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Travel Co. Workers Agree To $8.7M Deal To End ESOP Suit


January 27, 2023

Workers for a travel company asked a Pennsylvania federal judge to sign off on an $8.7 million deal to resolve their proposed class action claiming their employee stock ownership plan was overcharged when it shelled out $200 million to buy shares from three of their employer’s founders.

The employees asked the court Wednesday to greenlight the settlement between ESOP manager Prudent Fiduciary Services, Prudent founder Miguel Paredes, World Travel Inc. co-founder James A. Wells and a class of workers who said the costly stock transaction ran afoul of the Employee Retirement Income Security Act.

“A settlement avoids the risks and delays attendant with continued litigation and ensures the class members will each receive approximately $11,950 on average before fees and expenses — an amount that far exceeds most other ERISA settlements on similar issues,” the workers said.

The workers said Prudent and Paredes let them overpay in 2017 by allowing three World Travel founders to sell their shares to the ESOP at more than market value while retaining control of the company board.

The May 2021 suit said the $200 million valuation was based on unrealistic growth projections, which left the proposed class receiving smaller amounts of stock, losses to their individual accounts and “tens of millions” of dollars of debt to the plan at large.

. . .

The employees are represented by Daniel Sutter, Laura Older Rockmore, Mary Bortscheller and Michelle C. Yau of Cohen Milstein Sellers & Toll PLLC and Patricia Mulvoy Kipnis, Gregory Y. Porter, Laura E. Babiak, Patrick O. Muench and Ryan T. Jenny of Bailey Glasser LLP.

Read the article on Law360.