Nova (eikaiwa) - Lawsuits

Lawsuits

The parents of a Nova employee who committed suicide in 2004 filed a suit against the company on 31 August 2007. Their son, age 28 at the time, was employed by Nova to design and supervise the construction of new classrooms. During that period Nova was engaged in a rapid expansion meant to increase the number of Nova branches by 300 in an attempt to reach a total of 1,000. The parents' suit alleges that their son was required by Nova to work up to 80 hours of overtime in one month, and even through the night on seven occasions, despite his inexperience. At one point he had requested to be relieved but was persuaded to stay, which eventually led to overwhelming stress shortly before his suicide.

On 3 September 2007, an Osaka woman filed suit against Nova over a refund related issue. Unlike previous complaints about how Nova adjusted the value of unused lesson points on which the Supreme Court ruled in June 2007, this suit contested Nova's decision not to refund lesson points that were extended after the woman purchased additional points. The woman claims that while Nova explained that her unused points (worth approximately 400,000 yen) from the first contract would carry over after signing a new contract, she was not told that they could not be refunded if she chose to cancel.

In October 2008, approximately a year after the collapse, 24 former students filed a class action lawsuit against accounting firms KPMG AZSA & Co, former Nova president Sahashi, and five of the directors of the company claiming that the rapid expansion was pursued in a reckless manner, and that upfront lesson fees were being misappropriated. The suit further claims that Sahashi and his directors were negligent in their duties to fulfill obligations to customers. It also accuses five directors and two accounting firms of participating in the bankruptcy of NOVA by allowing it to continue to use illicit accounting practices. Those accused allegedly inflated profit reports by recording 45% of the paid-in-advance tuition fees as part of its sales. The suit seeks a total of 16 million yen in compensation.