Summary of the Lawsuit
This lawsuit alleges that Defendants violated the Employee Retirement Income Security Act of 1974 (“ERISA”) by obtaining personal benefits from a transaction involving the PDQ Food Stores, Inc. Employee Stock Ownership Plan (the “PDQ ESOP”) and breaching their fiduciary duties.
Summary of the Claims
The Complaint alleges that members of the PDQ, Inc. Board, including Defendants Mike Arnold, Mike Whaley, Phil Troia and Lea Gerend, breached their fiduciary duties under ERISA and/or engaged in prohibited transaction in connection with an October 10, 2017 transaction (the “October 2017 Transaction”) in which Kwik Trip, Inc. acquired 100% of the assets of PDQ Food Stores, Inc.
The Complaint alleges that the directors and officers structured the October 2017 Transaction to include millions in side-payments to themselves, including (1) $1 million in non-compete payments from Kwik Trip, Inc. for each of them, (2) an undisclosed amount of the $4.96 million Stock Appreciation Rights Plan Payout, (3) an undisclosed amount equal to two times their annual salary, (4) an undisclosed portion of the $1.85 million deduction from the COBRA Holdback Amount and Indemnity Holdback Amount, and (5) Mike Arnold provided Kwik Trip, Inc. the right to buy property in which he had an ownership interest of $2 million.
The Board Defendants also voted to recommend that ESOP participants vote in favor of the October 2017 Transaction, including the side-payments, while simultaneously serving as fiduciaries of the PDQ ESOP. Additionally, Defendant GreatBanc Trust Company, as the Trustee of the PDQ ESOP at the time of the October 2017 Transaction, voted the ESOP’s shares in favor of the transaction, including the side-payments.
Class Action Allegations
This lawsuit is brought on behalf of the following persons:
Participants in the PDQ ESOP who had vested under the Plan as of October 10, 2017 and those participants’ beneficiaries.
Excluded from the Class are Defendants and their immediate family, any fiduciary of the Plan and the members of his or her immediate family, the officers and directors of PDQ and the members of their immediate families and legal representatives, successors, and assigns of any such excluded persons.
Status of the Litigation
The Class Action Complaint was filed on November 15, 2019. Defendants have until February 10, 2020 to respond to the Complaint.
Whom to Contact for More Information
If you are a member of the proposed class or you have information which might assist us in the prosecution of these allegations, please contact one of the following persons:
Block & Leviton is co-counsel in this litigation with Hurley Burish, S.C.