Market Basket Mismanaged Employees' Investments: Lawsuit

TEWKSBURY, MA — The profit-sharing plan that was part of Market Basket CEO Arthur T. DeMoulas's effort to rally employees around his reinstatement five years ago is the subject of a class-action lawsuit filed this week against the Tewksbury-based grocery chain. The federal lawsuit accuses parent company DeMoulas Super Markets Inc. of using an overly conservative, "wildly unsuccessful" investment strategy for the profit-sharing plan and depriving workers of millions of dollars in retirement savings.

According to the Boston Business Journal, which first reported this story, Market Basket says the lawsuit filed in the name of former employee Paul Toomey has "no merit." Five years ago, employees rallied around for the reinstatement of DeMoulas after he was ousted from the company. Workers were inspired by DeMoulas's commitment to better employee benefits, including the profit-sharing retirement plan.

Market Basket puts a portion of profits in the $750 million plan and employees get their portion when they retire. The lawsuit claims investment returns on the plan were the worst in the country when compared to nearly 700 similar plans between 2012 and 2016 because administrators used an overly-conservative investment strategy.

"These abysmal returns were not the result of coincidence or bad luck," the lawsuit says. “Rather, they are the product of a fundamentally flawed investment strategy that effectively guarantees that participants will not adequately save for retirement."

For more on this story, see the Boston Business Journal.