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Federal Court Turns Down Oregon's Attempt To Sue For-Profit College

The 9th Circuit Court of Appeals ruled against the State of Oregon in a lawsuit against the company that operates the University of Phoenix.
The 9th Circuit Court of Appeals ruled against the State of Oregon in a lawsuit against the company that operates the University of Phoenix.

Oregon has failed in its attempt to recover millions from a bad investment in a for-profit university.

A federal appeals court this week ruled against the state and in favor of the company that operates the University of Phoenix.

Four years ago, three retirement funds -- including the primary Oregon public workers pension fund -- filed a shareholder lawsuit against the Apollo Group, which is the parent company of the University of Phoenix. They claimed that the university made false and misleading statements about how many students would enroll there and how much they'd pay in tuition.

The state said at the time that its pension fund had lost $10 million as a result.

But a panel of federal judges on the 9th U.S. Circuit Court of Appeals this week upheld a lower court's ruling that said the University of Phoenix didn't cross the line with its optimistic projections of future profits. The judges said the company was engaging in so-called "business puffery". That's essentially a legal form of exaggeration.

A spokesman for the Oregon Department of Justice said the agency is reviewing the opinion and had no additional comment.

Copyright 2014 Northwest News Network

Chris Lehman covers the Oregon state capitol for JPR as part of the Northwest News Network, a group of 12 Northwest public radio organizations which collaborate on regional news coverage. Chris graduated from Temple University with a journalism degree in 1997. He began his career producing arts features for Red River Public Radio in Shreveport, Louisiana and has been a reporter/announcer for NPR station WNIJ in DeKalb, Illinois. Chris has also reported from overseas, filing stories from Iraq, Burkina Faso, El Salvador, Northern Ireland, Zimbabwe and Uganda.
Chris Lehman
Chris Lehman graduated from Temple University with a journalism degree in 1997. He landed his first job less than a month later, producing arts stories for Red River Public Radio in Shreveport, Louisiana. Three years later he headed north to DeKalb, Illinois, where he worked as a reporter and announcer for NPR–affiliate WNIJ–FM. In 2006 he headed west to become the Salem Correspondent for the Northwest News Network.