A settlement agreement has been announced in a suit alleging terminated employee stock ownership plan (ESOP) participants were forced to liquidate company stock holdings at an unfair price.
Plaintiffs Greg Pfeifer and Andrew Dorley, on behalf of a putative class of terminated Wawa employees, allege that Wawa Inc., its ESOP trustees, and its plan administrators violated the Employee Retirement Income Security Act (ERISA) by amending the plan to eliminate plaintiffs’ right to own Wawa stock, forcing liquidation of plaintiffs’ Wawa stock at an unfair price, and misrepresenting plaintiffs’ rights under the plan.
Judge Paul S. Diamond of the U.S. District Court for the Eastern District of Pennsylvania previously found eliminating ESOP participants’ right to invest in company stock is not a violation of ERISA’s anti-cutback provisions, but forcing participants with balances greater than $5,000 out of the plan may be.
According to the Joint Notice of Settlement in Principle and Motion for Stay of Litigation, “the Parties have reached a settlement in principle of this case, subject to a condition subsequent of Defendants securing funding commitments from their insurers. The Parties are currently preparing a written term sheet and also intend to draft a Settlement Agreement.”
In addition, the court document says the agreement in principle involves the resolution of claims against persons who have not yet been named as defendants in this action. The plaintiffs expect to file an amended complaint, and the defendants will not oppose the filing of an amended complaint.
A trial is set for June 9, 2020. The document asks the court to stay the action until March 30, 2020. According to the case docket, the motion to stay was granted December 27, 2019.