Wawa, Inc. ESOP Litigation
Wawa, Inc. Employee Stock Ownership Litigation
This lawsuit alleges that Wawa and other fiduciaries of the Wawa, Inc. Employee Stock Ownership Plan ("ESOP" or "Plan") violated ERISA and breached their fiduciary duties with respect to the administration of the Plan and by adopting and implementing an amendment to the Plan that forcibly divested Terminated Employee Participants of their benefit and right to continue holding Wawa stock in their Wawa ESOP account.
This lawsuit was filed as a class action on behalf of former Wawa employees whose employment ended prior to January 1, 2015, for reason other than retirement, death or total disability ("Terminated Employee Participants"), alleging violations of the Employee Retirement Security Act of 1974 ("ERISA"), the federal law governing pension plans, and breach of fiduciary duties. The Complaint challenges the post-termination change to the Wawa, Inc. Employee Stock Ownership Plan ("ESOP") forcing the divestment of Wawa stock in Terminated Employee Participant ESOP accounts on August 30, 2015.
Prior to August 2015, the Plan document for the ESOP provided that Terminated Employee Participants with ESOP account balances greater than $5,000 could continue to hold Wawa stock in their ESOP accounts until age 68, at which time they would be offered the same benefit options as retired participants. In August 2015, participants were informed that the Plan had been amended to require the sale of Wawa stock held in the ESOP accounts of Terminated Employee Participants. The Complaint alleges that this forced sale was contrary to the terms of the Plan in existence at his termination and the terms of the Summary Plan Description. The forced sale appears to have used an incorrect share price, and the Complaint alleges that the forced sale appears timed to avoid paying dividends to the Terminated Employee Participants and the communications announcing the forced sale misrepresented the reasons for the forced sale.
The Complaint alleges that the forced sale was based on a stale and unreliable valuation of the stock. The Complaint alleges that the Class received less than fair market value for their Wawa stock, lost the right to continue to own Wawa stock, as well as the continued appreciation in value of Wawa stock, dividends paid by Wawa stock, and the opportunity to benefit from future dividends and appreciation in value of Wawa stock. The lawsuit seeks to recover the losses suffered by the Class and the ESOP that stem from the incorrect price and the application of the August 2015 Amendment, as well as other appropriate equitable relief, and reformation of the ESOP Plan terms to eliminate the applicability of the August 2015 Amendment to any participant who terminated prior to its implementation.
This lawsuit is brought on behalf of the following class:
All persons who were Terminated Employee Participants in the Wawa ESOP as of January 1, 2015 with account balances greater than $5,000 and the beneficiaries of such participants and any Alternate Payees whose stock in the Wawa ESOP was liquidated pursuant to 2015 Plan Amendment (i.e. Plan Amendment No. 4).
Excluded from the Plaintiff Class are: (a) the Defendant Trustees; (b) the members of the Defendant Wawa Inc., Retirement Plans Committee and their immediate families; (c) the officers and directors of Defendant Wawa and their immediate families; and (d) legal representatives, successors, heirs, and assigns of any such excluded persons.
Status of the Litigation
The complaint was filed with the District Court on February 1, 2016. Plaintiffs filed an amended complaint on April 22, 2016. Defendants filed a Motion to Dismiss all counts of the complaint on June 14, 2016. On October 6, 2016, the Court issued an order granting in part and denying in part Defendants' Motion to Dismiss. The Court denied Defendants' Motion for Reconsideration dismissal of Counts V and VI of the amended complaint on January 11, 2017. A hearing on Plaintiffs' Motion for Class Certification was held on January 30, 2017. A trial date has been set for January 2018.
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