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Wawa Inc. agreed to pay $25 million to settle a lawsuit accusing the convenience store and gas station chain of forcing employees to sell their company stock at an unfair price.
The settlement will benefit about 2,300 current and former Wawa employees who invested their retirement savings in the privately held company’s stock. The workers say Wawa wrongly forced them to sell the shares held in their employee stock ownership plan at $6,940 per share in 2015. This share price was below market value at the time and $712 below the share price three months after the forced sale, the workers say.
The case is a noteworthy twist on the typical class action challenging retirement investments held in company stock. Most cases target employers that allow workers to continue holding company stock during a period in which share price drops as a result of corporate malfeasance or other alleged fraud. This case, like a long-running lawsuit involving R.J. Reynolds Tobacco Co., claims that workers were forced to give up their company stock at an unfair price.
The settlement comes a year after a federal judge refused to dismiss several of the Wawa workers’ claims against the company. The deal, which must be approved by the judge before becoming final, allows up to $5 million of the settlement to go to the workers’ lawyers as attorneys’ fees.
The case is pending before Judge Paul S. Diamond of the U.S. District Court for the Eastern District of Pennsylvania.
The Wawa workers are represented by Feinberg Jackson Worthman & Wasow LLP, Cohen Milstein Sellers & Toll PLLC, Block & Leviton LLP, and Donahoo & Associates PC. Wawa is represented by Morgan Lewis & Bockius LLP.
Wawa employs about 30,000 people throughout the mid-Atlantic and southern U.S.
The case is Pfeifer v. Wawa, Inc. , E.D. Pa., No. 2:16-cv-00497-PD, motion for settlement approval filed 12/29/17 .
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