IN THE CIRCUIT COURT OF THE COUNTY OF ST. LOUIS
STATE OF MISSOURI
DOUGLAS SHARP, et al. )
v. ) Case No. 98CC-339
) Div. 10
THE CURATORS OF THE )
UNIVERSITY OF MISSOURI, )
SETTLEMENT AGREEMENT AND RELEASE
This Settlement Agreement and Release entered into this _______ day of April, 2005, by and among DOUGLAS A. SHARP, SANDRA K. LYNN and FREDERICK J. ECCHER III, on their individual behalf and on behalf of all members of the class of Plaintiffs (hereinafter referred to collectively as "Plaintiffs" and referred to individually by their last names), and THE CURATORS OF THE UNIVERSITY OF MISSOURI, a public corporation and body politic (hereinafter referred to as "Defendant").
WHEREAS, Plaintiffs initiated this class action lawsuit in January 1998 against Defendant, primarily seeking injunctive relief and a declaratory judgment regarding their allegations that Defendant had been and was violating the provisions of Section 172.360, RSMo 1998, by charging tuition to Missouri youth over the age of sixteen years enrolled in undergraduate classes at the University of Missouri-Columbia, the University of Missouri-Kansas City, the University of Missouri-Rolla and the University of Missouri-St. Louis (hereinafter referred to as "the lawsuit"); and
WHEREAS, Defendant denied those allegations and raised numerous legal and factual defenses to said lawsuit; and
WHEREAS, effective August 28, 2001, the Missouri General Assembly amended the provisions of Section 172.360, RSMo 1998 to expressly permit the Defendant to charge tuition to Missouri youth over the age of sixteen years enrolled in undergraduate classes at the University of Missouri-Columbia, the University of Missouri-Kansas City, the University of Missouri-Rolla and the University of Missouri-St. Louis; and
WHEREAS, in December 2001, the parties hereto tried the liability phase of this lawsuit in the Circuit Court of the County of St. Louis; and
WHEREAS, on December 6, 2002, the Court issued its decision on the liability phase of this lawsuit and ruled that the legal defenses raised by Defendant, though substantial, were insufficient to permit the Court to rule in Defendant’s favor as a matter of law and ruled further that Defendant had violated the provisions of Section 172.360, RSMo 1998, as it read at the time the class action lawsuit was filed, by charging educational fees, which the Court found to be synonymous with tuition, to Missouri youth over the age of sixteen years enrolled in undergraduate classes at the University of Missouri-Columbia, the University of Missouri-Kansas City, the University of Missouri-Rolla and the University of Missouri-St. Louis; and
WHEREAS, the Court’s December 6, 2002 decision did not answer any issues regarding what remedy, if any, was appropriate under the circumstances, leaving such determination to be made in a subsequent phase of the litigation; and
WHEREAS, the parties hereto, with the assistance of the Special Master appointed by the Court, have reached a settlement and compromise in connection with this pending lawsuit which, contingent upon approval by the Court, would resolve this pending litigation eliminating for all parties hereto the extraordinary expense of litigation and appeal and the risk of adverse result; and
WHEREAS, the parties hereto acknowledge that this settlement is not intended to and should not be construed as an admission of liability by the Defendant or any of its officers, agents, employees or attorneys, all of whom expressly deny any such liability;
NOW, THEREFORE, in consideration of the foregoing premises and the individual and mutual promises contained herein, the parties hereto agree as follows:
1. COURT APPROVAL IS CONDITION PRECEDENT--This Settlement Agreement and Release shall not be effective nor enforceable unless and until final approval of the settlement by the Court based upon a determination by the Court that the terms and conditions are deemed to be fair, reasonable and in the best interest of the class members and the entry of a Final Judgment by the Court dismissing the lawsuit with prejudice.
2. SETTLEMENT CLASS DEFINITION-- The parties hereto agree that the class shall be defined as follows:
All individuals who were enrolled as a Missouri resident undergraduate student at one of Defendant’s four campuses during the time period between the first day of classes in Winter/Spring Semester 1995 (beginning in January 1995) and the first day of classes in Fall Semester 2001 (beginning August 2001) and who had reached their sixteenth birthday and who had not reached their twenty-second birthday prior to the first day of classes of at least one semester during the above-described time period.
3. CLASS CERTIFICATION FOR SETTLEMENT PURPOSES ONLY--If this Settlement Agreement and Release is not approved by the Court in complete accordance with the terms of this Settlement Agreement and Release, Defendant will not be deemed to have consented to certification of any class, and will retain all rights to object to or oppose any motion for class certification, including certification of the identical class provided herein or any modification of the class certified by the Court. Further, if this Settlement Agreement and Release is not approved by the Court in complete accordance with the terms of this Settlement Agreement and Release, then this Settlement Agreement and Release and all negotiations, proceedings, documents prepared, and statements made in connection herewith shall be without prejudice to Plaintiffs and Defendant, shall not be deemed or construed to be an admission or confession by Plaintiffs or Defendant of any fact, matter, or proposition of law, and shall not be used in any manner for any purpose, and Plaintiffs and Defendant shall stand in the same position as if this Settlement Agreement and Release had not been negotiated, made or filed with the Court.
4. ESTABLISHMENT OF SCHOLARSHIP FUND--The Defendant agrees to establish a scholarship fund in the principal amount of ten million dollars ($10,000,000.00), which fund will be administered by the Defendant under the policies and procedures which the Defendant utilizes and has established for the investment, management and distribution of earnings of its scholarship funds. The fund shall be established to provide scholarships to class members, spouses of class members and natural or adopted children of class members to assist those individuals to attend any campus of the University to take a course or courses for which academic credit from said campus may be earned. In the event that applications from eligible individuals exceed the number of scholarships available in any given year, the class members themselves would have priority over spouses and children of class members. Applications for such scholarships would be made annually and are not automatically renewable. The scholarship fund is to remain in existence for twenty-five years (25), with the express understanding that the corpus of scholarship fund may be invaded for funding scholarships with the intention that the entire corpus and actual earnings thereon, or as much thereof as is reasonably possible given the demand by eligible applicants, would be utilized for the stated purposes prior to the 25th anniversary date of the establishment of such scholarship fund; provided, however, that in no event will the Defendant be obligated to contribute to such scholarship fund any amount in excess of the original amount of $10,000,000 plus the actual earnings thereon whatever such earnings may be. Whatever portion of the corpus and the actual earnings thereon remains on said 25th anniversary date will be transferred by the Defendant to its general scholarship fund(s). Details with regard to the number and the amount of said scholarships available in any given academic year and other terms and conditions of said scholarships will be determined by the parties hereto on or before the hearing on preliminary approval of this Settlement Agreement and Release, after consultation with an actuary selected in accordance with the provisions of Paragraph 11 hereof.
An annual report of the disposition of the funds from said scholarship fund during the previous fiscal year shall be made available on-line by the Defendant within sixty (60) days of the closing of accounting records for said previous fiscal year, but such on-line report shall not contain any information protected from disclosure by the provisions of the federal law known as the Family Educational Rights and Privacy Act (FERPA). Defendant shall participate, at its own expense, in the defense of any challenges to the terms and conditions of this Settlement Agreement and Release.
The settlement will not be adversely affected if the parties fail to agree on the terms and conditions of the scholarship, but in that event, the Court, in consultation with the parties, will specify said terms and conditions and the settlement will go forward.
5. TIME FOR ESTABLISHMENT OF SCHOLARSHIP FUND--The scholarship fund referenced in the preceding paragraph shall be established within ten (10) days following the expiration of time for appealing the Court’s Final Judgment approving said settlement or, if said judgment is appealed, within ten (10) days following affirmation of said judgment.
6. PAYMENT TO NAMED PLAINTIFFS FOR TIME AND EFFORT--In addition to the establishment of the scholarship fund described in Paragraph 4 hereof, the Defendant will pay the sum of Twenty Seven Thousand Dollars ($27,000.00) total to the named Plaintiffs, SHARP, LYNN and ECCHER, with the same to be divided by the named Plaintiffs as they and Plaintiff’s counsel shall agree and if they cannot so agree, then as Special Master Richard Ralston shall determine to be appropriate. The above sum shall be paid as compensation to named Plaintiffs for the time, effort and commitment by named Plaintiffs in prosecution of this case, including time spent in discovery, including deposition and time devoted to preparation for and the trial of the liability portion of this case. The payment shall be made at the time specified in Paragraph 7 below.
7. PAYMENT OF PLAINTIFFS’ ATTORNEY’S FEES--In addition to the establishment of the scholarship fund described in Paragraph 3 hereof and any other payments called for by this Settlement Agreement and Release, the Defendant will pay to Plaintiff’s counsel upon approval by the Court the amount of One Million Dollars ($1,000,000.00) as attorney’s fees for services rendered for the benefit of all Plaintiffs in this case, which all parties hereto agree is a reasonable amount of attorneys’ fee. The payment will be made within ten (10) days following the expiration of time for appealing the Court’s Final Judgment approving said settlement or, if said judgment is appealed, within ten (10) days following affirmation of said judgment.
8. REIMBURSEMENT FOR PLAINTIFFS’ ATTORNEY’S EXPENSES--In addition to the establishment of the scholarship fund described in Paragraph 4 hereof and the payment described in Paragraph 6 hereof, the Defendant will pay to Plaintiff’s counsel the amount of Seventeen Thousand Seven Hundred Sixty Dollars ($17,760.00) as reimbursement of certain expenses incurred by Plaintiff’s counsel in prosecution of this case, with payment to be made at the time specified in Paragraph 7 above. In light of the foregoing payment and the payments described in Paragraphs 9 and 10 below, Plaintiffs agree that they will not seek to recover court costs for any expenses reimbursed to Plaintiffs’ counsel pursuant to this provision nor for the payments made by Defendant to the Special Master or to the actuary, pursuant to Paragraphs 9 and 10 respectively.
9. PAYMENT TO SPECIAL MASTER--Defendant shall pay all reasonable fees of the Special Master for services rendered for the Court and the parties as Special Master to conduct discovery and serve as mediator in this case, whether incurred prior to or subsequent to the execution of this Settlement Agreement and Release, with payment to be made at such time as the Court shall direct in its future order approving such fees.
10. SELECTION OF AND PAYMENT TO ACTUARY--The parties will endeavor to agree upon the selection of an actuary to assist in the design of said scholarship fund. In the event the parties are unable to reach such an agreement, the actuary shall be appointed by the Court. Defendant shall pay the reasonable expenses of said actuary, incurred subsequent to such selection, but not in excess of the amount approved by Court.
11. NEGOTIATIONS--Settlement negotiations have taken place between counsel for Plaintiffs and counsel for Defendant under the auspices of the Special Master in which terms of the Settlement Agreement and Release were agreed to in principle. Plaintiffs and Defendant did not enter into negotiations regarding payments to the named Plaintiffs, attorneys’ fees and expenses (as embodied in Paragraphs 6, 7 and 8 hereof) until after Plaintiffs and Defendant had discussed, negotiated, and agreed upon the nature of the relief provided to all Plaintiffs (all members of the class as defined in Paragraph 2 above).
12. CLASS NOTIFICATION--For purposes of mailing notice to all Plaintiffs (all members of the class as defined in Paragraph 2 above) and establishing that the best practicable notice has been given, membership in the class of Plaintiffs (as defined in Paragraph 2 above) as of the date of preliminary approval of this Settlement Agreement and Release shall be determined from the then existing records of Defendant.
13. PAYMENT FOR NOTICE TO CLASS--Defendant shall pay all costs of providing notice to all Plaintiffs (all members of the class as defined in Paragraph 2 above) in this class action advising all Plaintiffs of the proposed settlement of the lawsuit in such form and manner as the Court prescribes, after consultation with the parties. The parties agree that they will prepare a notice to the class that will be submitted to the Court for approval at the hearing on preliminary approval of this Settlement Agreement and Release. The parties agree that the notice shall, among other things, inform the class members that this lawsuit was brought under Rule 52.08(b)(2) of the Missouri Rules of Civil Procedure with the primary relief sought being injunctive and declaratory in nature and with any monetary relief sought being only incidental to said injunctive and declaratory relief, that the class was certified by the Court and the case was litigated pursuant to Rule 52.08(b)(2) and that the proposed settlement will effectively bind all Plaintiffs (all members of the class) to the final, total and complete disposition of this case and a total and complete release of the Defendant by the Plaintiffs (all members of the class), with no class member having the right to opt out of said settlement. The notice shall also describe the class members’ rights to object to the settlement, and the procedure by which such objections may be made and heard by the Court.
14. COURT SUBMISSION--The parties shall submit this Settlement Agreement and Release to the Court as soon as possible after it is executed. The parties shall ask the Court to pass the case for settlement based upon its preliminary review of this Settlement Agreement and Release, and to set a hearing for formal preliminary approval of the Settlement Agreement and Release. Defendant will cooperate in presenting this proposed settlement to the Court for its approval, and it will neither object to the terms and conditions of said settlement nor encourage others to do so; provided, however, that sending the notice by Defendant to class members described in Paragraph 13 hereof, informing them of their right to challenge said settlement and/or the procedure required for lodging such a challenge shall not be deemed encouragement in breach of this provision.
15. COMPLETE RELEASE OF ALL CLAIMS--SHARP, LYNN and ECCHER, for themselves individually and as representatives of all members of the class, hereby covenant and agree that in consideration of the terms of this Settlement Agreement and Release, each of them hereby waives, fully releases and forever discharges the Defendant, its governing board, all agents, officers, employees and attorneys, past and present, the University of Missouri System, the University of Missouri-Columbia, the University of Missouri-Kansas City, the University of Missouri-Rolla, the University of Missouri-St. Louis and all successors and assigns thereof, and any and all other persons, firms and corporations who on its or their behalf may be liable of and from any and every claim, demand, and cause of action of whatsoever nature which they have or may in the past have had, against them, or any of them, including but not limited to, any and every claim, demand and cause of action of whatsoever nature, whether in law or in equity, whether in contract or in tort, whether known or unknown, related in any way whatsoever, either direct or indirect, to the charges by Defendant to them or on their behalf for tuition, educational fees or any other fees charged by Defendant to them during their enrollment as a student at one of Defendant’s campuses whether contained in this pending lawsuit or which could have been contained in the aforesaid lawsuit, including attorney's fees, allegedly sustained by or accruing to them in connection with said charges. Nothing contained in this Settlement Agreement and Release is intended to release any claim for breach of this Settlement Agreement and Release that occurs or is alleged to have occurred subsequent to the approval of same by the Court and the parties hereto expressly agree that, after approval by the Court, the appropriate mechanism for enforcement of this Settlement Agreement and Release is an action for breach of contract.
16. CESSATION OF LITIGATION ACTIVITY--Immediately upon presentation of this Settlement Agreement and Release to the Court for preliminary approval, Plaintiffs, counsel for Plaintiffs and Defendant agree to cease all litigation activity in the lawsuit (other than any activity to implement this Settlement Agreement and Release). The parties agree that, if necessary, the Court may enjoin any new litigation initiated by any class Plaintiff until the Court has ruled on whether to grant final approval of this Settlement Agreement and Release.
17. DISMISSAL WITH PREJUDICE--Upon final approval of this Settlement Agreement and Release by the Court, counsel for Plaintiffs shall move to dismiss the lawsuit with prejudice.
18. INTEGRATION CLAUSE--This Settlement Agreement and Release contains a full, complete and integrated statement of each and every term and provision agreed to by and among the Plaintiffs and Defendant and supersedes any prior writings or agreements (written or oral) between or among the Plaintiffs and Defendant, which prior agreements may no longer be relied upon for any purpose. Plaintiffs and Defendant acknowledge that, in entering into this Settlement Agreement and Release, they have not relied upon any representations, statements, actions, or inaction by Defendant or its counsel that are not expressly set forth herein. All agreements and understandings herein are contractual in nature and not a mere recital.
19. MUTUAL INTERPRETATION--Plaintiffs and Defendant agree and stipulate that this Settlement Agreement and Release was negotiated on an "arms-length" basis between parties of equal bargaining power. Also, the Settlement Agreement and Release has been drafted jointly by counsel for Plaintiffs and counsel for Defendant. Accordingly, this Settlement Agreement and Release shall be neutral and no ambiguity shall be construed in favor or against either the Plaintiffs or Defendant.
20. GOVERNING LAW--To the extent not governed by the Missouri Rules of Civil Procedure, the contractual terms of this Settlement Agreement and Release shall be interpreted and enforced in accordance with the substantive law of the State of Missouri.
21. DENIAL OF LIABILITY--The parties agree that this settlement is not intended to and should not be construed as an admission of liability by the Defendant or any of its officers, agents, employees or attorneys, all of whom expressly deny any such liability.
22. AMENDMENT OR WAIVER ONLY IN WRITING--None of the terms or conditions herein shall in any manner be altered, amended, waived, or abandoned, except by written agreement of the parties.
23. BINDING NATURE OF AGREEMENT--This Settlement Agreement and Release shall be binding upon all members of the class as defined in paragraph 2, and upon the Defendant, and shall inure to the benefit of the parties and their respective heirs, successors, legal representatives and assigns.
24. VOLUNTARY NATURE OF SETTLEMENT--All parties hereto specifically acknowledge that they have had adequate time to reflect on the advisability of entering into this Settlement Agreement and Release and have entered into this Settlement Agreement and Release knowingly and voluntarily.
IN WITNESS WHEREOF, the parties hereto have executed this agreement and/or authorized same to be executed by their duly authorized representatives as of the date shown below the respective signatures.
THE CURATORS OF THE
UNIVERSITY OF MISSOURI
By /s/ Elson S. Floyd
/s/ Douglas A. Sharp
DOUGLAS A. SHARP
Date 20 APR 2005
/s/ Sandra K. Lynn
SANDRA K. LYNN
/s/ Frederick J. Eccher, III
FREDERICK J. ECCHER, III