Whataburger is currently contesting a potential class action lawsuit related to losses in its employee retirement plans. The lawsuit, initiated by former San Antonio employee Manuel Esquivel, alleges that Whataburger mismanaged the $215 million retirement plan by retaining underperforming investments instead of opting for better alternatives.
Esquivel’s complaint, filed in March, accuses Whataburger Restaurants LLC, its board, and the plan’s administration committee of failing to adequately monitor the investments. Specifically, Esquivel points to two mutual funds—The MainStay Winslow Large Cap Growth Fund Class R1 and the Janus Henderson Triton Fund Class T—as having consistently underperformed compared to their benchmarks.
Whataburger has moved to dismiss the lawsuit, arguing that the alleged underperformance of the funds does not demonstrate significant and consistent losses over the long term. Additionally, Whataburger contends that Esquivel waived his right to sue when he signed a severance agreement that included a release from any future claims related to his employment.
In its defense, Whataburger asserts that Esquivel cannot claim rights to sue on behalf of the retirement plan while simultaneously accepting severance benefits, which included a waiver of his rights to pursue legal actions against the company.
As of the end of 2022, Whataburger’s 401(k) retirement plan boasted over 36,000 participants and ranks within the top 0.9 percent of all U.S.-defined contribution plans by total assets, according to the lawsuit. Similar lawsuits under the Employee Retirement Income Security Act of 1974 have been filed against other employers nationwide, including Texas-based grocer H-E-B.
This proposed class action lawsuit adds to Whataburger’s ongoing legal challenges. Recently, the fast food chain filed a trademark infringement lawsuit against What-A-Burger #13, a small restaurant in North Carolina, which has responded by expressing concern over its future against the larger national chain.