Carr v. Flowers Foods, Inc.
| Decision Date | 07 May 2019 |
| Docket Number | CIVIL ACTION NO. 16-2581,CIVIL ACTION NO. 15-6391 |
| Parties | MATTHEW CARR, TERRY CARR, DAVID TUMBLIN AND GREGORY BROWN, on behalf of themselves and others similarly situated, Plaintiffs, v. FLOWERS FOODS, INC. AND FLOWERS BAKING CO. OF OXFORD, INC., Defendants. LUKE BOULANGE, on behalf of himself and others similarly situated, Plaintiff, v. FLOWERS FOODS, INC. AND FLOWERS BAKING CO. OF OXFORD, INC., Defendants. |
| Court | U.S. District Court — Eastern District of Pennsylvania |
Plaintiffs in this suit are distributor drivers for a baked goods retailer, who assert that they have been improperly categorized as independent contractors rather than employees under federal and state law, and thereby deprived of overtime pay, other wages, and records. Named plaintiffs Matthew Carr, Terry Carr, David Tumblin, Gregory Brown, and Luke Boulange bring suit on behalf of themselves and others similarly situated (collectively, "Plaintiffs") against defendants Flowers Foods, Inc. and its subsidiary, Flowers Baking Company of Oxford, Inc., (collectively, "Defendants" or "Flowers") for violations of the Fair Labor Standards Act ("FLSA"), 29 U.S.C. §§ 201, et seq.; the Pennsylvania Wage Payment and Collection Law ("PWPCL"), 43 P.S. §§ 260.1, et seq.; the Pennsylvania Minimum Wage Act ("PMWA"), 43 Pa. C.S.A. §§ 333.101, et seq.; the Maryland Wage and Payment Collection Law ("MWPCL"), Md. Code Ann., Lab. & Empl. §§ 3-501, et seq.; the Maryland Wage and Hour Law ("MWHL"), Md. Code Ann., Lab. & Empl. §§ 3-401, et seq.; the New Jersey Wage and Payment Law ("NJWPL"), N.J. S.T. 34:11-4.1, et seq.; and the New Jersey Wage and Hour Law ("NJWHL"), N.J. S.T. 34:11-56a, et seq.
On January 9, 2017, Plaintiffs' FLSA claims were conditionally certified as a collective action. Defendants now move to decertify that collective action. Separately, Plaintiffs move to certify three independent class actions pertaining to three states—Pennsylvania, Maryland, and New Jersey—where distributors work. Accordingly, the issue before the Court is whether Plaintiffs' claims are suitable for group adjudication. Specifically, with regard to the FLSA, the Court must determine whether the named plaintiffs and approximately one hundred other distributors who have opted into this lawsuit may receive final certification to proceed as a collective. Separately, the Court must determine whether three classes, representing the distributors of Pennsylvania, Maryland, and New Jersey, may be certified under Fed. R. Civ. P. 23.
For the reasons that follow, Defendants' motion to decertify the FLSA collective action shall be denied, and the FLSA collective shall receive final certification. Further, Plaintiffs' motions to certify the state class actions shall be granted with respect to the Rule 23(b)(3) classes and denied with respect to the Rule 23(b)(2) classes.
Defendant Flowers Foods, Inc. is a Georgia corporation that develops and markets bakery products on a national scale through its network of subsidiaries. Defendant Flowers Baking Co.of Oxford, Inc. ("Oxford") is one such subsidiary, which operates as the local sales and distribution manager in Pennsylvania, New York, New Jersey, Maryland, and Virginia. Plaintiffs are individual distributors who collect baked goods from Oxford warehouses and deliver them to customers—mainly stores and restaurants.
Plaintiffs have provided testimony and documentary evidence detailing their work experience as distributors with Flowers. In short, they earn money by purchasing product from Flowers at a discount rate which is fixed unilaterally by Flowers, and selling it at a higher price to customers within a designated geographic area. Their job also includes delivery of product to customer stores and stock management of the product at those stores. They pick up the products from designated Flowers warehouses; drive the products to customer locations; stock the product on customer shelves using Flowers' layout design specifications, known as "planograms"; and manage the stale, unsold product that accrues at customer locations, some of which Flowers will buy back, at a rate determined by Flowers. Generally, distributors make deliveries five days out the week, and on the other two days they will perform "pull ups," to adjust the stock on the shelves at customer stores. Orders and deliveries are tracked using handheld computers issued by Flowers, and Flowers retains in its database records generated by these computers. In fulfilling their obligations, distributors are subject to Flowers' oversight and discipline, which is principally effected through ride-alongs by Flowers' sales managers to check and maintain performance, and breach letters that identify perceived deficiencies in a distributor's work.
Distributors' employment classification changes over the course of their time with Flowers. It starts with a multi-week training program, run by Flowers, during which they are classified as employees. Once the training program is completed, Flowers decides whether or not drivers will be retained. If Flowers elects to retain them, they must sign a "DistributorAgreement," which labels them independent contractors. From that point forward, Flowers considers them to be independent contractors.
In addition to reclassifying distributors as independent contractors, the Distributor Agreement assigns each distributor a defined geographic area, making the distributor responsible for sales and deliveries within that area. The Distributor Agreement also includes a number of stipulations regarding the working relationship between distributors and Flowers. More specifically, Flowers may change the "terms and prices" of its sales to distributors "at any time"; distributors must use their "best efforts to develop and maximize" sales in accordance with "good industry practice," and "cooperate" with Flowers' marketing and sales efforts; Flowers has the right to "solicit and drop delivery accounts, in whole or in part" from the distributors' territory for "legitimate business reasons"; Flowers will determine the Flowers warehouse location where distributors collect product; distributors must provide their own delivery trucks; deliveries need not be "conducted personally," and distributors are "free to engage" outside assistance; Flowers may terminate the contract if the distributor "fails to perform [the] obligations under this Agreement"; and, finally, Flowers may issue notices where it finds a distributor to be in breach of the agreement.
Because a distributor's earnings are determined largely by the balance between the amount of sales to customers, less the amount paid to purchase the product from Flowers, sales to customers are key to their income.1 But the parties dispute the extent of distributors' ability toimpact their sales. The testimony provided by Plaintiffs demonstrates that, for each existing customer account, Flowers compiles a "suggested order," listing recommended products, prices, and volumes, and loads the suggested order onto the handheld computer. Several distributors indicated that they felt they had some degree of control over the content of the orders, and could or did change the orders—though many stated that Flowers left them little to no discretion to deviate from the suggested orders. The parties also paint contrasting pictures of distributors' ability to add new customers on their own initiative: some distributors were able to add new accounts, while others testified that this was not permitted by Flowers.
Importantly, however, a significant portion of each distributors' sales is generated by large chain accounts, such as Walmart, rather than smaller "cash" accounts with local businesses. As the parties agree, Flowers deals with the large chain accounts directly, setting terms for, inter alia, pricing, products, and volume, as well as setting delivery expectations and customer requirements. By contrast, distributors may exercise more influence over the small "cash" accounts. While the large chain accounts make up varying percentages of distributors' sales, the evidence indicates that the large chain accounts comprise a majority of each individual distributor's sales: some distributors testified that sixty to seventy percent of their sales are attributable to the large chain accounts, while others indicated that such accounts make up as much as ninety-nine percent of their sales.
The testimony provided by Plaintiffs also indicates that there are some variations among distributors' work experiences. For example, some distributors hired assistants to help with their routes, though many did not. Some also delivered products for other businesses, in addition to their work for Flowers. Some were not given an hourly schedule by Flowers, while others had their schedules tightly controlled by Flowers. Some used trucks they selected and financedindependent of Flowers, while others stated that Flowers dictated the vehicle to be used. Some closely followed Flowers' layout instructions for store displays (the "planograms"), while others testified to deviating to some degree.
All plaintiffs that are members of the FLSA opt-in collective have stated that their obligations to Flowers required them to work beyond 40 hours per week.
The FLSA was enacted "to protect workers, particularly non-unionized workers, by establishing federal minimum wage, maximum hour, and overtime guarantees that could not be avoided through contract." Knepper v. Rite Aid Corp., 675 F.3d 249, 253-54 (3d Cir. 2012). To safeguard these protections, the FLSA permits that an action may be brought "by any one or more employees for and in behalf of himself or themselves and other employees similarly situated." 29 U.S.C. § 216(b). Thus FLSA claims may be brought individually or as a collective action, "in which a named employee plaintiff or plaintiffs file a complaint 'in behalf of a group of other, initially...
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