Summary of the Lawsuit
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.
Summary of the Claims
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 hearing on Plaintiffs’ motion for class certification and preliminary approval of settlement was held on May 1, 2018. The Court certified the Class and granted preliminary approval of settlement the next day. As set by the Court, class members have until July 6, 2018 to object or challenge the data on which the settlement is based.
A fairness hearing has been set for August 9, 2018 at 10:00 a.m. in Courtroom 14A at the United States District Court for the Eastern District of Pennsylvania, James A. Byrne United States Courthouse, 601 Market Street, Philadelphia, PA 19106. At that hearing, the Court will consider whether to grant final approval of the settlement and the amount of fees to award to Class Counsel.
Plaintiffs reached a settlement on behalf of the class to settle the claims in this Litigation for $25 million. On December 29, 2017, Plaintiff filed a Renewed Motion for Class Certification and Motion for Preliminary Approval of Settlement. The settlement needs to be approved by the Court, which consists of a three part process (1) the Court granting preliminary approval of the settlement and certifying the class, (2) if the Court grants class certification and preliminary approval of the settlement, a formal notice will be mailed to class members and class emmbers will be provided with the ability to comment on the Settlement, and (3) the Court granting final approval of the settlement.The Court has not yet decided the motion for class certification or preliminary approval. Additional information is also available at www.wawasettlement.com
Plaintiffs’ Class Counsel held a Town Hall meeting at The Inn at Swarthmore, 10 S. Chester Road, Swarthmore, Pennsylvania 19081 on June 10, 2018 at 1:00 pm. If you were unable to attend the Town Hall meeting in person and wish to view it online, please contact Ming Siegel at firstname.lastname@example.org and Olivia Ruiz at email@example.com with your name in order to receive a link to the live stream.
The Final approval hearing was held on August 9, 2018. Two class members attended to oppose the settlement – one who had filed a timely written objection and one who did not. Both objectors spoke about the settlement. Those were the only two objections out of 1,264 ESOP participant class members. Both objections claim that the settlement is too small and they believe that the losses are greater than what Plaintiffs’ experts calculated. At the hearing, Class Counsel explained why the objectors’ calculations are not a legally viable method of calculating losses in this case and why there were significant risks to the case justifying a settlement that was between 25% and 50% of the maximum losses as calculated by Plaintiffs’ experts (depending on which measure of losses the Court were to adopt).
On August 31, 2018, the Court granted Plaintiffs’ Motions for Final Approval and for Attorneys’ Fees, Litigation Expenses and Class Representative Service Awards. The Court also entered entered Judgment on the same day.
The settlement will not become final and non-appealable until a 30 day period runs out from the date of the Order on Final Approval. This means that, if no appeal is filed, the settlement will become final and non-appealable 30 days after the August 31st Order granting Final Approval. Payments from the Settlement cannot be issued to class members until the time to appeal has expired.
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: