Noting that “The Parties wish to conserve their and the Court’s resources during the period of time necessary to finalize insurance funding of the settlement,” a settlement has been struck in a case involving an ESOP where the stock price… rose.
The filing, in the U.S. District Court for the Eastern District of Pennsylvania (Cunningham v. Wawa, Inc., E.D. Pa., No. 2:18-cv-03355, notice of settlement 12/27/19), regarded a suit brought on behalf of a potential class of terminated Wawa, Inc. employees, alleged that Wawa, its ESOP plan trustees and its plan administrators violated ERISA by amending the ESOP to “eliminate Plaintiffs’ right to own Wawa stock (which is privately held), forcing liquidation of Plaintiffs’ Wawa stock at an unfair price, and misrepresenting Plaintiffs’ rights under the Plan.”
More specifically, the suit alleged that the ESOP plan’s fiduciaries violated ERISA in implementing plan amendments that, contrary to the fiduciaries’ representations (including furnishing allegedly materially misleading summary plan descriptions, eliminated the participants’ right to hold Wawa stock through age 68. This, the participant-plaintiffs alleged, deprived them of the stock’s subsequent appreciation and forced them to sell their shares at an unfair price.
The ”Joint Notice of Settlement in Principle and Motion for Stay of Litigation” explains that “following a private mediation session before David Geronemus of JAMS New York on December 17, 2019, the Parties have reached a settlement in principle of this case, subject to a condition subsequent of Defendants securing funding commitments from their insurers.” It further notes that the parties are “currently preparing a written term sheet and also intend to draft a Settlement Agreement.”
It also notes that the agreement in principle “involves the resolution of claims against persons who have not yet been named as defendants in this action, and Plaintiffs expect to file an amended complaint that, among other things, names such persons as defendants,” and that “Defendants will not oppose the filing of such amended complaint.”
The parties in the case, which had a June 9, 2020 trial date set, say that, “in an effort to expedite the resolution of this case, the Parties agreed to the terms of a settlement in principle among themselves and separately agreed to a 90-day period for Defendants to secure funding commitments for the cash settlement amount from Defendants’ insurers,” and that, “once funding is resolved, the Parties will be in a position to promptly move for the Court’s preliminary approval of the settlement.”
That means that except with regard to the filing of the amended complaint noted above, the parties are requesting that the court put a hold on the action until March 30, 2020 – and that on, or before, that date, the parties “will either move for approval of the settlement terms or, if necessary, propose new case deadlines.”
Just two weeks ago, the Labor Department backed the position of the participant-plaintiffs in a “friend of the court” filing, supporting the view that plan participants don’t need to show detrimental reliance in order to maintain certain disclosure and fiduciary breach claims.
The plaintiffs in the case are represented by Cohen Milstein Sellers & Toll PLLC, Feinberg Jackson Worthman & Wasow LLP, Block & Leviton LLP, and Donahoo & Associates PC. Morgan Lewis & Bockius LLP represents Wawa.