Tarapara v. K12 Inc. et al

Filing 109

Order by Judge Phyllis J. Hamilton granting 105 Motion for Preliminary Approval of Settlement.(pjhlc1S, COURT STAFF) (Filed on 2/14/2019)

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF CALIFORNIA
OAKLAND JUDICIAL DIVISION

In re K12 INC. SECURITIES
LITIGATION

Master File No. 4:16-cv-04069-PJH
Honorable Phyllis J. Hamilton

[PROPOSED] ORDER PRELIMINARILY APPROVING
SETTLEMENT AND PROVIDING FOR NOTICE
WHEREAS, a consolidated class action is pending in this Court entitled In re K12 Inc. Sec.
Litig., Master File No. 4:16-cv-04069-PJH (the “Action”);
WHEREAS, (a) Lead Plaintiff Babulal Tarapara, on behalf of himself and the Settlement
Class (defined below), and (b) Defendant K12 Inc. (“K12”), along with Defendants Nathaniel A.
Davis (“Davis”) and James J. Rhyu (“Rhyu”) (the “Individual Defendants” and, together with K12,
the “Defendants”; and, together with Lead Plaintiff, the “Parties”) have determined to settle all
claims asserted or that could have been asserted against Defendants in this Action with prejudice
on the terms and conditions set forth in the Stipulation and Agreement of Settlement dated
November 26, 2018 (the “Stipulation”) subject to approval of this Court (the “Settlement”);
WHEREAS, Lead Plaintiff has made an application, pursuant to Rule 23 of the Federal
Rules of Civil Procedure, for an order preliminarily approving the Settlement in accordance with
the Stipulation, certifying the Settlement Class for purposes of the Settlement only, and allowing
notice to Settlement Class Members as more fully described herein;
WHEREAS, the Court has read and considered: (a) Lead Plaintiff’s motion for preliminary
approval of the Settlement, and the papers filed and arguments made in connection therewith; and

[PROPOSED] ORDER

(b) the Stipulation and the exhibits attached thereto; and
WHEREAS, unless otherwise defined herein, all capitalized words contained herein shall
have the same meanings as they have in the Stipulation;
NOW THEREFORE, IT IS HEREBY ORDERED:
1.

Class Certification for Settlement Purposes – Pursuant to Rule 23(a) and (b)(3)

of the Federal Rules of Civil Procedure, the Court certifies, solely for purposes of effectuating the
proposed Settlement, a Settlement Class consisting of all Persons1 who or which purchased or
otherwise acquired K12 Securities2 between October 10, 2013 and October 27, 2015, inclusive
(the “Settlement Class Period”), and were damaged thereby. Excluded from the Settlement Class
are K12, Nathaniel A. Davis, James J. Rhyu, the Officers and directors of K12 at all relevant times,
member of their Immediate Families and their legal representatives, heirs, successors, or assigns;
any entity in which Defendants have or had a controlling interest; any trust of which Nathaniel A.
Davis and/or James J. Rhyu is the settlor or which is for the benefit of their Immediate Family
members; and the legal representatives, agents, affiliates, heirs, successors-in-interest or assigns
of any such excluded party. Also excluded from the Settlement Class are any Persons who or
which exclude themselves by submitting a request for exclusion that is accepted by the Court.
2.

Class Findings – Solely for purposes of the proposed Settlement of this Action, the

Court finds that each element required for certification of the Settlement Class pursuant to Rule
23 of the Federal Rules of Civil Procedure has been met: (a) the members of the Settlement Class

“Person” or “Persons” means an individual, corporation (including all divisions and subsidiaries),
general or limited partnership, association, joint stock company, joint venture, limited liability
company, professional corporation, estate, legal representative, trust, unincorporated association,
government or any political subdivision or agency thereof, and any other business or legal entity.
1

“K12 Securities” means K12 common stock publicly traded on the New York Stock Exchange
(“NYSE”).
2

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are so numerous that their joinder in the Action would be impracticable; (b) there are questions of
law and fact common to the Settlement Class which predominate over any individual questions;
(c) the claims of Lead Plaintiff in the Action are typical of the claims of the Settlement Class; (d)
Lead Plaintiff and Lead Counsel have and will fairly and adequately represent and protect the
interests of the Settlement Class; and (e) a class action is superior to other available methods for
the fair and efficient adjudication of the Action.
3.

The Court hereby finds and concludes that, pursuant to Rule 23 of the Federal Rules

of Civil Procedure and for the purposes of the Settlement only, Lead Plaintiff Babulal Tarapara is
an adequate class representative and certifies him as Class Representative for the Settlement Class.
The Court also appoints Lead Counsel as Class Counsel for the Settlement Class, pursuant to Rule
23(g) of the Federal Rules of Civil Procedure.
4.

Preliminary Approval of the Settlement – The Court hereby preliminarily

approves the Settlement, as embodied in the Stipulation, as being fair, reasonable, and adequate to
the Settlement Class, subject to further consideration at the Settlement Hearing to be conducted as
described below.
5.

Settlement Hearing – The Court will hold a settlement hearing (the “Settlement

Hearing”) on July 10, 2019 at 9:00 a.m. in Courtroom 3, 3rd Floor, Ronald V. Dellums Federal
Building & United States Courthouse, 1301 Clay Street, Oakland, CA 94612, for the following
purposes: (a) to determine whether the proposed Settlement on the terms and conditions provided
for in the Stipulation is fair, reasonable, and adequate to the Settlement Class, and should be
approved by the Court; (b) to determine whether a Judgment substantially in the form attached as
Exhibit B to the Stipulation should be entered dismissing the Action with prejudice against
Defendants; (c) to determine whether the proposed Plan of Allocation for the proceeds of the

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Settlement is fair and reasonable and should be approved; (d) to determine whether the motion by
Lead Counsel for an award of attorneys’ fees and reimbursement of Litigation Expenses should be
approved; and (e) to consider any other matters that may properly be brought before the Court in
connection with the Settlement. Notice of the Settlement and the Settlement Hearing shall be
given to Settlement Class Members as set forth in paragraph 7 of this Order.
6.

The Court may adjourn the Settlement Hearing without further notice to the

Settlement Class, and may approve the proposed Settlement with such modifications as the Parties
may agree to, if appropriate, without further notice to the Settlement Class.
7.

Retention of Claims Administrator and Manner of Giving Notice – Lead

Counsel is hereby authorized to retain Epiq Class Action & Mass Tort Solutions, Inc. (the “Claims
Administrator”) to supervise and administer the notice procedure in connection with the proposed
Settlement as well as the processing of Claims as more fully set forth below. Notice of the
Settlement and the Settlement Hearing shall be given by Lead Counsel as follows:
a.

not later than fifteen (15) calendar days after entry of this Order, K12 shall

provide or cause to be provided to Lead Counsel or the Claims Administrator in electronic,
searchable format (at no cost to the Settlement Fund, Lead Counsel, or the Claims Administrator)
a list of the names and last known addresses of the Persons who purchased or otherwise acquired
K12 Securities during the Settlement Class Period;
b.

not later than twenty (20) business days after the date of entry of this Order

(the “Notice Date”), the Claims Administrator shall cause a copy of the Postcard Notice,
substantially in the form attached hereto as Exhibit 4, to be mailed by first-class mail to potential
Settlement Class Members at the addresses set forth in the records provided by K12 or in the

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records which K12 caused to be provided, or who otherwise may be identified through further
reasonable effort;
c.

contemporaneously with the mailing of the Postcard Notice, the Claims

Administrator shall cause copies of the Notice and the Claim Form to be posted on a website to be
developed for the Settlement, from which copies of the Notice and Claim Form can be
downloaded;
d.

not later than ten (10) business days after the Notice Date, the Claims

Administrator shall cause the Summary Notice, substantially in the form attached hereto as Exhibit
3, to be published once in Investor’s Business Daily and to be transmitted once over the PR
Newswire; and
e.

not later than seven (7) calendar days prior to the Settlement Hearing, Lead

Counsel shall serve on Defendants’ Counsel and file with the Court proof, by affidavit or
declaration, of such mailing and publication.
8.

Approval of Form and Content of Notice – The Court (a) approves, as to form

and content, the Notice, the Claim Form, the Summary Notice, and the Postcard Notice attached
hereto as Exhibits 1, 2, 3, and 4, respectively, and (b) finds that the mailing and distribution of the
Postcard Notice, the posting of the Notice and Claim Form online, and the publication of the
Summary Notice in the manner and form set forth in paragraph 7 of this Order (i) is the best notice
practicable under the circumstances; (ii) constitutes notice that is reasonably calculated, under the
circumstances, to apprise Settlement Class Members of the pendency of the Action, of the effect
of the proposed Settlement (including the Releases to be provided thereunder), of Lead Counsel’s
motion for an award of attorneys’ fees and reimbursement of Litigation Expenses, of their right to
object to the Settlement, the Plan of Allocation, and/or Lead Counsel’s motion for attorneys’ fees

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and reimbursement of Litigation Expenses, of their right to exclude themselves from the
Settlement Class, and of their right to appear at the Settlement Hearing; (iii) constitutes due,
adequate, and sufficient notice to all persons and entities entitled to receive notice of the proposed
Settlement; and (iv) satisfies the requirements of Rule 23 of the Federal Rules of Civil Procedure,
the United States Constitution (including the Due Process Clause), the Private Securities Litigation
Reform Act of 1995, 15 U.S.C. § 78u-4, as amended, and all other applicable law and rules. The
date and time of the Settlement Hearing shall be included in the Postcard Notice, Notice, and
Summary Notice before they are mailed, posted online, and published, respectively.
9.

Nominee Procedures – Brokers and other nominees who purchased or otherwise

acquired K12 Securities during the Settlement Class Period for the benefit of another Person shall
(a) within seven (7) calendar days of receipt of the Postcard Notice, request from the Claims
Administrator sufficient copies of the Postcard Notice to forward to all such beneficial owners and
within seven (7) calendar days of receipt of those Postcard Notices forward them to all such
beneficial owners; or (b) within seven (7) calendar days of receipt of the Postcard Notice, send a
list of the names and addresses of all such beneficial owners to the Claims Administrator in which
event the Claims Administrator shall promptly mail the Postcard Notice to such beneficial owners.
Upon full compliance with this Order, such nominees may seek reimbursement of their reasonable
expenses actually incurred in complying with this Order, up to a maximum of $0.15 per notice, by
providing the Claims Administrator with proper documentation supporting the expenses for which
reimbursement is sought.

Such properly documented expenses incurred by nominees in

compliance with the terms of this Order shall be paid from the Settlement Fund, with any disputes
as to the reasonableness or documentation of expenses incurred subject to review by the Court.

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10.

Participation in the Settlement – Settlement Class Members who wish to

participate in the Settlement and to be eligible to receive a distribution from the Net Settlement
Fund must complete and submit a Claim Form in accordance with the instructions contained
therein. Unless the Court orders otherwise, all Claim Forms must be delivered or postmarked no
later than one hundred twenty (120) calendar days after the Notice Date. Notwithstanding the
foregoing, Lead Counsel may, at its discretion, advise the Claims Administrator to accept for
processing late Claims provided such acceptance does not delay the distribution of the Net
Settlement Fund to the Settlement Class. By submitting a Claim, a Person shall be deemed to have
submitted to the jurisdiction of the Court with respect to his, her, or its Claim and the subject matter
of the Settlement.
11.

Each Claim Form submitted must satisfy the following conditions: (a) it must be

properly completed, signed and submitted in a timely manner in accordance with the provisions of
the preceding paragraph; (b) it must be accompanied by adequate supporting documentation for
the transactions and holdings reported therein, in the form of broker confirmation slips, broker
account statements, an authorized statement from the broker containing the transactional and
holding information found in a broker confirmation slip or account statement, or such other
documentation as is deemed adequate by Lead Counsel or the Claims Administrator; (c) if the
Person executing the Claim Form is acting in a representative capacity, a certification of that
Person’s current authority to act on behalf of the Settlement Class Member must be included in
the Claim Form to the satisfaction of Lead Counsel or the Claims Administrator; and (d) the Claim
Form must be complete and contain no material deletions or modifications of any of the printed
matter contained therein and must be signed under penalty of perjury.

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12.

Any Settlement Class Member that does not timely and validly submit a Claim

Form or whose Claim is not otherwise approved by the Court: (a) shall be deemed to have waived
his, her, or its right to share in the Net Settlement Fund; (b) shall be forever barred from
participating in any distributions therefrom; (c) shall be bound by the provisions of the Stipulation
and the Settlement and all proceedings, determinations, orders, and judgments in the Action
relating thereto, including, without limitation, the Judgment or Alternate Judgment, if applicable,
and the Releases provided for therein, whether favorable or unfavorable to the Settlement Class;
and (d) will be barred from commencing, maintaining, or prosecuting any of the Released
Plaintiffs’ Claims against each and all of the Defendants’ Released Parties, as more fully described
in the Stipulation and Notice. Notwithstanding the foregoing, late Claim Forms may be accepted
for processing as set forth in paragraph 10 above.
13.

Exclusion From the Settlement Class – Any member of the Settlement Class who

wishes to exclude himself, herself or itself from the Settlement Class must request exclusion in
writing within the time and in the manner set forth in the Notice, which shall provide that: (a) any
such request for exclusion from the Settlement Class must be mailed or delivered such that it is
received no later than twenty-one (21) calendar days prior to the Settlement Hearing, to: K12
Securities Litigation, EXCLUSIONS, c/o Epiq Class Action & Mass Tort Solutions, Inc., P.O.
Box 2312, Portland, OR 97208-2312 and (b) each request for exclusion must (i) state the name,
address, and telephone number of the Person requesting exclusion, and in the case of entities, the
name and telephone number of the appropriate contact person; (ii) state that such Person “requests
exclusion from the Settlement Class in In re K12 Securities Litigation, Master File No. 4:16-cv04069-PJH”; (iii) state the number of K12 Securities that the Person requesting exclusion
purchased/acquired and/or sold during the Settlement Class Period, as well as the dates and prices

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of each such purchase/acquisition and sale; and (iv) be signed by the Person requesting exclusion
or an authorized representative. A request for exclusion shall not be effective unless it provides
all the required information and is received within the time stated above, or is otherwise accepted
by the Court.
14.

Any Person who or which timely and validly requests exclusion in compliance with

the terms stated in this Order and is excluded from the Settlement Class shall not be a Settlement
Class Member, shall not be bound by the terms of the Settlement or any orders or judgments in the
Action, and shall not receive any payment out of the Net Settlement Fund.
15.

Any Settlement Class Member who or which does not timely and validly request

exclusion from the Settlement Class in the manner stated in this Order: (a) shall be deemed to have
waived his, her, or its right to be excluded from the Settlement Class; (b) shall be forever barred
from requesting exclusion from the Settlement Class in this or any other proceeding; (c) shall be
bound by the provisions of the Stipulation and Settlement and all proceedings, determinations,
orders, and judgments in the Action, including, but not limited to, the Judgment or Alternate
Judgment, if applicable, and the Releases provided for therein, whether favorable or unfavorable
to the Settlement Class; and (d) will be barred from commencing, maintaining, or prosecuting any
of the Released Plaintiffs’ Claims against any of the Defendants’ Released Parties, as more fully
described in the Stipulation and Notice.
16.

Appearance and Objections at Settlement Hearing – Any Settlement Class

Member who does not request exclusion from the Settlement Class may enter an appearance in the
Action, at his, her, or its own expense, individually or through counsel of his, her, or its own choice,
by filing with the Clerk of Court a notice of appearance such that it is received no later than twentyone (21) calendar days prior to the Settlement Hearing, or as the Court may otherwise direct. Any

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Settlement Class Member who does not request exclusion from the Settlement Class and does not
enter an appearance will be represented by Lead Counsel.
17.

Any Settlement Class Member who does not request exclusion from the Settlement

Class may file a written objection to the proposed Settlement, the proposed Plan of Allocation,
and/or Lead Counsel’s motion for an award of attorneys’ fees and reimbursement of Litigation
Expenses and appear and show cause, if he, she, or it has any cause, why the proposed Settlement,
the proposed Plan of Allocation, and/or Lead Counsel’s motion for attorneys’ fees and
reimbursement of Litigation Expenses should not be approved; provided, however, that no
Settlement Class Member shall be heard or entitled to contest the approval of the terms and
conditions of the proposed Settlement, the proposed Plan of Allocation, and/or the motion for
attorneys’ fees and reimbursement of Litigation Expenses unless that Person has filed a written
objection with the Court such that it is received no later than twenty-one (21) calendar days prior
to the Settlement Hearing.
18.

Any objections, filings, and other submissions by a Settlement Class Member in

accordance with Paragraph 17 must: (a) state the name, address, and telephone number of the
Person objecting and must be signed by the objector; (b) clearly identify the case name and number
(In re K12 Inc. Securities Litigation, Master File No. 4:16-cv-04069-PJH); (c) provide a statement
of the Settlement Class Member’s objection or objections, and the specific reasons for each
objection, including any legal and evidentiary support the Settlement Class Member wishes to
bring to the Court’s attention; and (d) provide documents sufficient to prove membership in the
Settlement Class, including the number of K12 Securities that the objecting Settlement Class
Member purchased, acquired, and/or sold during the Settlement Class Period, as well as the dates
and prices of each such purchase, acquisition, and/or sale. Objectors who enter an appearance and

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desire to present evidence at the Settlement Hearing in support of their objection must include in
their written objection or notice of appearance the identity of any witnesses they may call to testify
and any exhibits they intend to introduce into evidence at the hearing.
19.

Any Settlement Class Member who neither requests exclusion from the Settlement

Class nor makes his, her, or its objection in the manner provided herein shall be deemed to have
waived his, her, or its right to object to any aspect of the proposed Settlement, the proposed Plan
of Allocation, and Lead Counsel’s motion for an award of attorneys’ fees and reimbursement of
Litigation Expenses and shall be forever barred and foreclosed from objecting to the fairness,
reasonableness, or adequacy of the Settlement, the Plan of Allocation, or the requested attorneys’
fees and Litigation Expenses, or from otherwise being heard concerning the Settlement, the Plan
of Allocation, or the requested attorneys’ fees and Litigation Expenses in this or any other
proceeding.
20.

Stay and Temporary Injunction – Until otherwise ordered by the Court, the Court

stays all proceedings in the Action other than proceedings necessary to carry out or enforce the
terms and conditions of the Stipulation. Pending final determination of whether the Settlement
should be approved, the Court bars and enjoins Lead Plaintiff, and all other members of the
Settlement Class, from commencing or prosecuting any and all of the Released Plaintiffs’ Claims
against each and all of the Defendants’ Released Parties.
21.

Settlement Administration Fees and Expenses – All reasonable costs incurred in

identifying Settlement Class Members and notifying them of the Settlement, as well as in
administering the Settlement, shall be paid as set forth in the Stipulation without further order of
the Court.

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22.

Settlement Fund – The contents of the Settlement Fund held by The Huntington

National Bank (which the Court approves as the Escrow Agent), shall be deemed and considered
to be in custodia legis of the Court, and shall remain subject to the jurisdiction of the Court, until
such time as they shall be distributed pursuant to the Stipulation and/or further order(s) of the
Court.
23.

Taxes – Lead Counsel is authorized and directed to prepare any tax returns and any

other tax reporting form for or in respect to the Settlement Fund, to pay from the Settlement Fund
any Taxes owed with respect to the Settlement Fund, and to otherwise perform all obligations with
respect to Taxes and any reporting or filings in respect thereof without further order of the Court
in a manner consistent with the provisions of the Stipulation.
24.

Termination of Settlement – If the Settlement is terminated as provided in the

Stipulation, the Settlement is not approved, or the Effective Date of the Settlement otherwise fails
to occur, this Order shall be vacated, rendered null and void, and be of no further force and effect,
except as otherwise provided by the Stipulation, and this Order shall be without prejudice to the
rights of Lead Plaintiff, the other Settlement Class Members, and Defendants, and the Parties shall
revert to their respective positions in the Action as of September 10, 2018, as provided in the
Stipulation.
25.

Use of this Order – Neither this Order, the Stipulation (whether or not

consummated), including the exhibits thereto, and the Plan of Allocation contained therein (or any
other plan of allocation that may be approved by the Court), the negotiations leading to the
execution of the Stipulation, nor any proceedings taken pursuant to or in connection with the
Stipulation and/or approval of the Settlement (including any arguments proffered in connection
therewith): (a) shall be offered against any of the Defendants’ Released Parties as evidence of, or

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construed as, or deemed to be evidence of any presumption, concession, or admission by any of
the Defendants’ Released Parties with respect to the truth of any fact alleged by Lead Plaintiff or
any other of Plaintiffs’ Released Parties, or the validity of any claim that was or could have been
asserted against any of the Defendants’ Released Parties, or the deficiency of any defense that has
been or could have been asserted in this Action or in any other litigation, or of any liability,
negligence, fault, or other wrongdoing of any kind with respect to any of the Defendants’ Released
Parties, or in any way referred to for any other reason as against any of the Defendants’ Released
Parties, in any civil, criminal, or administrative action or proceeding, other than such proceedings
as may be necessary to effectuate the provisions of the Stipulation; (b) shall be offered against any
of the Plaintiffs’ Released Parties, as evidence of, or construed as, or deemed to be evidence of
any presumption, concession, or admission by any of the Plaintiffs’ Released Parties that any of
their claims are without merit, that any of the Defendants’ Released Parties had meritorious
defenses, or that damages recoverable under the Complaint would not have exceeded the
Settlement Amount or with respect to any liability, negligence, fault, or wrongdoing of any kind,
or in any way referred to for any other reason as against any of the Plaintiffs’ Released Parties, in
any civil, criminal, or administrative action or proceeding, other than such proceedings as may be
necessary to effectuate the provisions of the Stipulation; or (c) shall be construed against any of
the Released Parties as an admission, concession, or presumption that the consideration to be given
under the Settlement represents the amount which could be or would have been recovered after
trial; provided, however, that if the Stipulation is approved by the Court, the Parties and the
Released Parties and their respective counsel may refer to it to effectuate the protections from
liability granted thereunder or otherwise to enforce the terms of the Settlement.

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26.

Supporting Papers – Lead Counsel shall file and serve the opening papers in

support of the proposed Settlement, the Plan of Allocation, and Lead Counsel’s motion for an
award of attorneys’ fees and reimbursement of Litigation Expenses no later than sixty (60) calendar
days prior to the Settlement Hearing; and reply papers, if any, shall be filed and served no later
than fourteen (14) calendar days prior to the Settlement Hearing.
27.

The Court retains jurisdiction to consider all further applications arising out of or

connected with the proposed Settlement.
SO ORDERED this 14th day of February, 2019.

________________________________________
The Honorable Phyllis J. Hamilton
United States District Judge

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