Former Wawa Employee Proposes Big Class-Action Suit Against Convenience Store Chain
Every time Wawa’s valuation goes up, Greg Pfeifer believes he’s losing hard-earned money.
Pfeifer was employed at Wawa from 1992 to 2009, working his way up from retail stores to the company’s headquarters in Wawa, Pa., where he worked in the point-of-sale division. In that time span, he continually earned the company’s private stock through its employee stock ownership plan (ESOP) — and watched that stock grow as the company exploded from Philly favorite to a regional powerhouse with locations up and down the Eastern seaboard.
Upon leaving the company, Pfeifer claims he was told that he’d be able to keep his Wawa stock — and watch it grow — until he retired or reached the age of 68, when the company makes beneficiaries cash out. But in August 2015, Wawa allegedly forced all former workers to sell their company stock and barred any current or future workers from holding company stock once they’re no longer employed with the company.
Now Pfeifer is suing Wawa on behalf of a proposed class of 3,000 former workers, claiming that changes to the company’s retirement plan resulted in them losing out on future earnings and were in violation of the Employee Retirement Income Security Act. The case was filed in the U.S. District Court for the Eastern District of Pennsylvania.
Pfeifer’s attorney claims that — based on the latest company valuation of $7,652 per share — Pfeifer (who is now 42) lost out on at least $30,000 in retirement income since he was forced to sell his stock in August 2015. That’s probably on the high side compared to others in the class, given that Pfeifer worked at the company for 17 years but his lawyer, Daniel Feinberg, said he believes that “losses for the whole class are over $20 million to date.”
The terminated workers “have lost out on 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,” according to Pfeifer’s complaint. It claims that Wawa’s ESOP stock holdings are now valued at more than $1 billion.
“In the plan summaries that they gave to people, Wawa promised they wouldn’t take away benefits at a later date,” said Feinberg, from Feinberg, Jackson, Worthman & Wasow. “Lo and behold, Wawa decides as of August that they’re changing rules of the game. Once you terminate employment, you have to sell your stock right away, even if you left some years in the past.”
A Wawa representative said she could not comment on the litigation directly but did say the plan has grown to represent approximately 41 percent ownership of the company. When asked via email if Wawa changed is retirement plan in August 2015 to forbid former workers from holding company stock, she did not respond.
Let’s be clear on one important point: None of the former employees lost their retirement money, they’re just arguing that they’re no longer permitted to hold their Wawa stock — costing them future earnings. It’s likely that many just rolled the funds over into personal retirement accounts.
Isn’t Wawa within its legal rights to change the structure of its retirement plan however it chooses? Feinberg says the change is fine for new employees but unfair for those who were given different parameters.
“ESOPs have different rules for how benefits get distributed but you do not often see retirement plans changing the rules for how benefits get distributed,” said Feinberg. The complaint says: “Wawa promised that their right to continue to hold Wawa stock after termination of employment would not be taken away.”
The plaintiffs are asking Wawa to make good on any losses suffered by the class since the August rule change, and to eliminate the rule change altogether. They’re also requesting that the members of Wawa’s retirement plans committee be removed from their roles as fiduciaries of the ESOP — and that the company employ an independent fiduciary to manage the plan.
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