Settlement only if you stay in the Class. Excluding yourself is telling the Court that you do not want to be part of the Class. If you exclude yourself, you have no basis to object because the case no longer applies to you.Back To Top
The Final Approval Hearing will be held on March 8, 2016, at 11:00 a.m., before the Honorable J. Paul Oetken at the United States District Court for the Southern District of New York, 40 Foley Square, Courtroom 706, New York, New York 10007. The Court has the right to approve the Settlement, the Plan of Allocation or the request for attorneys’ fees and reimbursement of Litigation Expenses at or after the Final Approval Hearing without further notice to the members of the Class.Back To Top
To object, you must send a letter, brief or other writing saying that you object to the Settlement in In re ITT Educational Services, Inc. Securities Litigation, Case No. 13-cv-1620-JPO, and explaining in detail the basis for your objection or objections. Be sure to include:
Persons or entities who intend to object to the Settlement, the Plan of Allocation and/or to Lead Counsel’s application for an award of attorneys’ fees and reimbursement of Litigation Expenses must include a list of cases in which you or your counsel have appeared as settlement objectors or counsel for objectors in the preceding five years.
You must send the letter to:
|Clerk’s Office||Lead Counsel for the Class||Defendants’ Counsel|
COURT FOR THE SOUTHERN
DISTRICT OF NEW YORK
500 Pearl Street
New York, NY 10007
COHEN MILSTEIN SELLERS & TOLL PLLC
Carol V. Gilden
190 South LaSalle St.
Chicago, IL 60603
GIBSON, DUNN & CRUTCHER LLP
Jennifer L. Conn
00 Park Avenue
New York, NY 10166
You may not object to the Settlement, or any aspect of it, if you are not a member of the Class or if you excluded yourself from the Class.
If you wish to be heard orally at the Final Approval Hearing in opposition to the approval of the Settlement, the Plan of Allocation, or Lead Counsel’s request for an award of attorneys’ fees and reimbursement of Litigation Expenses, and if you have filed and served a timely written objection as described above, you also must notify the above counsel on or before February 16, 2016, concerning your intention to appear. Persons or entities who intend to object and desire to present evidence at the Final Approval Hearing must include in their written objections the identity of any witnesses they may call to testify and exhibits they intend to introduce into evidence at the hearing.
You may file a written objection without having to appear at the Final Approval Hearing. You may not appear at the Final Approval Hearing to present your objection, however, unless you first filed and served a written objection in accordance with the procedures described above, unless the Court orders otherwise.
You are not required to hire an attorney to represent you in making written objections or in appearing at the Final Approval Hearing. If you decide to hire an attorney at your own expense, he or she must file a notice of appearance with the Court and serve it on Lead Counsel so that the notice is received on or before February 16, 2016.
If you object to the Settlement, the Plan of Allocation and/or Lead Counsel’s request for an award of attorneys’ fees and reimbursement of Litigation Expenses, or otherwise request to be heard at the Final Approval Hearing in the manner stated above, you are submitting to the jurisdiction of the Court with respect to the subject matter of the Settlement, including, but not limited to, the release of the Released Claims contained in the Judgment. If the Court overrules your objection and approves the Settlement or the part of the Settlement to which you have objected, you only will potentially share in the Net Settlement Fund if you file a Proof of Claim Form in the manner stated in ¶ 48 in the Notice and the Claims Administrator approves your claim.
Please Note: The Final Approval Hearing may be adjourned by the Court without further written notice to the Class. Any new date for the Final Approval Hearing will be posted on this website. If you intend to attend the Final Approval Hearing, you should confirm the date and time with Lead Counsel.Back To Top
If you purchased or otherwise acquired ITT common stock for the beneficial interest of a person or organization other than yourself, you must either (i) within fourteen (14) days after you receive a Notice package, request from the Claims Administrator sufficient copies of the Notice and the Proof of Claim Form to forward to all such beneficial owners, and within fourteen (14) days of receipt of the copies of the Notice and the Proof of Claim Form forward them to all such beneficial owners; or (ii) within fourteen (14) days after you receive this Notice, provide a list of the names and addresses of all such beneficial owners (preferably in electronic format (e.g., Excel .csv)) to ITT Securities Settlement, PO Box 3058, Portland, OR 97208-3058, or by email to info@ITTSecuritiesSettlement.com.
If you choose the second option, the Claims Administrator will send a copy of the Notice and the Proof of Claim Form to each beneficial owner whose name and address you provide. Upon full compliance with these directions, nominees may seek reimbursement of their reasonable expenses actually incurred by providing the Claims Administrator with proper documentation supporting the expenses for which reimbursement is sought. Copies of the Notice may also be obtained by calling the Claims Administrator at (877) 271-1547. Copies of the Notice may be downloaded by clicking here, or from Lead Counsel’s website, www.cohenmilstein.com.Back To Top
The Notice contains only a summary of the terms of the proposed Settlement. More detailed information about the matters involved in the Action is available at the important documents tab, including, among other documents, copies of the Settlement and the Complaint. All inquiries concerning the Notice should be directed to:
ITT Securities Litigation
PO Box 3058
Portland, OR 97208-3058
COHEN MILSTEIN SELLERS & TOLL PLLC
Carol V. Gilden
190 South LaSalle Street
Chicago, IL 60603
DO NOT CALL OR WRITE THE COURT OR THE OFFICE OF THE CLERK OF COURT.Back To Top