Earlier this month, a judge ruled in favor of nearly 6,600 former Piggly Wiggly employees who sued the now collapsed Piggly Wiggly Carolina Co. over lost retirement benefits and approved an $8.7 million settlement to be split between the former employees. According to the agreement, about a third of the money will be spent to pay for attorney fees, meaning the average payout per employee will be less than $1,000.
The lawsuit was filed earlier this year in May and accused Piggly Wiggly executives of “carting off millions of dollars while” employee retirement benefits disappeared and the company crumbled.
The ruling from U.S. District Judge Richard Gergel reached his decision regarding the lawsuit after listening to a 90-minute hearing “between the Charleston-based company’s employee-owners and its senior management team.” When commenting on it, he called the settlement “an imperfect remedy,” and added, “I find the settlement is fair and adequate and reasonable.”
Payouts for the former employees are expected to begin this fall, according to Eric Amstutz, an attorney for the plaintiffs. He added that the amount each plaintiff receives will vary depending on the individual losses they experienced.
So where will the settlement funds come from? Who’s responsible for paying the $8.7 million? For starters, David Schools, the former Piggly Wiggly CEO, along with two other top executives will pay $3.45 million, despite admitting no wrongdoing. Another chunk of the settlement money is expected to come from the sale of land “they own in Savannah valued between $975,000 and $1.95 million and put the proceeds toward the settlement.” The rest is expected to come from the companies “insurance funds and other sources, bringing the total to between $7.65 million and $8.65 million.”
Not all the plaintiff’s agreed with the settlement, though. Of the nearly 6,600 plaintiff’s, eight individuals objected, according to John Moylan, the attorney who filed the case. In a court brief, he said:
“Class counsel respectfully believe that none of these objections warrants reconsideration of the settlement. The scarcity of objections to this settlement, particularly given the thousands of individuals who received notice of it, suggests ‘broad, class-wide support for the settlement and supports its approval.’ ”
He added that many of the objections stemmed from beliefs that the settlement was too low in comparison to the wrongdoing committed by the Schools and other Piggly Wiggly executives. One of the plaintiffs who objected was Rita Postell. According to her, she worked for the company for 40 years before retiring. However, upon retiring she said her benefits shriveled. While employed with the company, she was tasked with traveling to company stores throughout Georgia and South Carolina to “reinforce the benefit of the company’s employee stock ownership plan.” She said, “Not only was I deceived, but the many employees that believed in what I promoted were deceived as well…It appears many of us were puppets in a Ponzi scheme (of) sorts.”
Like some of the other objectors, Postell feels as though the settlement amount is too low, and also thinks Schools and other company executives should be held accountable for their actions. She said:
“The admission of wrongdoing should definitely be included in this settlement if there is to be justice. The company’s executives were siphoning the company’s worth into their personal worth. The lies told were a sham and never had any consideration for employees.”
Piggly Wiggly’s downward spiral began in the mid-2000s as the company’s management team changed hands. During this transition to a new management team, company executives began taking large bonuses while employee stock-ownership accounts shriveled up and store after store began closing.