Case 2:16-cv PD Document Filed 07/25/18 Page 1 of 31 IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA

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1 Case 2:16-cv PD Document Filed 07/25/18 Page 1 of 31 IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA GREG PFEIFER and ANDREW DORLEY, Plaintiffs, -vs.- Case No PD WAWA, INC., RETIREMENT PLANS COMMITTEE OF WAWA, INC., JARED G. CULOTTA, MICHAEL J. ECKHARDT, JAMES MOREY, CATHERINE PULOS, HOWARD B. STOECKEL, DOROTHY SWARTZ, RICHARD D. WOOD, JR. and KEVIN WIGGINS. and Defendants, WAWA, INC. EMPLOYEE STOCK OWNERSHIP PLAN. Nominal Defendant. MEMORANDUM IN SUPPORT OF PLAINTIFFS MOTION FOR FINAL APPROVAL OF CLASS ACTION SETTLEMENT i

2 Case 2:16-cv PD Document Filed 07/25/18 Page 2 of 31 TABLE OF CONTENTS I. BACKGROUND... 1 II. A. Factual Background... 1 B. Procedural Background Defendants Motion to Dismiss and Plaintiffs Motion for Class Certification Discovery Mediation, Settlement, and Preliminary Approval Motion for Attorneys Fees, Litigation Expenses and Class Representative Service Awards... 5 C. Terms of the Settlement and Plan of Allocation... 5 THE PROPOSED SETTLEMENT IS FAIR, REASONABLE AND ADEQUATE, AND MERITS FINAL APPROVAL... 7 A. The Girsh Factors Support Final Approval of the Settlement The Complexity, Expense, And Likely Duration of the Litigation Supports the Settlement The Stage of the Proceedings and the Amount of Discovery Completed Supports Approval of the Settlement The Risks of Establishing Liability and Damages and Maintaining the Class Action Through the Trial Support Approval of the Settlement Defendants Ability to Withstand a Greater Judgment Does Not Favor or Disfavor Approval of the Settlement The Range of Reasonableness of the Settlement in Light of the Best Possible Recovery and All Attendant Risks of Litigation Supports Approval of the Settlement The Reaction of the Class to the Settlement Supports Approval of the Settlement 17 B. The Non-Mandatory Prudential Factors Support Final Approval III. THE PLAN OF ALLOCATION IS FAIR, REASONABLE, AND ADEQUATE, AND MERITS PRELIMINARY APPROVAL IV. THE COURT SHOULD CONFIRM CLASS CERTIFICATION UNDER RULES 23(A), 23(B)(1), AND 23(B)(2) V. CONCLUSION i

3 Case 2:16-cv PD Document Filed 07/25/18 Page 3 of 31 TABLE OF AUTHORITIES Page(s) Cases In re Automotive Refinishing Paint Antitrust Litig., MDL 1426, 2004 WL (E.D. Pa. Sept. 27, 2004)...9 Barel v. Bank of Am., 255 F.R.D. 393 (E.D. Pa. 2009)...16 Becker v. Bank of New York Mellon Tr. Co., N.A., , 2016 WL (E.D. Pa. Oct. 5, 2016)...20 Boyd v. Coventry Health Care Inc., 299 F.R.D. 451 (D. Md. 2014)...16 In re Cendant Corp. Litig., 264 F.3d 201 (3d Cir. 2001)...12 In re CertainTeed Corp. Roofing Shingle Prods. Liab. Litig., 269 F.R.D. 468 (E.D. Pa. 2010)...8, 17 In re CertainTeed Fiber Cement Siding Litig., 303 F.R.D. 199 (E.D. Pa. 2014)...23 Chakejian v. Equifax Info. Servs., LLC, 275 F.R.D. 201 (E.D. Pa. 2011)...17 Conkright v. Frommert, 559 U.S. 506 (2010)...9 Ehrheart v. Verizon Wireless, 609 F.3d 590 (3d Cir. 2010)...7 In re Elec. Carbon Prods. Antitrust Litig., 447 F. Supp. 2d 389 (D.N.J. 2006)...10, 14 Fish v. Greatbanc Tr. Co., 09 C 1668, 2016 WL (N.D. Ill. Sept. 1, 2016)...13 In re Flonase Antitrust Litig., 291 F.R.D. 93 (E.D. Pa. 2013)...22 In re Gen. Instrument Sec. Litig., 209 F. Supp. 2d 423 (E.D. Pa. 2001)...22 ii

4 Case 2:16-cv PD Document Filed 07/25/18 Page 4 of 31 In re General Motors Corp. Pick-Up Truck Fuel Tank Prod. Liab. Litig. ( GM ), 55 F.3d 768 (3d Cir. 1995)...7 Girsh v. Jepson, 521 F.2d 153 (3d Cir. 1975)... passim Henderson v. Volvo Cars of N.A., LLC, CIV.A CCC, 2013 WL (D.N.J. Mar. 22, 2013)...17 In re Ikon Off. Sols., Inc. Securities Litig., 209 F.R.D. 94 (E.D. Pa. 2002)...9, 12, 13, 17 In re Imprelis Herbicide Mktg., Sales Practices and Prods. Liab. Litig., 296 F.R.D. 351 (E.D. Pa. 2013)...17 Jackson v. Wells Fargo Bank, N.A., 136 F. Supp. 3d 687 (W.D. Pa. 2015)...16 Johnson v. Fujitsu Tech. and Bus. of Am., Inc., 16-CV NC, 2018 WL (N.D. Cal. May 11, 2018)...16 Kaplan v. Houlihan Smith & Co., No. 12 C 5134, 2014 WL (N.D. Ill. June 20, 2014)...22 In re Linerboard Antitrust Litig., 296 F. Supp. 2d 568 (E.D. Pa. 2003)...11 McCoy v. Health Net, Inc., 569 F. Supp. 2d 448 (D.N.J. 2008)...9, 13, 14 McDonough v. Toys R Us, Inc., 80 F. Supp. 3d 626 (E.D. Pa. 2015)...16 Mehling v. New York Life Ins. Co., 246 F.R.D. 467 (E.D. Pa. 2007)...23 Mehling v. New York Life Ins. Co., 248 F.R.D. 455 (E.D. Pa. 2008)... passim Moore v. GMAC Mortg., CIV , 2014 WL (E.D. Pa. Sept. 19, 2014)...8, 11 In re Nat l Football League Players Concussion Injury Litig., 307 F.R.D. 351 (E.D. Pa. 2015)...17, 20, 21 In re Nat l Football League Players Concussion Injury Litig., 821 F.3d 410 (3d Cir. 2016)... passim iii

5 Case 2:16-cv PD Document Filed 07/25/18 Page 5 of 31 Noa v. Keyser, 519 F. Supp. 2d 481 (D.N.J. 2007)...13, 19 Pfeifer v. Wawa, Inc., CV , 2018 WL (E.D. Pa. May 1, 2018)...4, 22, 23 In re Prudential Ins. Co. Am. Sales Prac. Litig. Agent Actions, 148 F.3d 283 (3d Cir. 1998)...8, 20, 21 Smith v. Dominion Bridge Corp., CIV.A , 2007 WL (E.D. Pa. Apr. 11, 2007)...22 Stoetzner v. U.S. Steel Corp., 897 F.2d 115 (3d Cir. 1990)...17 Stoner v. CBA Info. Servs., 352 F.Supp.2d 549 (E.D. Pa. 2005)...17, 18 Sullivan v. DB Invs., Inc., 667 F.3d 273 (3d Cir. 2011)...21 In re Unisys Sav. Plan Litig., No , 1997 WL (E.D. Pa. Nov. 24, 1997), aff d, 173 F.3d 145 (3d Cir.1999)...19 W. Palm Beach Police Pension Fund v. DFC Glob. Corp., CV , 2017 WL (E.D. Pa. Sept. 20, 2017)...14, 15 Wachtel v. Health Net, Inc., 482 F.3d 225 (3d Cir. 2007)...9 In re Warfarin Sodium Antitrust Litig., 391 F.3d 516 (3d Cir. 2004)... passim Williams v. Rohm & Haas Pension Plan, 658 F.3d 629 (7th Cir. 2011)...16 In re WorldCom, Inc. ERISA Litig., No. 02-civ (DLC), 2004 WL (S.D.N.Y. Oct. 18, 2004)...16 Statutes ERISA ERISA 502(a)(2)...9 ERISA 502(a)(3)...9 iv

6 Case 2:16-cv PD Document Filed 07/25/18 Page 6 of 31 Other Authorities 68 Fed. Reg Fed. R. Civ. P Fed. R. Civ. P. 23(b)(1)...4, 20, 21, 22 Fed. R. Civ. P. 23(b)(2)...4, 20, 21, 22 Fed. R. Civ. P. 30(b)(6)...3, 4, 11 Fed. R. Civ. P. 23(e)...1, 7, 23 Fed. R. Civ. P. 23(e)(2)...7 v

7 Case 2:16-cv PD Document Filed 07/25/18 Page 7 of 31 Pursuant to Rule 23(e) of the Federal Rules of Civil Procedure, Plaintiffs Greg Pfeifer and Andrew Dorley and additional Class Representative Michael DiLoreto, on behalf of themselves and the Class, respectfully submit this Memorandum in support of Plaintiffs Motion for Final Approval of Class Settlement. 1 The Settlement and the Plan of Allocation are fair, adequate, and reasonable. All relevant factors weigh in favor of final approval of the Settlement and the Plan of Allocation. Only one Class Member out of 1,264 Class Members has submitted an objection to the Settlement. As no Class Member has objected to certification of this action as a class action for settlement purposes, and the form and methods of notice to the Class satisfy the requirements of Rule 23(e) and due process, class certification should also be confirmed. Therefore, the Motion should be granted. I. BACKGROUND A. Factual Background In light of the Court s familiarity with the case, the background facts are stated briefly. This lawsuit challenges the 2015 amendment of the Wawa, Inc. Employee Stock Ownership Plan ( the ESOP or the Plan ) eliminating Class Members right to continue to hold stock of Wawa, Inc. ( Wawa ) in their ESOP accounts and the liquidation of their Wawa stock in September The Amended Complaint also alleges that the ESOP s fiduciaries breached their fiduciary duties in implementing the amendment by liquidating the former employees shares at less than fair market value and furthering the trustees personal financial interests. Specifically, Count V alleges that the rights of former employees under the ESOP became fixed when they terminated employment and, as a result, an amendment adopted after their employment ended could not be applied retroactively to take away their right under the Plan to hold Wawa stock until age All capitalized terms are defined in the Settlement Agreement. 1

8 Case 2:16-cv PD Document Filed 07/25/18 Page 8 of 31 The Complaint asserts a total of nine counts under the Employee Retirement Income Security Act of 1974 ( ERISA ), which can be categorized into three groups: (a) claims seeking to enforce rights under Plan documents and promises made in other communications to Class Members, such as the Summary Plan Descriptions ( SPDs ), regarding a participant s right to enforce the terms of the Plan in effect when the participant terminated employment (Counts IV, VI, and VII), see Dkt. No. 20 ( Am. Compl. ) , , (b) violations of ERISA s fiduciary and prohibited transaction provisions in valuing Wawa stock for the September 2015 liquidation (Counts I, II, III, V, VIII, and IX), see id , ; and (c) a claim alleging violation of ERISA s anti-cutback provision 204(g) (Count V). See id B. Procedural Background 1. Defendants Motion to Dismiss and Plaintiffs Motion for Class Certification On June 13, 2016, Defendants filed a motion to dismiss the Amended Complaint. Dkt. No. 31. On October 6, 2016, the Court dismissed Counts IV and V in part but denied the rest of Defendant s motion. Dkt. No. 58. On October 20, 2016, Defendants filed an Answer to the Amended Complaint and a motion for reconsideration of the Court s October 6, 2016 order or, alternatively, certification for interlocutory appeal. Dkt. Nos. 62, 63. On January 11, 2017, the Court denied Defendants motion. Dkt. No. 84. Class ): On December 13, 2016, the Parties stipulated to the following Class definition ( the All persons who were Terminated Employee Participants in the ESOP as of January 1, 2015 with account balances greater than $5, and the beneficiaries of such participants and any Alternate Payees whose stock in the ESOP was liquidated pursuant to 2015 Amendment (i.e. Plan Amendment No. 4). Excluded from the Class are the Defendant Trustees and members of the Defendant Committee and their immediate families; the officers and directors of 2

9 Case 2:16-cv PD Document Filed 07/25/18 Page 9 of 31 Defendant Wawa and their immediate families; and legal representatives, successors, heirs, and assigns of any such excluded persons. Dkt. No On December 14, 2016, Plaintiffs moved the Court to certify the case as a class action on behalf of the Class. Dkt. No Discovery Prior to negotiating the Settlement, the Parties engaged in significant discovery. Although the Court postponed merits discovery (except as to non-parties) until after a ruling on class certification, Plaintiffs completed discovery on issues related to class certification and obtained documents and testimony from Wawa on the merits to the extent that it overlapped with class certification. Declaration of R. Joseph Barton in Support of Final Approval ( Barton Decl. ) 4. Discovery related to class certification included document production, the depositions of the three Class Representatives, and the Rule 30(b)(6) depositions of Wawa, Inc. (through five separate witnesses designed as the representatives). Id. In addition, as the Court permitted the Parties to serve document subpoenas on non-parties, Plaintiffs issued subpoenas for and obtained extensive documents from Defendants financial and legal advisors on merits-related issues about the 2015 amendment and the valuation of Wawa stock. Id. 5. Finally, in order to be sufficiently informed to conduct settlement negotiations, Plaintiffs requested and Defendants agreed to produce certain merits-related documents and information. Id. 7. Utilizing the information produced during discovery and information exchanged as part of settlement discussions, the Parties exchanged expert reports regarding the amount of monetary relief prior to the May 2017 mediation. Id. Therefore, Class Counsel had more than sufficient information to thoroughly evaluate both the merits of Plaintiffs claims and the potential recovery for the Class prior to negotiating the Settlement. 3

10 Case 2:16-cv PD Document Filed 07/25/18 Page 10 of Mediation, Settlement, and Preliminary Approval The Parties agreed to use Michael Young, Esq. of JAMS in New York City as a mediator in this action because of Mr. Young s experience in mediating ESOP class actions and other complex litigation. Id. 2. On September 15, 2016, the Parties engaged in an all-day mediation session with Mr. Young. Id. Although the mediation session was not successful, it provided the Parties a framework for later settlement negotiations. Id. 3. In order to give the Parties more time to discuss settlement, the Court placed the action on its suspense calendar on April 6, Dkt. No. 99. Following the Court s rulings on Defendants motion to dismiss and motion for reconsideration, the Parties agreed to conduct another mediation session with Mr. Young on May 8, Id. 6. The Parties made substantial progress at the May 2017 mediation session. After several subsequent mediations between Defendants and their insurers, the Parties ultimately reached agreement on the terms of the Settlement. Id. 8. On November 1, 2017, the Parties signed the Agreement in Principle. On December 29, 2017, the Parties executed the Settlement Agreement. Dkt. No ( Agmt ). On May 1, 2018, the Court conditionally certified the case under Rule 23(b)(1) and (b)(2) and only as to Counts I-III and V-IX, on behalf of a settlement class, which is the same as the Class definition set forth in the Parties December 13, 2016 stipulation and Plaintiffs December 14, 2014 motion for class certification ( the Class or the Settlement Class ). Pfeifer v. Wawa, Inc., CV , 2018 WL , at *7 (E.D. Pa. May 1, 2018); see Dkt. No ; Agmt. I.E & II.1. The Court appointed Mr. Pfeifer, Mr. Dorley, and Mr. DiLoreto as Class Representatives and Plaintiff s counsel as Class Counsel, granted preliminary approval of the Settlement and the proposed Plan of Allocation, and appointed Dahl Administration, LLC as the Settlement Administrator. Pfeifer, 2018 WL , at *7-8. 4

11 Case 2:16-cv PD Document Filed 07/25/18 Page 11 of Motion for Attorneys Fees, Litigation Expenses and Class Representative Service Awards On May 31, 2018, Plaintiffs filed their motion for attorneys fees, litigation expenses and class representative service awards ( Fee Motion ). Dkt. No Plaintiffs requested an award of 20% of the common fund or $5,000, as attorneys fees for Class Counsel, payment of $85, in litigation expenses plus additional expenses incurred prior to the final approval hearing, and service awards of $25, each for the three Class Representatives. Id. No Class Member has objected to the request for attorneys fees, payment of expenses or the requested service awards. Barton Decl C. Terms of the Settlement and Plan of Allocation The terms of the Settlement Agreement are described in detail in Plaintiffs motion for preliminary approval. See Dkt. No at 4-7. The Settlement Agreement provides for a payment of $25 million into a Settlement Fund to resolve the claims of Plaintiffs and the Settlement Class. Agmt. IV.1. After payment of Class Counsel s attorneys fees and litigation expenses and incentive awards to the Class Representatives, the remaining amount of the Settlement Fund ( the Net Settlement Amount ) will be allocated to Class Members pursuant to the Plan of Allocation. Id. VI. Under the Plan of Allocation, the Net Settlement Amount will be distributed to Class Members based upon their pro rata Wawa stock allocation under the ESOP as of August Id. After the Net Settlement Amounts are paid into the Wawa ESOP, the Net Settlement Amount allocated to the Class Members individual ESOP accounts will be distributed to Class 2 The Fee Motion stated that Class Counsel would submit an updated summary of their expenses prior to the final approval hearing and include the updated expense reimbursement in the proposed final approval order. Dkt. No at 9. Class Counsel will submit an updated statement of expenses at least a week prior to final approval. 5

12 Case 2:16-cv PD Document Filed 07/25/18 Page 12 of 31 Members according to their online elections or Distribution Election forms submitted to the Plan Administrator. Id. V.4-5. Class Members may elect to receive a cash distribution or roll over their settlement allocations to an IRA or another qualified retirement plan. For Class Members who do not make an online election or submit a Distribution Election form, the Plan Administrator will transfer their individual ESOP accounts into the Class Members accounts in the Wawa 401(k) Plan. Id. V.5(b). For Class Members who are no longer participants in the 401(k) Plan, the 401(k) Plan administrator will re-activate or establish new 401(k) accounts for such Class Members for purposes of the Settlement allocation. Id. Each Class Member s settlement allocation will be invested according to his or her investment allocation under the 401(k) Plan. Id. V.5(d). If the Class Member has not made an investment allocation election, then the Class Member s settlement allocation shall be invested in the 401(k) Plan s default investment. Id. In addition to paying $25 million, Defendants will bear all costs and expenses related to administration of the Settlement, including those related to distribution of the Settlement, allocation of the net proceeds of the Settlement Fund to the Class Members ESOP accounts, and transfer of any net proceeds of the Settlement Fund to the Class Members 401(k) Plan accounts. Id. V.6. Defendants will also bear all costs and expenses related to the hiring of an Independent Fiduciary to approve the Settlement and the release of claims on behalf of the Wawa ESOP, as required by Department of Labor Class Exemption Id. XII; see Prohibited Transaction Class Exemption , Release of Claims and Extensions of Credit in Connection with Litigation, issued December 31, 2003, by the United States Department of Labor, 68 Fed. Reg , as amended. The Independent Fiduciary completed his report on June 18, 2018 and approved the Settlement. Barton Decl. 9 & Ex. A. 6

13 Case 2:16-cv PD Document Filed 07/25/18 Page 13 of 31 In exchange, the Class will release and dismiss with prejudice all claims related to this Action and the 2015 Plan amendment against Defendants and their insurers. Agmt. XIV.1. The release in the Settlement Agreement includes all claims arising from the 2015 Amendment, which would encompass Plaintiffs misrepresentation claims in Count IV as well as additional claims that were not actually alleged in the Amended Complaint to the extent that they arose out of the 2015 amendment. Id. Thus, Class Members misrepresentation claims will be released as part of the Settlement even though Plaintiffs withdrew their request that the Court certify Count IV under Rule 23 for settlement purposes. II. THE PROPOSED SETTLEMENT IS FAIR, REASONABLE AND ADEQUATE, AND MERITS FINAL APPROVAL [A] strong public policy exists, which is particularly muscular in class action suits, favoring settlement of disputes, finality of judgments and the termination of litigation. Ehrheart v. Verizon Wireless, 609 F.3d 590, 593 (3d Cir. 2010); see also In re General Motors Corp. Pick- Up Truck Fuel Tank Prod. Liab. Litig. ( GM ), 55 F.3d 768, 784 (3d Cir. 1995) ( The law favors settlement, particularly in class actions and other complex cases where substantial judicial resources can be conserved by avoiding formal litigation. ). A court may approve a class action settlement pursuant to Rule 23(e) only after hearing and on finding that it is fair, reasonable, and adequate. Fed. R. Civ. P. 23(e)(2). The Third Circuit has identified the following factors ( the Girsh factors ) that a court should consider in determining whether a proposed class action settlement is fair, reasonable, and adequate: (1) the complexity, expense and likely duration of the litigation; (2) the reaction of the class to the settlement; (3) the stage of the proceedings and the amount of discovery completed; (4) the risks of establishing liability; (5) the risks of establishing damages; (6) the risks of maintaining the class action through the trial; (7) the ability of the defendants to withstand a greater judgment; (8) the 7

14 Case 2:16-cv PD Document Filed 07/25/18 Page 14 of 31 range of reasonableness of the settlement fund in light of the best possible recovery; and (9) the range of reasonableness of the settlement fund to a possible recovery in light of all the attendant risks of litigation. In re Nat l Football League Players Concussion Injury Litig. ( NFL ), 821 F.3d 410, 437 (3d Cir. 2016) (quoting Girsh v. Jepson, 521 F.2d 153, 157 (3d Cir. 1975)); Moore v. GMAC Mortg., CIV , 2014 WL , at *4 (E.D. Pa. Sept. 19, 2014) (J. Diamond). When appropriate, courts may also consider the following non-mandatory factors known as the Prudential factors: [a] the maturity of the underlying substantive issues, as measured by experience in adjudicating individual actions, the development of scientific knowledge, the extent of discovery on the merits, and other factors that bear on the ability to assess the probable outcome of a trial on the merits of liability and individual damages; [b] the existence and probable outcome of claims by other classes and subclasses; [c] the comparison between the results achieved by the settlement for individual class or subclass members and the results achieved or likely to be achieved for other claimants; [d] whether class or subclass members are accorded the right to opt out of the settlement; [e] whether any provisions for attorneys' fees are reasonable; and [f] whether the procedure for processing individual claims under the settlement is fair and reasonable. In re Prudential Ins. Co. Am. Sales Prac. Litig. Agent Actions, 148 F.3d 283, 323 (3d Cir. 1998); NFL, 821 F.3d at 437. Unlike the Girsh factors, each of which the district court must consider before approving a class settlement, the Prudential considerations are just that, prudential. Id. (quotation omitted); see In re CertainTeed Corp. Roofing Shingle Prods. Liab. Litig., 269 F.R.D. 468, 490 (E.D. Pa. 2010) (finding that the Girsh factors weigh in favor of approving the agreement, and that it is not necessary to expand to the Prudential factors ). In determining whether a settlement is fair, reasonable, and adequate, [c]ourts in this Circuit give considerable weight and deference to the views of experienced counsel as to the merits of an arms-length settlement. Moore, 2014 WL , at *3 (granting final approval 8

15 Case 2:16-cv PD Document Filed 07/25/18 Page 15 of 31 of settlement); In re Automotive Refinishing Paint Antitrust Litig., MDL 1426, 2004 WL , at *2 (E.D. Pa. Sept. 27, 2004) (finding settlement fair, reasonable, and adequate). A. The Girsh Factors Support Final Approval of the Settlement 1. The Complexity, Expense, And Likely Duration of the Litigation Supports the Settlement The first Girsh factor addresses the probable costs, in both time and money, of continued litigation. NFL, 821 F.3d at 437. A settlement is favored when continuing litigation through trial would have required additional discovery, extensive pretrial motions addressing complex factual and legal questions, and ultimately a complicated, lengthy trial. In re Warfarin Sodium Antitrust Litig. ( Warfarin ), 391 F.3d 516, 536 (3d Cir. 2004). ERISA is an enormously complex statute and many ERISA matters also involve facts that are exceedingly complicated. Conkright v. Frommert, 559 U.S. 506, 509 (2010); Wachtel v. Health Net, Inc., 482 F.3d 225, 237 (3d Cir. 2007) ( ERISA is an enormously complicated statute. ). Courts within this Circuit have recognized that the complexity of ERISA class actions and the corresponding expense and duration of litigation favored settlement. E.g., In re Ikon Off. Sols., Inc. Securities Litig. ( Ikon ), 209 F.R.D. 94, 104 (E.D. Pa. 2002) (finding numerous complex issues some novel under ERISA 502(a)(2) & (a)(3) weighed in favor of settlement where [t]rial would require lengthy inquiries into defendants fiduciary breaches and whether any communications from defendants constituted a material misrepresentation ); McCoy v. Health Net, Inc., 569 F. Supp. 2d 448, (D.N.J. 2008) (granting final approval based on many difficult questions of law in ERISA class action and the likelihood of appeal from any decision on the merits); Mehling v. New York Life Ins. Co., 248 F.R.D. 455, 460, 465 (E.D. Pa. 2008) (granting final approval of ERISA breach of fiduciary duty class action because it involved 9

16 Case 2:16-cv PD Document Filed 07/25/18 Page 16 of 31 complex issues under ERISA and [g]iven the length of time and the substantial expense required to resolve this matter through continued litigation )). Without the Settlement, the Parties would likely have faced several additional years of litigation, including appeal from any decisions on the merits. Had they not reached a settlement, Plaintiffs would have continued discovery on the merits. Plaintiffs would have likely deposed at least 11 fact witnesses in addition to the eight individual defendants, plus additional depositions for expert discovery. Prior to trial, Plaintiffs would have had their experts complete their analyses as to relief. Defendants would have likely moved for summary judgment on some or all of the issues in the case. And certainly, the non-prevailing parties would have taken an appeal. Thus, the complexity, expense, and likely duration of the litigation favor final approval of the Settlement. 2. The Stage of the Proceedings and the Amount of Discovery Completed Supports Approval of the Settlement The next Girsh factor considers the degree of case development that class counsel had accomplished prior to settlement to determine whether counsel had an adequate appreciation of the merits of the case before negotiating. Warfarin, 391 F.3d at 537. What matters is not the amount or type of discovery class counsel pursued, but whether they had developed enough information about the case to appreciate sufficiently the value of the claims. NFL, 821 F.3d at 439. In making this assessment, courts consider the amount of discovery conducted or whether the parties had otherwise obtained sufficient information to conduct meaningful, well-informed settlement negotiations. Mehling, 248 F.R.D. at 460 ( Given the amount of discovery completed, the Court finds that both parties had sufficient evidence to conduct meaningful, arms-length negotiations reflecting the relative strengths of the claims. ); In re Elec. Carbon Prods. Antitrust Litig., 447 F. Supp. 2d 389, 400 (D.N.J. 2006) ( Where this negotiation process follows 10

17 Case 2:16-cv PD Document Filed 07/25/18 Page 17 of 31 meaningful discovery, the maturity and correctness of the settlement become all the more apparent. ). Here, the Parties held two full days of mediation with an experienced mediator following substantial discovery and motion practice. Barton Decl. 2, 6. Prior to the first mediation, Defendants motion to dismiss was fully briefed, and, as a result, Class Counsel had a thorough understanding of Defendants arguments and defenses. Id. 3. By the time of the second mediation, the Parties had completed all discovery related to class certification, which included substantial document production and a Rule 30(b)(6) deposition of Wawa as well as the deposition of the Plaintiffs and Proposed Class Representatives. Id. 4. Plaintiffs had also obtained document discovery from all known relevant non-parties. Id. 5. As part of settlement discussions, Defendants agreed to and did produce additional documents and data related to the merits and individual class data that enabled assessment of the Class s potential recovery. Id. 7. In order to assess the potential value of the claims, Class Counsel hired two different experts one to assess the losses if Plaintiffs claims as to their right to continue to hold Wawa stock in their ESOP accounts succeeded, and a valuation expert to opine as to the correct fair market value that Wawa should have paid to the Class for Wawa stock liquidated in September Id.. Thus, Class Counsel was well informed of the merits of case and potential remedies and had sufficient information to negotiate the Settlement and determine that it is fair, adequate, and reasonable. Further, [a] presumption of correctness is said to attach to a class settlement reached in arms-length negotiations between experienced, capable counsel after meaningful discovery. In re Linerboard Antitrust Litig., 296 F. Supp. 2d 568, 578 (E.D. Pa. 2003) Moore, 2014 WL , at *3 (same). In addition to being well-informed about the facts and the legal theories, 11

18 Case 2:16-cv PD Document Filed 07/25/18 Page 18 of 31 Class Counsel are experienced in litigating ERISA class actions, including ESOP cases. Dkt. No ; Dkt. No Thus, this factor is readily met. 3. The Risks of Establishing Liability and Damages and Maintaining the Class Action Through the Trial Support Approval of the Settlement In considering the risks of establishing liability, courts examine what the potential rewards (or downside) of litigation might have been had class counsel decided to litigate the claims rather than settle them. In re Cendant Corp. Litig. ( Cendant ), 264 F.3d 201, 237 (3d Cir. 2001). The inquiry concerning the risks of establishing damages attempts to measure the expected value of litigating the action rather than settling it at the current time. Id. at 238. Courts consider the risks of establishing both liability and damages in order to balance the likelihood of success and the potential damage award if the case were taken to trial against the benefits of an immediate settlement. NFL., 821 F.3d at 439. And courts also take into account the likelihood of obtaining and keeping a class certification if the action were to proceed to trial. Warfarin, 391 F.3d at 537 (quoting GM, 55 F.3d at 817). Here, if the Parties had not reached the Settlement, Plaintiffs would have faced risks on class certification on some claims and on all claims on the merits and remedies. First, Defendants stipulated to class certification only with respect to Counts I, II, III, V, VII, and IX. See Dkt. No , 4. Defendants opposed class certification as to Counts IV, VI, and VII (respectively claims alleging misrepresentation, improperly unilaterally amending the terms of the Plan, and furnishing SPDs that violated ERISA 102). Dkt. No. 85 (Defendants class certification opposition). As another court in this District recognized in approving a class action settlement in an ERISA breach of fiduciary duty case, there are certainly risks of maintaining the class through trial in such ERISA cases. Ikon, 209 F.R.D. at

19 Case 2:16-cv PD Document Filed 07/25/18 Page 19 of 31 Second, ERISA cases alleging breach of fiduciary duties are difficult and therefore involve significant risk. Ikon, 209 F.R.D. at 107 (recognizing risks of establishing liability in fiduciary breach case involving investment in employer stock). For example, in a case alleging breach of fiduciary duties involving an ESOP invested in privately held stock, a court found in favor of the defendants on all claims after 34 trial days. Fish v. Greatbanc Tr. Co., 09 C 1668, 2016 WL , at *1 and *68 (N.D. Ill. Sept. 1, 2016); see also Noa v. Keyser, 519 F. Supp. 2d 481, 492 (D.N.J. 2007) (finding no fiduciary breach by forcing sale of employer stock held in 401(k) plan). While Plaintiffs believe that their claims are strong, Class Counsel recognize that those claims are subject to potential defenses and arguments. For example, on their motion to dismiss, Defendants argued that the representations in the SPDs at issue were accurate, Plaintiffs received adequate consideration for their Wawa stock, and Defendants followed an appropriate process to determine the stock s value. See Dkt. No at 10-16, 19-23, They likely would have raised those arguments on summary judgment and on appeal. Third, Plaintiffs would also have faced the obstacle of establishing the correct model for calculating the amount of losses to the Plan and to Plaintiffs and the Class. See Mehling, 248 F.R.D. at 461 (noting proving damages would involve a battle of the experts on complex factual questions and there is no guarantee that the Court would accept their estimate of damages over Defendants' estimate ). As in other ERISA cases, Plaintiffs would have faced substantial challenges in establishing liability and remedies. E.g., McCoy, 569 F. Supp. 2d at 461 (noting presence of difficult issues that create a risk that Plaintiffs would not be able to establish liability at trial or on summary judgment ); Mehling, 248 F.R.D. at 461 (recognizing even if liability were established, determining the amount of loss to the Plans would be complex and 13

20 Case 2:16-cv PD Document Filed 07/25/18 Page 20 of 31 highly contested ). Thus, the risks associated with liability, damages, and class certification favor final approval of the Settlement. 4. Defendants Ability to Withstand a Greater Judgment Does Not Favor or Disfavor Approval of the Settlement This Girsh factor considers whether the defendants could withstand a judgment for an amount significantly greater than the [s]ettlement, Warfarin, 391 F.3d at , and is most relevant when the defendant s professed inability to pay is used to justify the amount of the settlement. NFL, 821 F.3d at 440. Here, Plaintiffs reached the Settlement Agreement based on the strengths and weaknesses of the case without regard to Defendants ability to pay the full amount of a greater judgment. See Dkt. No. 120 at (granting preliminary approval where the Parties conducted substantial discovery related to the merits and the Class potential recovery and Class Counsel hired experts to assess the potential value of the Class claims ). A defendant s ability to afford a greater judgment than the settlement amount does not generally weigh against approval of the settlement. Warfarin, 391 F.3d at 538 ( [Defendant] s ability to pay a higher amount was irrelevant to determining the fairness of the settlement ); W. Palm Beach Police Pension Fund v. DFC Glob. Corp., CV , 2017 WL , at *6 (E.D. Pa. Sept. 20, 2017) ( [T]he fact that [defendant] could pay more does not weigh against approval of the settlement ). The reason is that the fact that [defendant] could afford to pay more does not mean that it is obligated to pay any more than what the [] class members are entitled to under the theories of liability that existed at the time the settlement was reached. Warfarin, 391 F.3d at 538. Courts regularly approve settlements where a settling defendant has had the ability to pay greater amounts. E.g., McCoy, 569 F. Supp. 2d at 462 (enumerating cases); In re Elec. Carbon Prods. Antitrust Litig., 447 F. Supp. 2d at 402 (approving settlement on the assumption that a larger judgment would not lie beyond the financial capabilities of the 14

21 Case 2:16-cv PD Document Filed 07/25/18 Page 21 of 31 Defendants ); W. Palm Beach Police Pension Fund, 2017 WL , at *6. Thus, this factor is neutral to Plaintiffs request for final approval of the Settlement. 5. The Range of Reasonableness of the Settlement in Light of the Best Possible Recovery and All Attendant Risks of Litigation Supports Approval of the Settlement The two Girsh factors concerning the range of reasonableness of a settlement evaluate whether the settlement represents a good value for a weak case or a poor value for a strong case. Warfarin, 391 F.3d at 538. In conjunction, [t]he factors test two sides of the same coin: reasonableness in light of the best possible recovery and reasonableness in light of the risks the parties would face if the case went to trial. Id. In making this determination, [t]he present value of the damages plaintiffs would likely recover if successful, appropriately discounted for the risk of not prevailing, should be compared with the amount of the proposed settlement. NFL, 821 F.3d at 440. Courts must guard against demanding too large a settlement based on its view of the merits of the litigation; after all, settlement is a compromise, a yielding of the highest hopes in exchange for certainty and resolution. GM, 55 F.3d at 806. Here, the Settlement provides substantial relief to the Class. The Settlement of $25 million represents an additional payment of nearly $1,000 per share for the Class Members (before deducting fees and costs). In Class Counsel s opinion, which was supported by two consulting experts hired to assist Class Counsel in connection with the mediation, the range of possible recoveries was between $0 and approximately $100 million. Dkt. No The Class would not be able to recover under both theories (A) the fair market value of the Wawa stock liquidated in September 2015 and (B) the present value of the right to continue holding Wawa stock until age 68 because these are alternative claims for recovery. Id. In Class Counsel s opinion, the Class was more likely to recover under the former theory, but the latter 15

22 Case 2:16-cv PD Document Filed 07/25/18 Page 22 of 31 theory would have resulted in a larger recovery. Id. If Plaintiffs prevailed on all the disputed issues regarding fair market value of Wawa stock, the maximum recovery would have been approximately $50 million. Id. If Plaintiffs had prevailed on all disputed issues regarding the right to continue holding Wawa stock, the maximum recovery would have been approximately $100 million. Id. Thus, the $25 million Settlement Fund represents approximately 25% of the best possible recovery if Plaintiffs had prevailed on the more difficult theory of recovery and approximately 50% of the best possible recovery under the less difficult theory. Under either theory, the Settlement is reasonable given the risks that Plaintiffs would have faced at trial. These percentages compare favorably with settlements that have been approved throughout this Circuit. E.g., McDonough v. Toys R Us, Inc., 80 F. Supp. 3d 626, 646 (E.D. Pa. 2015) (24% of estimated actual damages); Jackson v. Wells Fargo Bank, N.A., 136 F. Supp. 3d 687, 706 (W.D. Pa. 2015) (19.5% of class best possible recovery at trial); Barel v. Bank of Am., 255 F.R.D. 393, 402 (E.D. Pa. 2009) (recovery representing 5.2% of high end and 52% of low end of damages range of $2.7 to $27 million). Many ERISA class actions settle for far less than these percentages. E.g., Mehling, 248 F.R.D. at 462 (20% recovery); Johnson v. Fujitsu Tech. and Bus. of Am., Inc., 16-CV NC, 2018 WL , at *5 (N.D. Cal. May 11, 2018) (10% recovery); Boyd v. Coventry Health Care Inc., 299 F.R.D. 451, 463 (D. Md. 2014) (approving settlement that recovered 3.2% of estimated maximum losses); Williams v. Rohm & Haas Pension Plan, 658 F.3d 629, 634 (7th Cir. 2011) (24.3% recovery); In re WorldCom, Inc. ERISA Litig., No. 02-civ (DLC), 2004 WL , at *6 (S.D.N.Y. Oct. 18, 2004) (7% recovery). The Settlement Fund is well within the range of reasonable recovery that is fair, adequate, and reasonable. 16

23 Case 2:16-cv PD Document Filed 07/25/18 Page 23 of The Reaction of the Class to the Settlement Supports Approval of the Settlement This factor attempts to gauge whether members of the class support the settlement. NFL, 821 F.3d at 438. Typically, the reaction of the class is gauged by looking at the percentage of objections received in relation to the class as a whole. In re CertainTeed Corp. Roofing Shingle Prods. Liab. Litig., 269 F.R.D. 468, 485 (E.D. Pa. 2010) (finding number of objectors 78 from 40,000-member class or about 2% very small ). That a small percentage of class members raise objections favors approval of the settlement. See id.; In re Nat l Football League Players' Concussion Injury Litig., 307 F.R.D. 351, 389 (E.D. Pa. 2015) (finding reaction of class favored approval of settlement where only approximately 1% of Class Members filed objections ); Chakejian v. Equifax Info. Servs., LLC, 275 F.R.D. 201, 212 (E.D. Pa. 2011) ( two objectors in a class of nearly forty thousand represents a small number that weighs in favor of this settlement ); Stoner v. CBA Info. Servs., 352 F.Supp.2d 549, 552 (E.D. Pa. 2005) (finding five objections out of class of 11,980 indicated more than favorable class reaction ); Stoetzner v. U.S. Steel Corp., 897 F.2d 115, (3d Cir. 1990) (finding 29 objections from 281- member class strongly favor[] settlement ). Courts may also examine the nature of any objection to determine whether it provides a substantive basis for disapproval of the settlement. Ikon, 209 F.R.D. at 104; Chakejian, 275 F.R.D. at 212. Because [a] settlement is, after all, not full relief but an acceptable compromise, [o]bjections based solely on the amount of the award lack merit. Henderson v. Volvo Cars of N.A., LLC, CIV.A CCC, 2013 WL , at *9 (D.N.J. Mar. 22, 2013); In re Imprelis Herbicide Mktg., Sales Practices and Prods. Liab. Litig., 296 F.R.D. 351, (E.D. Pa. 2013) (quoting Henderson). On May 22, 2018, the Settlement Administrator mailed the Class Notice to 1,264 Class members identified by Defendants. Dkt. No , 6. Of those 1,264 Notices, only 15 were 17

24 Case 2:16-cv PD Document Filed 07/25/18 Page 24 of 31 ultimately returned as undeliverable. Id. 7. To address any questions or concerns about the Settlement, Class Counsel on June 10, 2018 held a two-hour town hall meeting in Swarthmore, Pennsylvania, where Class Members had the option to attend in person, participate via streaming video conference or later watch the recorded meeting. Barton Decl. 10. At that meeting, the Class Members generally expressed positive reaction to the Settlement. Id.. Additionally, Class Counsel has responded to a number of other inquiries by Class Members by telephone or by . Id. 11. Of the 1,249 Class Members to whom Notices were successfully delivered, only one person, Brad S. Wall, filed with the Court an objection to the Settlement. Dkt. No As his objection represents less than 0.1% of the Class, the reaction of the Class to the Settlement is more than favorable. Stoner, 352 F.Supp.2d at 552; see also NFL, 821 F.3d at 438 (affirming settlement approval where only approximately 1% of class members objected ). Class Counsel is not aware of any other person who has objected to the Settlement. Barton Decl. 15. The primary basis of Mr. Wall s objection is that the valuation of the settlement is grossly understated. Dkt. No Prior to Mr. Wall filing the objection, Class Counsel explained to him the risks associated with class certification, the merits of the case, and loss calculations in a telephone conversation lasting at least a half an hour. Barton Decl. 12. Mr. Wall s objection fails to take into account the risks on class certification or the risks of Plaintiffs not prevailing on the merits or remedies. First, Defendants have vigorously opposed class certification with respect to Counts IV, VI, and VII (the claims on which Mr. Wall disagrees about the appropriate value). Had the Court denied class certification with respect to those counts, only the named Plaintiffs in the case, but not Mr. Wall, would have had those claims and could have recovered under them. In addition to the risks associated with class certification, Mr. Wall s loss estimate based on how much the Wawa stock that he was forced to sell in

25 Case 2:16-cv PD Document Filed 07/25/18 Page 25 of 31 would have been worth at age 68 presumes that Plaintiffs would have prevailed on one of those three claims, which seeks invalidation of the 2015 Plan amendment and reformation of the Plan consistent with its pre-amendment terms. As discussed above, Plaintiffs would have faced significant obstacles in establishing those claims. Finally, Mr. Wall s loss calculation based on the rise of the share price of Wawa stock in the two and a half years after the forced sale amounts to nothing more than a claim based on perfect hindsight. Noa, 519 F. Supp. 2d at 492. The law is clear that hindsight cannot play a role in determining whether a fiduciary's actions were prudent, In re Unisys Sav. Plan Litig., No , 1997 WL , at *23 (E.D. Pa. Nov. 24, 1997), aff'd, 173 F.3d 145 (3d Cir.1999). Thus, Plaintiffs would not have been able to recover under a hindsight-based breach of fiduciary theory. Instead, the approach that Class Counsel considered in settlement negotiations on these claims is an assessment of the option value of the right to hold the stock to age 68, which is based on the well-established in fact, a Nobel-prize winning Black Scholes Model methodology. See Dkt. No Mr. Wall s additional basis for objection that he was not able to participate in the settlement discussions also does not justify disapproval of the Settlement. First, there has been media coverage about this case since it was filed in February E.g., Jared Shelly, Former Wawa Employee Proposes Big Class-Action Suit Against Convenience Store Chain, Philadelphia Magazine, (Feb. 18, 2016), Information has also been posted on the websites of Class Counsel since inception. Barton Decl Thus, Mr. Wall could have found out about this 3 The links for Class Counsels websites are available at

26 Case 2:16-cv PD Document Filed 07/25/18 Page 26 of 31 lawsuit by conducting a quick Internet search. Second, before the Settlement Agreement was finalized in December 2017, Mr. Wall had had more than two years after the 2015 Plan amendment to hire a lawyer and file his own suit separately. He did not take any action to pursue these claims, but now criticizes the result achieved by the three Class Representatives who were willing to take action on behalf of the Class. Finally, Class Counsel did not have the contact information of Class Members, including Mr. Wall, until May Id. 14. Even if the Court had certified the Class prior to the Settlement, notice of class certification under Rule 23(b)(1) and (b)(2) is not required. Becker v. Bank of New York Mellon Tr. Co., N.A., , 2016 WL , at *11 (E.D. Pa. Oct. 5, 2016) (citing Rule 23(c)(2)(A) and stating for any class certified under Rules 23(b)(1) or 23(b)(2), the court may direct appropriate notice to the class, but is not always required to do so ). And it would not be feasible for Class Counsel to invite the opinion of numerous or even selected absentee Class Members, as that is the role of the class representatives and the purpose of the class notice. In sum, Mr. Wall s complaint about his recovery under the Settlement and not being part of the settlement discussions does not undermine the significance of the favorable reaction of the Class in favor of approval of the Settlement. B. The Non-Mandatory Prudential Factors Support Final Approval While not mandatory, the Prudential factors also weigh in favor of approving the Settlement. See In re Nat l Football League Players' Concussion Injury Litig., 307 F.R.D. at 396 ( Prudential factors are substantially similar to the factors provided in Girsh ). First, this litigation, including the discovery conducted, had proceeded far enough that Class Counsel were

27 Case 2:16-cv PD Document Filed 07/25/18 Page 27 of 31 able to assess the probable outcome of trial. Supra I.B. Second, Class Counsel are unaware of any related claims asserted by other classes or other claimants. Barton Decl. 16. Third, as the case was certified as a mandatory class action under Rule 23(b)(1) and 23(b)(2) for settlement purposes, Class Members are not accorded the right to opt out of the Settlement. Fourth, as discussed in detail in Plaintiffs pending Motion for Attorneys Fees, the request for attorneys fees is reasonable. Dkt. Nos. 121 & Fifth, the process of administering the Settlement imposes no more requirements than necessary on the Class and is fair and reasonable. In re Nat l Football League Players' Concussion Injury Litig., 307 F.R.D. at 396. As each Class Member s share of the Net Settlement Amount is determined on a pro rata basis under the Plan of Allocation and will be distributed automatically through the Wawa ESOP, Class Members do not need to submit a claim form. Agmt. V.5. Utilizing the usual procedures to request a distribution from the Plan, Class Members need only submit a Distribution Election Form. Id. If a Class Member has not yet submitted a distribution request, the settlement money will be transferred to the 401(k) Plan without a fee and a Class Member may request distribution from the 401(k) Plan utilizing the usual procedures to request a distribution from that Plan. Id. In short, all of the non-mandatory Prudential factors also support this settlement. III. THE PLAN OF ALLOCATION IS FAIR, REASONABLE, AND ADEQUATE, AND MERITS PRELIMINARY APPROVAL Approval of a plan of allocation of a settlement fund in a class action is governed by the same standards of review applicable to approval of the settlement as a whole: the distribution plan must be fair, reasonable and adequate. Mehling, 248 F.R.D. at 463; Sullivan v. DB Invs., Inc., 667 F.3d 273, 326 (3d Cir. 2011) ( A district court s principal obligation in approving a plan of allocation is simply to ensure that the fund distribution is fair and reasonable as to all participants in the fund. ). In general, a plan of allocation that distributes settlement proceeds to class members 21