A certified class of employee stock ownership plan participants is asking a New York federal court to ensure that a proposed BBQ ESOP DOL $15M settlement will not extinguish their path to trial in a parallel retirement benefits lawsuit tied to a $99 million stock deal.

The class, representing participants in the W BBQ Holdings Inc. ESOP, filed a letter Monday in its Employee Retirement Income Security Act case seeking clarity about a proposed consent order and judgment lodged by the U.S. Department of Labor in a separate enforcement action. The DOL docketed that proposed settlement Friday after announcing it had reached an agreement to resolve claims against Argent Trust Co. and company executives Herbert and Gregor Wetanson.

$99M Stock Deal at the Heart of the Fight

The Labor Department’s enforcement case, filed in December 2024, targets the same 2016 transaction that the ESOP class challenged in 2022: a $99 million private stock purchase in which the plan acquired 80% of company shares.

The proposed settlement calls for a $1 million cash payment from the Wetansons, a $100,000 civil penalty and a $14 million reduction in principal owed on a $71 million loan the company carries to the Wetansons. It also cancels warrants issued in the 2016 transaction — instruments the DOL said were never redeemed.

According to the DOL, those warrants would have allowed the Wetansons to acquire up to 40% of the company, potentially diluting the value of employee-held shares.

But the ESOP class, certified in May, told the court it wants confirmation that the proposed consent judgment will not block its own claims from proceeding. If the government or defendants take the position that the deal forecloses the class’s case, “the class objects to the entry of the consent order and judgment,” the letter states.

The class further contended the settlement consideration is insufficient — signaling it intends to press forward toward trial.

Restaurants, Valuations and “Cherry-Picked” Data

The DOL’s complaint alleges that shareholders in the 2016 transaction — including the Wetansons — operated 12 New York City restaurants, 10 under the Dallas BBQ brand, known for budget-friendly barbecue and frozen drinks.

The government claims the ESOP transaction relied on “cherry-picked and outdated data,” painting an overly optimistic picture of the restaurant business. Those projections, the DOL alleges, caused the plan to overpay for company stock, harming employee participants.

The agency also asserted that the 20% stake not sold to the ESOP was converted into warrants, a move that could have further depressed share value.

In a letter supporting the settlement, the DOL urged the court to approve the agreement, stating there was “no suggestion of improper collusion or corruption” and that the resolution adequately addressed the alleged ERISA violations.

Still, attorneys for Argent Trust Co. and the Wetansons, while seeking approval of the deal, pushed back on language suggesting they “caused and knowingly participated” in ERISA breaches. They pointed to provisions clarifying that the settlement does not constitute an admission or denial of wrongdoing.

The class action against company executives and Argent is moving toward trial after Argent failed in 2022 to compel arbitration.

Argent declined to comment. Counsel for the Wetansons and the class did not immediately respond to requests for comment.

The DOL is represented by attorneys from its Office of the Solicitor. Argent and the Wetansons are represented by Groom Law Group Chartered. The class is represented by Cohen Milstein Sellers & Toll PLLC.

As the court weighs whether to bless the BBQ ESOP DOL $15M deal, one question looms: Will the government’s settlement close the chapter — or merely set the stage for a broader reckoning at trial?