Rite Aid Beats Former Employee’s Insider Trading Allegation

Rite Aid prevailed in a case against a former employee who alleged the company’s executives engaged in insider trading during negotiations with Walgreens, under an order from a federal district court in Pennsylvania.

James Wickens alleged Rite Aid Headquarters Corp. fired him to retaliate for his bringing up insider trading concerns. But Rite Aid showed “clear and convincing evidence” that it fired Wickens regardless of those concerns and that his termination was part of broader layoffs, the U.S. District Court for the Middle District of Pennsylvania said Monday.

In 2017, Wickens learned vice presidents at Rite Aid sold their stock in the company after learning a merger agreement with Walgreens would be extended, and that Walgreens would acquire Rite Aid’s outstanding shares at a lower price than previously agreed, according to the opinion.

Wickens alleged the vice presidents engaged in insider trading, and informed other vice presidents of their conduct. But while Wickens worked for Rite Aid, he didn’t research whether the alleged actions constituted a crime by the company, the court said.

Wickens didn’t write “a single email, note, or statement regarding what he now alleges are serious securities laws violations,” Rite Aid said, according to the court.

Rite Aid transferred about half of its retail locations to Walgreens in an asset purchase agreement reached in 2017. Wickens’ employment was terminated as a result of the agreement and “top-down reduction in force across multiple departments,” according to the opinion.

Wickens alleged the company violated the Sarbanes-Oxley Act, and he reported to the Occupational Safety and Health Administration, which forwarded his documents to the Securities and Exchange Commission.

A Rite Aid vice president testified that the SEC didn’t find any wrongdoing. The court granted the company’s motion for summary judgment.

Rite Aid hired Wickens as immigration counsel in the company’s human resources department in 2003.

Judge Yvette Kane wrote the opinion.

Sidney L. Gold & Associates PC represented Wickens. Morgan, Lewis & Bockius LLP represented Rite Aid.

The case is Wickens v. Rite Aid Headquarters Corp., M.D. Pa., No. 1:19-cv-2021, 4/12/21.