THOMASVILLE, GA. — Flowers Foods, Inc. and Flowers Baking Co. of Jamestown L.L.C. on Dec. 9 reached an agreement to settle a class-action lawsuit dating from 2012. Shares of Flowers Foods surged in response.
The settlement was disclosed in a Form 8-K filed Dec. 9 with the Securities and Exchange Commission.
The lawsuit was filed in the U.S. District Court for the Western District of North Carolina (Charlotte Division). Under the settlement, Flowers will pay $9 million, including $5.2 million in settlement funds and $3.8 million in attorneys’ fees.
“The settlement also contains certain non-economic terms that are intended to strengthen and enhance the independent contractor model, which remains in place,” the filing says. “This agreement, which covers approximately 270 distributor territories, is subject to court approval.”
In trading on the New York Stock Exchange Dec. 9, Flowers shares surged. Before the close, Flowers shares had traded as high as $19.95 per share, up $2.92, or 17%, from the Dec. 8 close of $17.03.
The Fair Labor Standards Act lawsuit dates from 2012 in an action taken by plaintiffs including Scott Rehberg, Willard Allen Riley and Mario Ronchetti. Claiming Flowers drivers should be classified as employees, qualifying for overtime pay, rather than independent operators, the plaintiffs alleged violations of the Fair Labor Standards Act and the North Carolina Wage and Hour Act.
The distributor position at issue reflects drivers of baked foods from 24 warehouses in North Carolina, South Carolina, Virginia, and West Virginia who deliver product to customers in a defined geographic territory.
In November, Flowers announced it had taken a$1.25 million charge related to an agreement to settle a class-action misclassification lawsuit in Connecticut.As of February 2016, Flowers was facing 17 lawsuits similar to the Jamestown case.