Laureate Education, Inc.
IN RE LAUREATE EDUCATION, INC. SHAREHOLDER LITIGATION, CASE NO. 24-C-07-000664 (CIRCUIT COURT FOR BALTIMORE CITY)
In January 2007, Abbey Spanier and its co-counsel brought this case on behalf of holders of Laureate Education, Inc. ("Laureate" or the "Company") common stock challenging the decision of Laureate's Board of Directors (the "Board") to sell the Company to a consortium of private equity investors (defined herein as the "Investor Group") led by the Company's CEO and Chairman, Douglas Becker ("Becker"). Plaintiffs allege the Transaction and corresponding loss to shareholders resulted from the failure of the Board and management to act properly including by acting in bad faith, with improper motive, and without due care. The Board failed to conduct a proper market check as to the value of the Company such that the Transaction was advanced through an unfair process, for unfair consideration and in violation of the duties of the Board and management.
On November 12, 2009, the Maryland Court of Appeals, the highest court in the state, reversed the decision of the trial court and the Court of Special Appeals and issued a decision addressing an issue of first impression in Maryland. The Court of Appeals held that where corporate directors exercise non-managerial duties outside the scope of Md. Code, Corporations and Associations Article §2-405.1(a), such as negotiating the price that shareholders will receive for their shares in a cash-out merger transaction, after the decision to sell the corporation already has been made, the directors may be liable directly to the shareholders for any breach of their common law fiduciary duties of candor and maximization of shareholder value.
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