Dallas BBQ $22.5 Million ESOP Class Action Settlement

Individuals who held vested W BBQ Holdings Inc. employee stock ownership plan stock between July 29, 2016, and Dec. 31, 2025, or their beneficiaries may be eligible to receive a cash payment and other benefits from a class action settlement.

W BBQ Holdings Inc., d/b/a Dallas BBQ, agreed to pay an estimated $22.5 million to resolve a class action lawsuit alleging it violated the Employee Retirement Income Security Act. The lawsuit alleged the original owners of Dallas BBQ and the trustee that oversaw the transaction breached their fiduciary duties by selling the company to the employee stock ownership plan at an inflated price in 2016.

Who are the class members?

The settlement class includes all participants in the W BBQ Holdings Inc. employee stock ownership plan on or after July 29, 2016, who vested in whole or in part under the terms of the plan and those participants' beneficiaries.

Additional details

• The class includes current Dallas BBQ employees with vested ESOP shares, former employees who had vested shares during the class period and beneficiaries.
• Beneficiaries include surviving spouses, alternate payees under qualified domestic relations orders and other legal representatives.
• The court certified the class as mandatory, meaning the settlement automatically includes all class members and they cannot exclude themselves from it.

How much can class members get?

The settlement provides several forms of relief with an estimated total value of $22.5 million. This includes a $10 million cash payment, $12 million in loan principal forgiveness and $9.7 million in accrued interest forgiveness. The loan forgiveness increases the value of the Dallas BBQ stock held in current participants' ESOP accounts.

The settlement administrator will distribute the $10 million cash payment according to the court-approved plan of allocation:

• For shares cashed out as of Dec. 31, 2025, or earlier, each class member will receive $24.70 per share.
• For vested shares held in an ESOP account after Dec. 31, 2025, each class member will receive a pro rata share of the $10 million cash payment after court-approved deductions adjusted for any payments class members received from a related Department of Labor settlement.
• Former employees, who make up approximately 85% of class members, will receive their full calculated share because they are not eligible for the DOL settlement cash allocation.
• Current employees, who make up approximately 15% of class members, will receive a payment reduced by 60% of their expected 2026 DOL settlement cash allocation.

Class members will also receive distributions from their ESOP accounts in five equal annual installments:

• Former employees will receive distributions beginning the year after the settlement becomes final.
• Employees who separate from Dallas BBQ within one year after the settlement becomes final and who had ESOP accounts worth less than $5,000 as of Dec. 31, 2025, will receive distributions beginning the year after their separation.

No claim form needed to receive payment

Class members do not need to submit a claim form to receive payment. The settlement administrator will automatically distribute payments by check.

Class members who prefer a rollover to a qualified retirement account must submit the rollover form online or download, print and complete the PDF rollover form and mail it to the settlement administrator. The deadline to submit a rollover form is July 24, 2026.

Settlement administrator's mailing address: Dallas BBQ ESOP Settlement, c/o Atticus Administration, P.O. Box 64053, St. Paul, MN 55164

Payout options

• Physical check
• Direct rollover to a qualified retirement account

$22.5 million settlement

The $22,500,000 settlement includes:

• Cash payment: $10,000,000
• Loan principal forgiveness: $12,000,000
• Accrued interest forgiveness: $9,700,000

The $10 million cash payment includes:

• Settlement administration costs: To be determined
• Attorneys' fees: Up to $6,200,000
• Attorneys' expenses: Up to $850,000
• Service awards to class representatives: Up to $50,000 total
• Payments to eligible class members: Remainder of the cash payment

Important dates

• Deadline to submit a rollover form: July 24, 2026
• Fairness hearing: Aug. 14, 2026

When is the Dallas BBQ ESOP class action settlement payout date?

If the court approves the settlement and no one appeals, the settlement administrator will distribute the cash payments on or before March 15, 2027. Appeals may extend that timeline. The settlement administrator will determine the increase in ESOP stock value in 2027 and begin distributions from shares held by class members the year after the settlement becomes final.

Why did this class action settlement happen?

The lawsuit alleged that, in 2016, Dallas BBQ and related parties violated ERISA by selling the company to the ESOP at an inflated price and breaching their fiduciary duties.

The defendants denied all allegations of wrongdoing and argued the sale was for fair market value and did not harm the plan or its participants. Both sides agreed to settle to avoid the costs, risks and delays of continued litigation.

Sources

1. Class notice
2. Rollover form