Repost from mainebiz.com. It reads…
Flowers Foods Inc., the owner of Lepage Bakeries in Lewiston, has lost its appeal of a federal court’s ruling that its North Carolina distributors can file a class-action suit challenging the company’s classification of them as “independent contractors.”
In a May 21 ruling, the U.S. Fourth Circuit Court of Appeals in Virginia denied the company’s request to appeal a class certification decision made by the U.S. District Court for the Western District of North Carolina. The earlier decision ruled that more than 200 North Carolina bakery distributors constitute a “class” in their common concern of whether they are employees of Flowers Foods or — as the bakery claims — independent contractors.
“The order paves the way toward a trial that will provide certainty — once and for all — about the legality of the Flowers distribution program in North Carolina,” Shawn J. Wanta, a partner at Baillon Thome Jozwiak & Wanta LLP, the Minnesota law firm representing the North Carolina workers, said in a press release announcing the ruling.
Wanta said the order could have ramifications nationwide because Flowers operates 34 bakeries and distribution centers throughout the United States that employ hundreds of bakery distributors as independent contractors who “may have similar claims under state and federal laws that would entitle them to compensation from the bakery.” If the North Carolina class action lawsuit proves successful, he said, Flowers Foods might be required “to change its direct store distribution model to comply with federal and state employment laws.”
Paul Baltzer, managing director of media relations for Flowers Foods, provided this email response to a Mainebiz request for comment: “We do not provide comment on ongoing legal proceedings. In the case you are asking about, public record shows that in this procedural ruling, the federal appeals court in Richmond, Va., decided not to intervene in the lower court proceedings at this time. We intend to vigorously defend this case when it goes to trial.”
Baltzer also reiterated earlier comments that Flowers Foods has operated an independent distributor system since the mid-1980s, characterizing it as “a proven, market-driven approach to the operation of our direct-store-delivery segment.”
“It is similar to other programs in baking and other industries,” he wrote. “Additionally, the system has been upheld as an independent contractor model in various legal forums.” “Approximately 5,200 distributors currently participate in the company’s independent distributor system,” he continued. “We believe the independent distributor system is a win-win situation where distributors and the company benefit from the entrepreneurial incentives the system creates. Over the years, we’ve found that independent distributors provide superior service to customers because they have a strong incentive to grow their business and build equity.”
As a result of the appeals court’s decision, Wanta said the North Carolina plaintiffs can proceed with their state and federal claims on a class and collective basis in their lawsuit.
Flowers Foods (NYSE: FLO), based in Thomasville, Ga., reported $3.75 billion in sales in 2014. In May 2012 it purchased Lepage Bakeries for $370 million in cash and stock, noting in a company press release that Lepage had 550 “experienced team members” and would help expand Flowers Foods’ market from 64% to 70% of the U.S. population. Flowers’ brands include Wonder, Sunbeam, Country Kitchen and Mrs. Freshley’s, among others.