Rosinbaum, et al v. Flowers Foods, Inc., et al

RESPONSE in Opposition regarding 303 MOTION for Decertification

E.D.N.C.February 25, 2019

IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF NORTH CAROLINA SOUTHERN DIVISION BOBBY JO ROSINBAUM AND ROBERT WILLIAM MORGAN, JR., individually and on behalf of all similarly situated individuals, Plaintiffs, -v- FLOWERS FOODS, INC. and FRANKLIN BAKING COMPANY, LLC, Defendants. No. 7:16-cv-00233-FL PLAINTIFFS’ MEMORANDUM IN OPPOSITION TO DEFENDANTS’ MOTION FOR DECERTIFICATION Case 7:16-cv-00233-FL Document 334 Filed 02/25/19 Page 1 of 42 ii TABLE OF CONTENTS I. SUMMARY OF THE NATURE OF THE CASE .............................................................................. 1 II. CONCISE STATEMENT OF FACTS ................................................................................................ 2 A. Distributors Share the Same Economic Reality While Working for Flowers. ............................... 2 1. Defendants Hire and Train Distributors the Same Way. ............................................................ 3 2. Distributors Share the Same Core Duties, Subject to Defendants’ Oversight and Control. ...... 3 a. Defendants Control Distributors’ Activities in the Field....................................................... 5 b. Defendants Monitor and Control Distributors’ Product Orders and Returns. ....................... 6 3. Defendants Reserve Complete Discretion to Discipline and Terminate Distributors, Rendering the Relationship Terminable at Will. ................................................................................................... 8 B. Defendants Control Sales and Marketing Efforts with Customers, Which in Turn Controls Distributors’ Opportunity to Increase Their Profits. ................................................................................ 9 C. Defendants Do Not Deny Their Control Over Distributors’ Margins. ......................................... 11 D. Defendants Control Territory Sales. ............................................................................................. 12 III. ARGUMENT ................................................................................................................................ 12 A. Standard for Decertification .......................................................................................................... 12 B. Common Evidence Proves Plaintiffs Were Subject to Substantially Similar Employment Settings. .................................................................................................................................................. 14 1. Common Evidence Will Decide Whether Plaintiffs, Under the Economic Realities Test, Depend on Defendants for Their Livelihood. .................................................................................... 15 a. Common Evidence Will Establish That Plaintiffs Are Similarly Situated as to Degree of Actual Control............................................................................................................................... 18 b. Plaintiffs Are Similarly Situated as to Opportunity for Profit and Loss Dependent on Managerial Skill. ........................................................................................................................... 22 c. Because Defendants’ Investments in Distribution Infrastructure Dwarf Those by Any Individual Plaintiff, This Factor Will Be Resolved on Classwide Proof. ..................................... 23 d. The Degree of Skill Required for the Work Is Resolved on Common Evidence. ............... 25 e. The Distributorship Agreement Contemplates an Ongoing and Permanent Relationship. . 26 f. Defendants Concede, as a Matter of Common Proof, That Plaintiffs’ Work Is an Integral Part of Their Business. .................................................................................................................. 27 2. Plaintiffs Are Similarly Situated Because Defendants Uniformly Misclassified Plaintiffs Without Regard for Their Individual Circumstances. ....................................................................... 28 C. Defenses Will Be Resolved on Substantially Similar Proof. ........................................................ 29 1. The Motor Carrier Act Exemption Can Be Resolved for All Plaintiffs on a Classwide Basis. 30 2. The Outside Sales Exemption Will Be Resolved on Common Evidence. ............................... 31 3. Plaintiffs’ Hours and Damages Can Be Collectively Determined as a Matter of Just and Reasonable Inference. ........................................................................................................................ 32 D. Fairness and Procedural Considerations Strongly Favor a Collective Action. ............................. 33 IV. CONCLUSION ............................................................................................................................. 35 Case 7:16-cv-00233-FL Document 334 Filed 02/25/19 Page 2 of 42 iii TABLE OF AUTHORITIES Page(s) Cases Acosta v. Senvoy, LLC, No. 16-2293, 2018 WL 3722210 (D. Or. July 31, 2018) ......................................................... 22, 26, 27 Alston v. DirecTV, Inc., 254 F. Supp. 3d 765 (D.S.C. 2017) ...................................................................................................... 33 Ansoumana v. Gristede’s Operating Corp., 255 F. Supp. 2d 184 (S.D.N.Y. 2003) ............................................................................................ 25, 27 Bamgbose v. Delta-T Group, Inc., 684 F. Supp. 2d 660 (E.D. Pa. 2010) .................................................................................................... 15 Bayfield Alternative Staffing, Inc. v. Herman, 163 F.3d 668 (1st Cir. 1998) ................................................................................................................ 18 Brock v. Superior Care, Inc., 840 F.2d 1054 (2d Cir. 1988) ............................................................................................. 18, 19, 21, 26 Butler v. DirectSat USA, LLC, 47 F. Supp. 3d 300 (D. Md. 2014)............................................................................................ 13, 33, 34 Campos v. Zopounidis, No. 09-1138, 2011 WL 2971298 (D. Conn. July 20, 2011) ............................................... 23, 24, 25, 26 Collinge v. Intelliquick Delivery, No. 12-824, 2015 WL 1292444 (D. Ariz. Mar. 23, 2015).............................................................. 22, 31 Craig v. FedEx Ground Package Sys. Inc., 335 P.3d 66 (Kan. 2014)....................................................................................................................... 25 Craig v. Fedex Package System, Inc., 686 F.3d 423 (7th Cir. 2012) ................................................................................................................ 20 Davis v. Food Lion, Inc., 792 F.2d 1274 (4th Cir. 1986) .............................................................................................................. 33 Dixon v. Zabka, No. 11-982, 2014 WL 6084351 (D. Conn. Nov. 13, 2014) ............................................................ 24, 25 Dole v. Snell, 875 F.2d 802 (10th Cir. 1989) .............................................................................................................. 26 In re FedEx Ground Pkg. Sys., Inc. Employment Pracs. Litig., 662 F. Supp. 2d 1069 (N.D. Ind. 2009) ................................................................................................ 25 Case 7:16-cv-00233-FL Document 334 Filed 02/25/19 Page 3 of 42 iv Flowers v. Rehberg Baking Co. of Jamestown, LLC, No. 12-596, 2015 WL 1346125 (W.D.N.C. Mar. 24, 2015) ......................................................... passim Garcia v. JIA Logistics, Inc., No. 16-22870, 2017 WL 2346149 (S.D. Fla. May 30, 2017) ............................................................... 30 Gatewood v. Koch Foods of Mississippi, No. 07-82, 2009 WL 8642001 (S.D. Miss. Oct. 20, 2009)................................................................... 15 Gayle v. Harry’s Nurses Registry, Inc., 594 F. App’x 714 (2d Cir. 2014) .......................................................................................................... 27 Grace v. Family Dollar Stores, Inc., No. 06-306, 2007 WL 2669699 (W.D.N.C. Sept. 6, 2007) .................................................................. 30 Harrison v. Delguerico’s Wrecking & Salvage, No. 13-5353, 2016 WL 826824 (E.D. Pa. Mar. 2, 2016) ..................................................................... 15 Heng v. Han Sun Sikpoom Trading Corp., No. 13-6789, 2015 WL 5567073 (E.D.N.Y. Sept. 21, 2015) ............................................................... 30 Jiminez-Orozco v. Baker Roofing Co., No. 05-34, 2007 WL 4568972 (E.D.N.C. Dec. 21, 2007) .................................................................... 13 Johnson v. Wave Comm GR LLC, 4 F. Supp. 3d 453 (N.D.N.Y. 2014) ..................................................................................................... 32 Kelly v. Healthcare Servs. Grp., Inc., 106 F. Supp. 3d 808 (E.D. Tex. 2015) .......................................................................................... passim Kerce v. West Telemarketing Corp., 575 F. Supp. 2d 1354 (S.D. Ga. 2008) ................................................................................................. 28 LaFleur v. Dollar Tree Stores, Inc., 30 F. Supp. 3d 463 (E.D. Va. 2014) ................................................................................... 14, 29, 33, 34 Martin v. Selker Bros., Inc., 949 F.2d 1286 (3d Cir. 1991) ................................................................................................... 22, 26, 33 McFeeley v. Jackson Street Entertainment, LLC, 47 F. Supp. 3d 260 (D. Md. 2015), aff’d, 825 F.3d 235 (4th Cir. 2016) ....................................... passim McFeely v. Jackson Street Entertainment, LLC, 825 F.3d 235 (4th Cir. 2016) ......................................................................................................... passim McGlone v. Contract Callers, 49 F. Supp. 3d 364 (S.D.N.Y. 2014) .............................................................................................. 12, 13 McMaster v. E. Armored Servs., Inc., 780 F.3d 167 (3d Cir. 2015) ................................................................................................................. 30 Case 7:16-cv-00233-FL Document 334 Filed 02/25/19 Page 4 of 42 v Monroe v. FTS USA, LLC, 763 F. Supp. 2d 979 (W.D. Tenn. 2011) .............................................................................................. 32 Morgan v. Family Dollar Stores, Inc., 551 F.3d 1233 (11th Cir. 2008) ...................................................................................................... 28, 34 Nerland v. Caribou Coffee Co., 564 F. Supp. 2d 1010 (D. Minn. 2007) ................................................................................................ 28 Noll v. Flowers Foods, Inc., No. 15-493, 2019 WL 206084 (D. Me. Jan. 15, 2019) ....................................................... 13, 29, 31, 32 Parker v. Smithfield Packing Co., No. 07-176, 2010 WL 11565605 (E.D.N.C. Aug. 23, 2010) ......................................................... 29, 33 Pizzarelli v. Cadillac Lounge, LLC, No. 15-254, 2018 WL 2971114 (D.R.I. Apr. 13, 2018) ................................................................. 20, 21 Purdham v. Fairfax County Pub. Schs., 629 F. Supp. 2d 544 (E.D. Va. 2009) ................................................................................................... 15 Randolph v. Powercomm Const., Inc., 309 F.R.D. 349 (D. Md. 2015) ....................................................................................................... 18, 33 Rawls v. Augustine Home Health Care, Inc., 244 F.R.D. 298 (D. Md. 2006) ............................................................................................................. 34 Rehberg v. Flowers Baking Co. of Jamestown, LLC, 162 F. Supp. 3d 490 (W.D.N.C. 2016) ........................................................................................... 17, 30 Richard v. Flowers Foods, Inc., No. 15-2557, slip op. (W.D. La. Aug. 13, 2018) ........................................................................... passim Rivet v. Office Depot, Inc., 207 F. Supp. 3d 417 (D.N.J. 2016) ................................................................................................. 14, 34 Romero v. Producers Diary Foods, Inc., 235 F.R.D. 474 (E.D. Cal. 2006) .......................................................................................................... 31 Salinas v. Commercial Interiors, Inc., 848 F.3d 125 (4th Cir. 2017) ................................................................................................................ 15 Scantland v. Jeffry Knight, Inc., 721 F.3d 1308 (11th Cir. 2013) ..................................................................................................... passim Schultz v. Capital Int’l Sec., Inc., 466 F.3d 298 (4th Cir. 2006) ......................................................................................................... passim Scott v. Aetna Servs., 210 F.R.D. 261 (D. Conn. 2002) .......................................................................................................... 28 Case 7:16-cv-00233-FL Document 334 Filed 02/25/19 Page 5 of 42 vi Scott v. Chipotle Mexican Grill, Inc., No. 12-8333, 2017 WL 1287512 (S.D.N.Y. Mar. 29, 2017) ................................................................ 30 Scovil v. FedEx Ground Package Sys., Inc., 886 F. Supp. 2d 45 (D. Me. 2012) ...................................................................................... 12, 13, 20, 28 Sharer v. Tandberg, Inc., No. 06-626, 2007 WL 676220 (E.D. Va. Feb. 27, 2007) ..................................................................... 15 Slayman v. FedEx Ground Package Sys., Inc., 765 F.3d 1033 (9th Cir. 2014) ........................................................................................................ 20, 25 Smith v. Schwan’s Home Serv., Inc., No. 13-231, 2014 WL 6679129 (D. Me. Nov. 25, 2014) ..................................................................... 30 Snively v. Peak Pressure Control, LLC, 314 F. Supp. 3d 734 (W.D. Tex. 2018) .......................................................................................... 31, 32 Spellman v. American Eagle Express, Inc. No. 10-2013, 2013 WL 1010444 (E.D. Pa. Mar. 14, 2013) ................................................................. 19 Thomas v. Kellogg Co., No. 13-5136, 2016 WL 7057218 (W.D. Wash. Dec. 5, 2016) ................................................. 23, 31, 32 Troy v. Kehe Food Distribs., Inc., 276 F.R.D. 642 (W.D. Wash. 2011) ......................................................................................... 19, 31, 32 Venegas v. Global Aircraft Serv., Inc., 159 F. Supp. 3d 93 (D. Me. 2016) ........................................................................................................ 13 Wilks v. Pep Boys, No. 02-837, 2006 WL 2821700 (M.D. Tenn. Sept. 26, 2006) ............................................................. 13 Young v. Fast Act Delivery of W.V., Inc., No. 16-9788, 2018 WL 989543 (S.D.W. Va. Feb. 20, 2018) ............................................. 14, 19, 28, 34 Statutes 29 U.S.C. 211(c) ......................................................................................................................................... 32 29 U.S.C. § 213(b)(1) ................................................................................................................................ 30 49 U.S.C. § 31502(b) ................................................................................................................................. 30 Other Authorities 29 C.F.R. § 541.700(a) ............................................................................................................................... 31 Case 7:16-cv-00233-FL Document 334 Filed 02/25/19 Page 6 of 42 1 I. SUMMARY OF THE NATURE OF THE CASE Plaintiffs brought a putative collective action against Flowers Foods and one of its North Carolina subsidiaries for violations of the Fair Labor Standards Act (FLSA), alleging Distributors are denied overtime wages because Defendants misclassified them as independent contractors instead of as employees. By an order on March 1, 2017, this Court granted conditional certification of a collective action proceeding on Plaintiffs’ FLSA claims. Following that ruling, more than 100 distributors have opted into this litigation (collectively, “Plaintiffs”). Defendants now bring a second-phase motion to decertify the collective action. Plaintiffs respectfully ask this Court to deny the motion. Proceeding on a collective basis will be manageable and serve judicial economy. Distributors all perform the same job and are similarly situated in all material respects under the economic realities test. This Court’s resources are certainly better spent trying Plaintiffs’ claims collectively, on common evidence, rather than conducting over one hundred separate trials where the same evidence is repeated to different factfinders. A single trial also eliminates the risk of conflicting decisions on Plaintiffs’ status as employees or independent contractors. Three other federal courts in related actions found a collective action preferable, denying Flowers’s motions for decertification, and the record before this Court supports the same result. Defendants’ own business practices confirm that individualized inquiry is not needed to determine whether Distributors are employees under the economic realities test: the company has never considered a single individual circumstance when uniformly classifying all Distributors as independent contractors, requiring them to sign the same Distributor Agreements, and subjecting them to the same operating criteria. Defendants ignore the glaring inconsistency between what they do in practice and what they argue to the Court here. The simple reality is that Distributors all perform the same core functions relevant to their economic reality: they go to Flowers’ warehouse, load their trucks, serve Flowers’ customers by delivering and stocking Flowers’ products, and periodically remove stale product and restock the shelves. All Distributors sign the same nonnegotiable Distributor Agreement, are subject to the same centralized training, policies and corporate practices, and face the same limitations and control by Defendants. And under a non-compete Case 7:16-cv-00233-FL Document 334 Filed 02/25/19 Page 7 of 42 2 provision in the Distributor Agreement, Flowers also ensures that Distributors cannot perform this job for any of Defendants’ competitors. Defendants’ “parade of individualized issues” is not only exaggerated and misleading, but in the end reflects some differences with no legal consequence. In its regular business practice, Defendants uniformly classify all Distributors as independent contractors regardless of any “variations” between them. The minor and often irrelevant collection of snippets of “divergent testimony” does not overcome the vast, representative evidence that Plaintiffs are similarly situated with respect to each factor of the economic realities test. And in their analysis of those factors, Defendants focus almost exclusively on control while completely ignoring two and misconstruing the other factors, although courts instruct that no one factor should be given more weight than the others. Fairness and simplicity of trial management demand collective action treatment. Because Plaintiffs have established they are similarly situated under the FLSA, the Court should deny the request to decertify this collective action. II. CONCISE STATEMENT OF FACTS A. Distributors Share the Same Economic Reality While Working for Flowers. Defendants produce fresh breads, buns, rolls, and snack cakes and distribute these products to their retail and foodservice customers through a network of Distributors, who distribute more than 85 percent of Defendants’ total product sales. Ex. 1 at 6. Distributors are so intertwined in Defendants’ operations that a disruption in Defendants’ direct store delivery system could materially affect Defendants’ financial condition, operations, and cash flow. Ex. 2. The Vice President of Distributor Operations—responsible for all Distributors nationwide—testified that Distributors’ income is directly tied to Flowers’s investments in its brands, marketing, and product lines. Ex. 3 at 89. The undeniable economic reality is that all Distributors depend upon Defendants for their livelihoods, and Defendants depend on Distributors to perform the core function of the companies’ business. Case 7:16-cv-00233-FL Document 334 Filed 02/25/19 Page 8 of 42 3 1. Defendants Hire and Train Distributors the Same Way. Defendants’ control over Distributors begins on day one: Distributors start as temporary employees hired through a staffing agency using a standardized application. Ex. 4 at 18, 27; Ex. 5 at 72. Franklin does not require Distributors to have any specialized skills or education, only a (non-commercial) drivers’ license and a clear background check. Ex. 4 at 27, 29-30. Before a “Prospective Distributor” (P.D.) can become a Distributor, Defendants require completion of a standardized twelve-week training program detailed in their “Field Operations Manual.” Ex. 4 at 33-34; Ex. 6. In the final week of training, the Director and Vice President of Sales ride along with the P.D. to review his progress. Ex. 6 at 77. Toward the end of the training period, Franklin decides whether to offer a distributorship to the P.D. Ex. 4 at 34, 36-37. The moment a P.D. signs a Distributor Agreement, the company automatically classifies him as an independent contractor. Ex. 5 at 207-09. 2. Distributors Share the Same Core Duties, Subject to Defendants’ Oversight and Control. Defendants define a Distributor’s core responsibilities as “ordering products, stocking shelves, maintaining special displays, and developing and maintaining good customer relations to ensure adequate inventory and removing unsold goods.” Ex. 1 at 9. Plaintiffs’ testimony universally confirms that they perform these primary job duties daily. Plaintiffs begin work early; they arrive at the warehouse to confirm their product order, make any necessary adjustments, and load their trucks. See, e.g., Ex. 8 at 82, 106; Ex. 9 at 87-90; Ex. 10 at 73-80; Ex. 11 at 22; Ex. 12 at 155; Ex. 13 at 61; Ex. 14 at 40-42; Ex. 15 at 60-61. Plaintiffs then drive their route to deliver products to customers on the specified day and time. See, e.g., Ex. 7 at 63; Ex. 8 at 108; Ex. 9 at 91-92; Ex. 10 at 85-88; Ex. 11 at 75-77; Ex. 13 at 68-69; Ex. 14 at 32-33, 72-73; Ex. 15 at 47-49. At the stores, Plaintiffs place the products on the shelves, usually according to a planogram, rotate the stock, and pull out-of-code or “stale” product off the shelves. See, e.g., Ex. 7 at 60; Ex. 11 at 79-80; Ex. 13 at 18-20, 41-42, 50; Ex. 14 at 33-34, 105; see also Ex. 19 at 26-27, 219-20. At the end of the day, Plaintiffs generally Case 7:16-cv-00233-FL Document 334 Filed 02/25/19 Page 9 of 42 4 return to the warehouse to “sell back” their out-of-code product to the warehouse thrift store for credit. See, e.g., Ex. 7 at 15; Ex. 8 at 128; Ex. 11 at 23, 119; Ex. 12 at 97; Ex. 13 at 250-51; Ex. 14 at 106; Ex. 15 at 50. Plaintiffs perform these duties five days a week. See Ex. 7 at 82-83; Ex. 8 at 105-106; Ex. 9 at 42- 43, 88-90; Ex. 10 at 73-80; Ex. 11 at 22-28; Ex. 12 at 153; Ex. 13 at 187; Ex. 14 at 40-42; Ex. 15 at 49. On the other two days of the week (Sunday and Wednesday), Plaintiffs must perform “pull-ups”: returning to stores to straighten and restock shelves, and occasionally deliver additional product, using their personal vehicles. See Ex. 7 at 71, 74-75; Ex. 8 at 79-80; Ex. 9 at 64-65; Ex. 10 at 62-64; Ex. 11 at 26, 28-29, 53; Ex. 12 at 119, 122, 153; Ex. 13 at 187, 220-21; Ex. 14 at 68-69; Ex. 15 at 54; see also Ex. 19 at 218. Defendants manage virtually all business aspects of the job, including billing and accounting for all charge customers; they also take on the risk of loss from nonpayment. Ex. 5 at 175. Defendants pay Plaintiffs each week, typically through direct deposit, using what they call a weekly “settlement statement.” See, e.g., Ex. 16. Although Defendants argue Plaintiffs are not similar because the Distributor Agreement does not require them to personally service their territories, every Plaintiff in the collective testified or submitted interrogatory responses stating they have worked more than forty hours per week for Defendants. See, e.g., Ex. 7 at 82-85; Ex. 8 at 105; Ex. 9 at 87-90; Ex. 10 at 73-80; Ex. 11 at 22-29; Ex. 12 at 155-60; Ex. 13 at 186-88; Ex. 14 at 40-42; Ex. 15 at 60-61.1 The representative proof applicable to all members of the collective action is that they personally performed the same job duties for Defendants under the same Distributor Agreement more than forty hours per week without compensation for their overtime. 1 Defendants identify Coniglio as a Distributor who has not personally serviced his route since May 2017. This does not undermine whether the Distributors are similarly situated, but instead goes to his membership in the collective action: this opt-in plaintiff would not have accrued damages during time periods he did not work over forty hours per week for Flowers. As a result, Coniglio would only be able to recover through May 2017, when he stopped working full-time for Defendants. See Ex. 8 at 95. Defendants further identify Plaintiff Brunst as someone who performs outside work in addition to his distributorship, but they ignore his testimony that he still works far more than 40 hours per week for Defendants. Ex. 7 at 82-85. The fact that a handful of Distributors may have other part-time jobs is wholly irrelevant to their classification by Flowers. Case 7:16-cv-00233-FL Document 334 Filed 02/25/19 Page 10 of 42 5 a. Defendants Control Distributors’ Activities in the Field. Defendants’ control over Plaintiffs originates in the Distributor Agreement, the nonnegotiable contract all Distributors must sign. Ex. 17. Under the Distributor Agreement, Distributors are obligated to follow “good industry practice” and use their “best efforts” in performing their daily work. Ex. 5 at 28-30; Ex. 4 at 53-55. Through their Rule 30(b)(6) designee, Defendants testified that neither phrase is completely defined in the Distributor Agreement, but instead that the phrases merely “sketch” Defendants’ expectations. Ex. 5 at 30-31. All “customer service requirements” become part of Plaintiffs’ obligations under the Distributor Agreement and Defendants routinely enforce these standards against Plaintiffs.2 Ex. 5 at 135-36; Ex. 19 at 39-40. Defendants’ sales managers are required, as part of their ordinary duties, to perform regular store visits—often without Plaintiffs’ knowledge—to ensure Plaintiffs meet these obligations and requirements. The managers will check whether product is merchandized according to the planogram; note missing items, insufficient quantities, or out-of-code product; check for displays, proper sales signage and stickers; meet with store managers; and to develop an action plan to address any deficiencies. Ex. 19 at 64, 71-74; Ex. 5 at 17-19. If Defendants’ sales managers find a problem in the store, they can take a variety of actions, from talking with the Distributor about the problem to issuing a breach letter. Ex. 19 at 74-75.3 Distributors can be formally disciplined, up to and including termination, for failure to follow these directions. Defendants also track Plaintiffs’ activities in the field by generating “days of service reports,” which show when product was delivered to a store. Ex. 19 at 67-69; Ex. 5 at 15-16.4 2 The term “customer service requirements” is misleading because Defendants often solicit customers to provide requirements, and in some cases, Defendants draft them for the customers. See Ex. 15 at 138, 141- 52; Ex. 24 at 20-22, 24-32. Regardless of their source, Defendants expect Distributors to comply with these requirements, and Defendants enforce the requirements by threatening to issue and issuing breach letters for failing to adhere to them. Ex. 5 at 135-36; Ex. 19 at 39-40; Ex. 24 at 21-22. 3 See also Ex. 8 at 24; Ex. 10 at 112-13; Ex. 14 at 45, 60 (testifying that Defendants’ managers would check to ensure that Plaintiffs complied with requirements). 4 While Defendants argue that days of service are specified by the customer, Plaintiffs’ actual experiences show Defendants enforce days of service requirements even if a customer approved another arrangement. For example, Plaintiff Coniglio—one of Defendants’ most experienced Distributors—received numerous breach letters stating that he did not service his accounts enough, overriding his personal assessment that there was no need to visit certain accounts as frequently. Ex. 8 at 118-19; Ex. 18 at 1, 3, 17, 23, 27, 28. Case 7:16-cv-00233-FL Document 334 Filed 02/25/19 Page 11 of 42 6 Plaintiffs consistently testified that their sales managers are in regular communication with them, frequently through text messages, to instruct them regarding sales, displays, and promotions; to pick up and deliver additional product; or to communicate complaints. See, e.g., Ex. 7 at 14, 62; Ex. 8 at 23-24; Ex. 9 at 27; Ex. 10 at 108-10, 145; Ex. 11 at 65; Ex. 12 at 169; Ex. 13 at 259-60; Ex. 14 at 44-45. At the corporate level, Flowers also deploys a “Field Marketing Team” made up of regional managers and field marketers, who direct sales efforts in Plaintiffs’ stores and ensure that Plaintiffs carry out Defendants’ plans for product promotions. Ex. 3 at 266-70. Defendants also post information about promotions on bulletin boards in the warehouses, showing Distributors what each store has on sale in a particular week. Ex. 19 at 102-103. Most major accounts use “planograms” that direct Distributors where to place Defendants’ products on shelves. See, e.g., Ex. 7 at 60; Ex. 8 at 38; Ex. 10 at 127-29; Ex. 11 at 79-81; Ex. 12 at 89-90; Ex. 13 at 18-20, 41-42, 50; Ex. 14 at 33-34. While Defendants tout the ability of some Plaintiffs to put up displays in stores, in most cases they do so only because Flowers already “sold” the display to the customer and instructed the Plaintiff to put it up. Ex. 9 at 41-42; Ex. 10 at 128; Ex. 11 at 117; Ex. 12 at 167; Ex. 13 at 192; Ex. 14 at 47; Exs. 21, 22 (instructing managers to “pre-sell” displays to the stores). Defendants’ attempt to characterize these efforts as indicative of Defendants’ lack of control, therefore, is specious. Once promotions are agreed upon between Flowers and the customer, Plaintiffs are required to order and deliver enough product to fill the shelf or display, and failure to do so can result in a breach for failure to follow the “marketing plan.” Ex. 19 at 40, 127; Ex. 5 at 38-40. The Field Marketing team also uses mobile software called “GoSpotCheck” to ensure, among other things, that the right products are on store shelves at the right price. Ex. 3 at 266-67. Defendants wholly ignore the testimony from their own managers as to the methods by which Defendants control Plaintiffs’ daily activities. b. Defendants Monitor and Control Distributors’ Product Orders and Returns. Plaintiffs are required to use a handheld computer, issued by Flowers, to place orders for products. The handheld interfaces with a centralized system called SAP, which captures the orders, consolidates them, Case 7:16-cv-00233-FL Document 334 Filed 02/25/19 Page 12 of 42 7 and sends them to the bakery for production. Ex. 5 at 85-88; Ex. 19 at 131-32. Plaintiffs must be at the warehouse to transmit their orders, and if they fail to do so within a specified period, they are subject to a breach letter. See Ex. 18 at 18-19. When a Plaintiff logs in to the handheld, he sees a list of customers, followed by a list of authorized products for each account and a suggested order for each product. Suggested orders are set based on Defendants’ proprietary forecasting system, but Defendants may also adjust orders for product promotions, seasonal business, or holidays. Ex. 19 at 132-34; Ex. 5 at 85, 89-90. For some products, Defendants have the ability to circumvent the handheld system and place or modify orders without Plaintiffs’ knowledge or approval. Ex. 11 at 115, 118-19; Ex. 13 at 234-35. For example, the National Accounts Team will forward advance orders with the specific numbers of products for each store, accompanied by an instruction to “communicate with our independent distributors to place orders.” Ex. 23. Defendants also review Plaintiffs’ orders to ensure they ordered for promotions or in accordance with the marketing plan. Ex. 19 at 140-41. A Distributor’s failure to take the product or displays can constitute a breach for not following the marketing plan. Ex. 5 at 36, 40; Ex. 19 at 40. Through their representative testimony, several Plaintiffs confirm Defendants’ common practice of adding product to Plaintiffs’ orders without their knowledge and consent and forcing Plaintiffs to take the product.5 See Ex. 7 at 91-92; Ex. 8 at 113-16; Ex. 9 at 18-19, 37-38; Ex. 10 at 104-06; Ex. 11 at 115, 117-18; Ex. 12 at 167-69; Ex. 14 at 48-51; Ex. 15 at 63-64. Defendants are similarly stringent with product returns. They require Plaintiffs to adhere to a strict set of stale check-in policies and return to the warehouse by a certain time, or risk being charged back for stale product. Ex. 19 at 171. In January 2018, Defendants implemented a ten percent “stale cap,” allowing them to charge Plaintiffs for returning excess quantities of stale products: if a Plaintiff returns over ten percent of his product, he is charged for the excess product. Ex. 19 at 168-70. Even prior to the stale cap, 5 While Defendants attempt to demonstrate inconsistencies between Plaintiffs’ testimony on the issue of ordering, they omit key testimony. For example, they quote Plaintiff Idries as stating “I control my market. I know what I’m supposed to order and what I’m supposed not to,” but they ignore his repeated testimony that product or displays are frequently added to his orders and that he is unable to reject them. Ex. 9 at 18- 19, 41-42. Case 7:16-cv-00233-FL Document 334 Filed 02/25/19 Page 13 of 42 8 Franklin implemented stale reduction initiatives to help Plaintiffs reduce returns. When Plaintiffs had high levels of stale product returns, Defendants targeted those Plaintiffs for “corrective actions,” such as riding with a Plaintiff during deliveries and meeting the Plaintiff to review and correct orders. Ex. 19 at 187-88; Ex. 25. 3. Defendants Reserve Complete Discretion to Discipline and Terminate Distributors, Rendering the Relationship Terminable at Will. The Distributor Agreement grants Defendants the right to terminate Plaintiffs on twenty-four hours’ notice for a “non-curable breach” or on ten days’ notice for an uncured “curable breach.” A non-curable breach is defined to include “any action or inaction on Distributor’s part that results in Distributor’s inability to service any Chain account.” Ex. 17 § 16.2. A curable breach is defined to broadly include any “failure of performance by Distributor.” Ex. 17 § 16.3. Breach letters warn Distributors that, if Defendants find a threat to Defendants’ relationship with customers, those actions constitute a non-curable breach. See Ex. 26. Most terminations originate with a “curable breach,” which if not redressed, ripens into a “non-curable breach.” Ex. 5 at 34; Ex. 19 at 39. Defendants have the sole discretion to determine what constitutes “best efforts” or “good industry practice” in any particular situation. Ex. 5 at 30, 34; Ex. 20 at 51-52, 53-54. And Defendants can, at their sole discretion, freely terminate Plaintiffs for failing to meet these standards. Ex. 17 §§ 2.6, 5.1; see also Ex. 5 at 34; Ex. 19 at 23. The problem Plaintiffs face regarding Defendants’ expansive termination rights is the absence of any clear performance criteria. Defendants’ Rule 30(b)(6) designee testified that “best efforts” and “good industry practice” provisions “are really just a framework,” and agreed it is up to Defendants’ management to interpret and apply those provisions. Ex. 5 at 30. Given these elusive obligations, Plaintiffs serve at the Defendants’ will like any employee.6 Breach letters may be issued for reasons ranging from failing to comply with a planogram, having out-of-code product in the store, having out-of-stock conditions in a store, 6 That some Plaintiffs have not personally received breach letters, see Def. Br. at 16, hardly defeats Plaintiffs’ representative proof of Defendants’ frequent exercise of control through the use or threat of breach letters. Defendants would not argue that an employee was not properly classified because her employer had never disciplined her, although clearly having the right to do so. Case 7:16-cv-00233-FL Document 334 Filed 02/25/19 Page 14 of 42 9 failing to follow a “marketing plan,” or failing to service an account a certain number of times per week. Ex. 19 at 39-40; Ex. 5 at 35-36; Ex. 26 (planogram); Ex. 18 at 1 (days of service); Ex. 18 at 11 (out-of- code). At their sole discretion, Defendants routinely exercise their right to discipline, punish, and terminate Plaintiffs, a hallmark of employment status. B. Defendants Control Sales and Marketing Efforts with Customers, Which in Turn Controls Distributors’ Opportunity to Increase Their Profits. Defendants deploy a vast National Accounts Team to manage and conduct the business discussions with Defendants’ major accounts. Dominant major accounts (such as Walmart, which represents 20% of Flowers’ sales) will only interact with Flowers, demanding scale and sophistication in marketing, pricing, and product selection that individual Plaintiffs cannot provide. Ex. 1 at 24; Ex. 27 at 39-40; Ex. 28 at 65- 67; Ex. 29 at 41-43. The National Accounts Team handles all business discussions with major accounts, and they have authority to propose new products, pitch wholesale and retail pricing, and suggest promotions—all without consulting Distributors. Ex. 30 at 18-19, 27-31, 57-58; Ex. 31 at 31-327; Ex. 32 at 53-60. These programs involve featured items and displays such as endcaps, space, hutches, and point of purchase displays: “whatever we have available to help sell our bread.” Ex. 33 at 23-24. Once a major account agrees to these programs, Defendants require Plaintiffs to implement them. Ex. 33 at 179. Defendants wholly ignore this centralized national marketing structure in their brief and do not acknowledge the numerous ways in which Defendants control product selection, pricing, displays and promotions. Their depiction of Distributors’ sales initiatives (Def. Br. at 23-25) disregards the miniscule impact of those initiatives on Plaintiffs’ economic reality, particularly because cash accounts, as to which Distributors may have slightly more discretion, account for only 11.5% of Franklin’s total sales. See Ex. 38. With respect to pricing, Defendants’ written policies confirm their nearly complete control over the prices at which products are sold to customers. When Plaintiffs acquire their territories, they sign a uniform 7 Darin Zaborski, as an employee with nationwide responsibility, testified in this case that all of his testimony from the LePage case was also accurate with respect to Franklin. Ex. 47 at 6-9. Case 7:16-cv-00233-FL Document 334 Filed 02/25/19 Page 15 of 42 10 “Distributor Checklist” stating that they cannot change prices for national accounts or fast food/restaurant businesses. Ex. 34; see also Ex. 13 at 261-63. For most items and customers, standard and promotional pricing is developed at the national level and presented to customers, and Plaintiffs have no involvement in those decisions. Ex. 5 at 91; Ex. 19 at 193, 196; Ex. 33 at 38, 239-41. Even in those limited circumstances where Plaintiffs are technically allowed to change a price, numerous restrictions apply, as noted on the uniform “Distributor Checklist.” For example, a Plaintiff must get approval if he wants to receive credit for a discount or promotion; otherwise the Plaintiff will bear the cost of the discount. Ex. 5 at 94-95. Even for cash accounts—where Defendants claim Plaintiffs have the most discretion—Flowers’ Distributor Enablement Operations Director acknowledged that if a Distributor tried to adjust a price and the customer then decided to stop buying Defendants’ products, the Plaintiff could be breached for failing to follow good industry practice. Ex. 20 at 121; Ex. 19 at 202. Flowers also negotiates shelf space and product selection with major accounts. Plaintiffs consistently testify that shelf space is tightly controlled and dictated by planograms, which allocate the space and outline which and how many products must go in each space. See, e.g., Ex. 7 at 60; Ex. 8 at 38; Ex. 10 at 127-29; Ex. 11 at 79-81; Ex. 12 at 89-90; Ex. 13 at 18-20, 41-42, 50; Ex. 14 at 33-34. If Plaintiffs attempt to deviate from the planogram, they can be issued a breach letter. See Ex. 26. When a Plaintiff does obtain extra shelf space beyond that dictated by the planogram, Defendants are usually involved. See Ex. 33 at 101-03. Defendants confirm that, for their sales managers, a key part of the job is to go into stores and ask for shelf space and displays. Ex. 19 at 32-33; Ex. 33 at 101-03. With respect to product selection, representative testimony establishes that Defendants have power to decide what products can be sold to each account. Defendants uniformly confirm that Defendants must authorize the sale of a product to a store before a Plaintiff can deliver the product there. Plaintiff Smith testified that, when he tried to suggest changing or adding a products in a store, Defendants refused. Ex. 14 at 94-96. Consistent with these limitations, several Plaintiffs expressed frustration over the fact they are required to carry low-value products. Ex. 7 at 16, 18; Ex. 12 at 72; Ex. 13 at 13-14, 18-19. Distributors’ inability to control product selection and shelf space diminishes their opportunity for profit and loss. Case 7:16-cv-00233-FL Document 334 Filed 02/25/19 Page 16 of 42 11 Promotions or displays are usually set at the national level and Distributors are simply required to execute the promotion. Ex. 19 at 228-31, 232-33; Ex. 33 at 178-79, 238-41 (promotions are “communicated to all Distributors, and Distributors sell the programming at that point and we follow up with the stores to make sure the program is in place.”); see also Ex. 13 at 263-64; Ex. 11 at 70-71. In some cases, Distributors receive special displays they did not order but are required to take and attempt to put up in stores. Ex. 9 at 41-42; Ex. 11 at 115-17; Ex. 12 at 167; Ex. 13 at 192. While Defendants claim that Plaintiff Idries was occasionally able to put up his own displays, they ignore his testimony that most of the displays were required by Defendants and were not particularly successful. Ex. 9 at 41-42 (“You force me to put products in the market that’s not going to sell.”). Defendants also ignore the fact that, if Plaintiffs refuse to take or put up displays, they are subject to a breach letter. Ex. 5 at 36; Ex. 19 at 40. Plaintiffs are further required to service any new account requesting service from Flowers. Ex. 5 at 109; Ex. 19 at 202; see also Ex. 12 at 64. Most Plaintiffs testify that they make no attempt to pick up new accounts. Plaintiff Ressigue testified that he stopped approaching new stores because he was unable to negotiate pricing, and that in any case, he did not have enough time to call on new accounts. Ex. 12 at 65, 185-86. Plaintiff Coniglio testified that while he picked up a few small stores, he could not make money on them. Ex. 8 at 63. Plaintiff Rosinbaum testified about numerous accounts he lost because Defendants would not authorize a lower price. Ex. 13 at 107-10. The unalterable, common thread among Distributors’ testimony is that Flowers retains complete control and discretion over whether and how to approve new accounts. C. Defendants Do Not Deny Their Control Over Distributors’ Margins. Besides controlling product selection, pricing, promotions, and accounts, Defendants unilaterally determine Distributors’ margin on product sales. Plaintiffs are paid a commission, or so-called “discount,” based on the difference between the wholesale price and the price paid by retailers. Depending on the product, Distributors receive discounts ranging from 10 percent (private label products) to 23 percent (white bread) commission, with most products ranging between 18 to 20 percent. See Ex. 35. For example, if the wholesale price of a loaf of bread is $1, and the discount is 20 percent, the Plaintiff earns 20 cents on the Case 7:16-cv-00233-FL Document 334 Filed 02/25/19 Page 17 of 42 12 sale (minus fees and expenses). Defendants have sole discretion to set and change these discounts. Ex. 19 at 189-92. Through unilateral control over Plaintiffs’ margins, Defendants impact Plaintiffs’ opportunity for profit and loss. D. Defendants Control Territory Sales. To sell a distribution territory, a Plaintiff must have the sale approved by Defendants. See Ex. 36. Defendants have sole discretion to decide whether someone is a “qualified and bona fide purchaser.” Ex. 17 at § 14.1. The selling Plaintiff is also responsible for training the new Distributor. Ex. 4 at 71. While the selling Plaintiff can attempt to set his own price, Flowers will only finance transactions at a 10 to 1 ratio, meaning the buyer has to come up with the difference. Ex. 37. Defendants also control whether a Plaintiff can purchase additional routes, which Coniglio found out when he was denied the opportunity to purchase another territory. Ex. 8 at 45-46. Under the Distribution Agreement, Defendants also retains an absolute right of first refusal to purchase the territory back from the Plaintiff, rather than allowing the Distributor to sell it. Ex. 17 § 14.1. III. ARGUMENT A. Standard for Decertification The Court of Appeals for the Fourth Circuit has yet to prescribe a method for determining whether workers are similarly situated under the FLSA when faced with a decertification motion. However, district courts in this Circuit typically evaluate (1) the factual and employment settings of the individual plaintiffs; (2) the defenses available to defendants which may be individual to each plaintiff; and (3) fairness and procedural considerations counseling for or against collective action treatment. Flowers v. Rehberg Baking Co. of Jamestown, LLC, No. 12-596, 2015 WL 1346125 at *15 (W.D.N.C. Mar. 24, 2015). While the “similarly situated” standard under § 216(b) is more stringent at the decertification stage than the conditional certification stage, the standard is still less demanding than for class certification under Rule 23. See, e.g., McGlone v. Contract Callers, 49 F. Supp. 3d 364, 367 (S.D.N.Y. 2014) (observing that “similarly situated” requirement is less stringent than Rule 23(b)(3) predominance standard); Scovil v. FedEx Ground Package Sys., Inc., 886 F. Supp. 2d 45, 57 (D. Me. 2012) (finding that collective action Case 7:16-cv-00233-FL Document 334 Filed 02/25/19 Page 18 of 42 13 standard is “less demanding”). Plaintiffs need only show that their positions are similar, not identical, to those of other members of the collective action. See, e.g., Venegas v. Global Aircraft Serv., Inc., 159 F. Supp. 3d 93, 106 (D. Me. 2016); Scovil, 886 F. Supp. 2d at 57. Plaintiffs are similarly situated when they have similar job duties and their putative employer engages in a unified policy, plan, or scheme that violates the FLSA. Venegas, 159 F. Supp. 3d at 106. This only requires a “persuasive showing that the original and opt-in plaintiffs were common victims of an FLSA violation pursuant to a systematically-applied company policy or practice such that there exist common questions of law and fact that justify representational litigation.” McGlone v. Contract Callers, Inc., 49 F. Supp. 3d 364, 367 (S.D.N.Y. 2014) (quoting Pefanis v. Westway Diner, Inc., No. 08-2, 2010 WL 3564426 at *4 (S.D.N.Y. Sept. 7, 2010)). Collective action does not require “no differences” between the plaintiffs, nor does it preclude some individualized inquiry. See, e.g., Butler v. DirectSat USA, LLC, 47 F. Supp. 3d 300, 306 (D. Md. 2014) (holding that similarly situated does not mean “identical”) (citing Hipp v. Liberty Nat’l Life Ins. Co., 252 F.3d 1208, 1217 (11th Cir. 2001)); see also Jiminez-Orozco v. Baker Roofing Co., No. 05-34, 2007 WL 4568972 at *6 (E.D.N.C. Dec. 21, 2007) (Flanagan, J.) (observing that workers are similarly situated when their overtime claims “ ‘aris[e] from at least a manageably similar factual setting with respect to their job requirements and pay provisions, but their situations need not be identical.’ ”) (quoting De Luna-Guerrero v. N.C. Growers Ass’n, 338 F. Supp. 2d 649, 654 (E.D.N.C. 2004)). A court instead should consider whether there is a meaningful nexus binding plaintiffs’ claims together, such that similarities in defendants’ wrongdoing outweigh the individual differences in plaintiffs’ circumstances. See Wilks v. Pep Boys, No. 02-837, 2006 WL 2821700 at *5-6 (M.D. Tenn. Sept. 26, 2006); Rehberg, 2015 WL 1346125 at *16 (quoting Butler, 47 F. Supp. 3d at 306). Defendants put small portions of the record under a microscope to point out supposed “variations” in certain details between Distributors, many of which are not even relevant to the governing standards. In other recent cases against Flowers, on essentially the same record before this Court, district courts held that plaintiffs were similarly situated despite these same “individual” colorations by Defendants. Noll v. Flowers Case 7:16-cv-00233-FL Document 334 Filed 02/25/19 Page 19 of 42 14 Foods, Inc., No. 15-493, 2019 WL 206084 at *5 (D. Me. Jan. 15, 2019) (“[T]he plaintiffs are similarly situated … it is possible to preserve and address individual defenses, and … a collective action is preferable to potentially conducting many separate trials[.]”); Rehberg, 2015 WL 1346125 at *17 (“Defendants exaggerate isolated differences among the distributors and ignore the larger picture … that all distributors are subject to Defendants’ uniform policies.”); Richard v. Flowers Foods, Inc., No. 15-2557, slip op. at 29 (W.D. La. Aug. 13, 2018) (finding “a meaningful nexus that binds Plaintiffs’ claims together and that the similarities in their claims outweigh their differences”) (available at Ex. 39). This Court should similarly look beyond the immaterial “variations” Defendants strain to create. B. Common Evidence Proves Plaintiffs Were Subject to Substantially Similar Employment Settings. To evaluate employment settings, relevant considerations include whether plaintiffs were subject to the same duties, location, supervision, and pay procedures. See, e.g., Rehberg, 2015 WL 1346125 at *15. If workers are assigned a common position and their duties are governed by common procedures and merchandising practices, this strongly supports the conclusion they are similarly situated. See, e.g., LaFleur v. Dollar Tree Stores, Inc., 30 F. Supp. 3d 463, 469-70 (E.D. Va. 2014) (citing common job titles, codes, training, and supervision); Rivet v. Office Depot, Inc., 207 F. Supp. 3d 417, 424 (D.N.J. 2016) (observing that workers “were governed by the same standard operating procedures … regardless of store location and size” and “were required to adopt pricing decisions made by a central corporate department; stock shelves in a certain manner; implement designated advertisements; and adhere to certain product layout standards, also known as planograms.”). Where workers sign an identical contract, have substantially similar job duties, and are uniformly classified as independent contractors, this is enough to demonstrate a common employment setting. Young v. Fast Act Delivery of W.V., Inc., No. 16-9788, 2018 WL 989543 at *2 (S.D.W. Va. Feb. 20, 2018); Rehberg, 2015 WL 1346125 at *15. In the current litigation, Plaintiffs had the same duties and were subject to the same hiring process, same working conditions, common supervision, common terms for compensation, and identical termination Case 7:16-cv-00233-FL Document 334 Filed 02/25/19 Page 20 of 42 15 procedures.8 Plaintiffs also uniformly challenge Flowers’ blanket classification of them as independent contractors instead of employees. To resolve this classification dispute, the Fourth Circuit authorities apply the economic realities test. See, e.g., McFeeley v. Jackson Street Entertainment, LLC, 47 F. Supp. 3d 260, 267 (D. Md. 2015), aff’d, 825 F.3d 235 (4th Cir. 2016). 1. Common Evidence Will Decide Whether Plaintiffs, Under the Economic Realities Test, Depend on Defendants for Their Livelihood. When deciding employment status under the FLSA, it should be construed expansively consistent with its remedial purpose. Schultz v. Capital Int’l Sec., Inc., 466 F.3d 298, 304 (4th Cir. 2006). Six factors are considered: (1) the degree of control exercised by the employer over the workers; (2) the workers’ opportunity for profit or loss based on managerial skill; (3) the workers’ investment in the business; (4) the degree of skill required for the work; (5) the permanence and duration of the working relationship; and (6) the extent to which the work is an integral part of the employer’s business. Schultz, 466 F.3d at 304-05. The fundamental concern under this test is whether, under the totality of the circumstances, workers are economically dependent on the putative employer or are in business for themselves. See, e.g., Salinas v. Commercial Interiors, Inc., 848 F.3d 125, 150 (4th Cir. 2017) (quoting Schultz, 466 F.3d at 304). In this analysis, no single factor is determinative; the economic realities test “is designed to capture the economic realities of the relationship between the worker and the putative employer.” Schultz, 466 F.3d at 305. When the economic realities are examined here, the record shows that Plaintiffs are similarly situated and their classification can be proven with representative evidence: 8 Defendants rely on cases where the putative class included workers in myriad positions with substantially different job responsibilities. See, e.g., Bamgbose v. Delta-T Group, Inc., 684 F. Supp. 2d 660, 668-69 (E.D. Pa. 2010) (workers in seven divisions with “dozens of different job titles and functions”); Purdham v. Fairfax County Pub. Schs., 629 F. Supp. 2d 544, 546 (E.D. Va. 2009) (jobs included “security, athletic coaching, and ticket-taking”); Harrison v. Delguerico’s Wrecking & Salvage, No. 13-5353, 2016 WL 826824 (E.D. Pa. Mar. 2, 2016) (proposed class encompassed “a mechanic, secretary, recycling sorter, driver helper, [etc.]”); Gatewood v. Koch Foods of Mississippi, No. 07-82, 2009 WL 8642001 at *21 (S.D. Miss. Oct. 20, 2009) (slaughterhouse workers with different job requirements in different divisions and locations); Sharer v. Tandberg, Inc., No. 06-626, 2007 WL 676220 at *3 (E.D. Va. Feb. 27, 2007) (teachers, product managers, and sales specialists). These cases are immaterial here because under their Distributor Agreements, all Plaintiffs share identical job responsibilities and are supervised and paid pursuant to Defendants’ common practices and procedures. Case 7:16-cv-00233-FL Document 334 Filed 02/25/19 Page 21 of 42 16 Factor Common Evidence 1. Degree of control over manner in which work is performed • Pursuant to their Distributor Agreements, all Plaintiffs must perform their jobs in accordance with “good industry practice.” See Ex. 17 §§ 2.6, 5.1 • Defendants reserve right to discipline—and routinely exercise that right—Plaintiffs for essentially any reason under the subjective and discretionary service requirements. Ex. 5 at 35-36; Ex. 19 at 39-40; Ex. 26; Ex. 18. • Defendants conduct market checks to assess Plaintiffs’ performance at different outlets and employ rehabilitation strategies with deficient Distributors. Ex. 3 at 266-70; Ex. 5 at 17-19; Ex. 19 at 64, 67-69, 71- 75; see also Ex. 8 at 24; Ex. 10 at 112-13; Ex. 14 at 45, 60. Plaintiffs can be and are reprimanded for exceeding stale percentages set by Defendants and not performing their jobs according to Defendants’ standards and customer service requirements. Ex. 19 at 187-88; Ex. 25. • Defendants may freely terminate Distributors for failing to meet Defendants’ standards. Ex. 5 at 34; Ex. 19 at 23. 2. Opportunities for profit or loss • Defendants’ national and regional sales managers by the nature of their very positions exercise control over all entrepreneurial and profit-generating activities. More specifically, members of the National Accounts Team are the single point of contact and develop business connections, pitch pricing, products and promotions, and nurture existing relationships with Defendants’ customers. Ex. 30 at 18-19, 27-31, 57-58; Ex. 31 at 31-32; Ex. 32 at 53-60; Ex. 33 at 23- 24, 179; Ex. 47 at 6-9. • Sales managers call on accounts, seek new accounts, maintain good relationships with store managers, solicit more shelf space, present customers with product opportunities, and handle store resets to try and secure the most opportune placement for Defendants’ products. Ex. 19 at 32-33; Ex. 33 at 101-03. • Plaintiffs cannot propose pricing or products to accounts, pitch promotions, or negotiate shelf space with national accounts. Ex. 5 at 91; Ex. 19 at 193, 196; Ex. 33 at 38, 179, 293-41; Ex. 34. • Defendants unilaterally determine the profit margins, expressed as “discounts,” between wholesale price to Plaintiffs and retail sale prices. Ex. 19 at 189-92; Ex. 35. • Pursuant to their Distributor Agreements, Plaintiffs cannot sell their distributorship without Defendants’ prior written approval. Ex. 17 § 14.1. 3. Investment in equipment or material; employment of other workers • All Plaintiffs must purchase their own vehicles for delivering Defendants’ products; however, Flowers makes financing available to assist Plaintiffs with this purchase. Ex. 40 at 19, 29-32. • Defendants pay chain accounts for shelf space and promotional opportunities. The cost is approximately 20% of total sales. Ex. 31 at 36-37. • The IRS has ruled that Distributors’ investments in their distributorship do not qualify as “investment in facilities” for purposes of classifying as an independent contractor. Ex. 41 at 68-72; Case 7:16-cv-00233-FL Document 334 Filed 02/25/19 Page 22 of 42 17 Ex. 42 at 259. • Defendants provide handheld computers and proprietary software, among other tools, which Plaintiffs need to perform their jobs. The cost of this system is at least $169 million from 2013-2017. Ex. 43. 4. Degree of skill and independent initiative required for work • The job of a Distributor does not require advanced knowledge or skill. The qualification for all Distributors is the same—namely, a good attitude. There are no educational requirements, job experience, or specific skills required to become a Distributor. Ex. 4 at 18-19. • All of Defendants’ Distributors go through the same P.D. training before they are hired as full-fledged Distributors. Ex. 4 at 33-34; Ex. 6. 5. Permanence of working relationship • Sales managers and the staffing agency are coached to recruit Distributors based on the likelihood that they will form a long-term relationship with Defendants. Ex. 44 at 29-30. • Sales managers are cautioned to avoid Distributor turnover because it reduces Defendants’ profitability. Ex. 44 at 30. 6. Degree to which the services rendered are an integral part of the employer’s business • Defendants testified that the economic fate of Distributors and the companies are “tied together.” Ex. 3 at 89. • Defendants rely exclusively on Distributors to deliver their products to retailers and restaurants. Ex. 1 at 6. • Defendants’ business model and profitability would crumble without Distributors. Ex. 2 at 103. In Rehberg v. Flowers Baking Co. of Jamestown, LLC, which involved facts and law virtually identical to that in the current case, the Western District of North Carolina carefully examined whether the economic realities test could be litigated on a classwide basis: [T]he court finds that Defendants exercise uniform control over distributors by requiring that they perform their jobs in accordance with ‘good industry practice,’ a standard that Defendants define in detail in the Distributor Agreement. All distributors’ opportunities for profit or loss are limited by Defendants’ significant control over profit-generating activities for national accounts, including Defendants’ role in managing existing accounts and seeking new ones, and in determining product pricing and promotions. All distributors are expected to make the same level of investment in equipment … but are provided the handhelds, proprietary software, dollies and other tools necessary by Defendants. In terms of skill required for the job, distributors are subject to common standards—they are not required to have any advanced knowledge … though they all undergo the same prospective distributor training. Regarding the permanence of distributors’ working relationships … although there is no set time frame for a distributorship, distributor relationships are clearly intended to be at least somewhat long-term…. Finally, common evidence shows that the degree to which distributors’ services are considered an integral part of the employer’s business is uniform across the board—Defendants rely almost exclusively on distributors to deliver their products to retailers and restaurants. This common evidence is sufficient to allow the court to undergo the economic realities test as to Plaintiff and all putative class members. Case 7:16-cv-00233-FL Document 334 Filed 02/25/19 Page 23 of 42 18 Rehberg, 2015 WL 1346125 at *7 (citations omitted). Defendants now try to distinguish this case as giving “undue weight to uniform classification” (Defs.’ Mem. at 33), but the preceding excerpt from that court’s opinion shows Rehberg went well beyond that, concluding that economic realities could be litigated on a classwide basis. That reasoning continues to have equal force and is well supported by Fourth Circuit caselaw. a. Common Evidence Will Establish That Plaintiffs Are Similarly Situated as to Degree of Actual Control. Defendants’ outsized attention to the control factor is lopsided and largely irrelevant. By focusing on a few isolated instances, where some Plaintiffs were “controlled” in ways in which others were not, does not help Defendants overcome the overwhelming common evidence on this and other economic realities factors. Defendants’ interpretation of the control factor runs against the preponderance of federal caselaw, including that in the Fourth Circuit. As the Fourth Circuit has clearly stated, the court does not consider control in and of itself, but, instead, “the issue is the degree of control that the alleged employer has in comparison to the control exerted by the worker.” Schultz, 466 F.3d at 305; see also Scantland v. Jeffry Knight, Inc., 721 F.3d 1308, 1314 (11th Cir. 2013) (“Control is only significant when it shows an individual exerts such a control over a meaningful part of the business that she stands as a separate economic entity.”); Brock v. Superior Care, Inc., 840 F.2d 1054, 1060 (2d Cir. 1988) (“An employer does not need to look over his workers’ shoulders every day in order to exercise control.”). Where a defendant actively supervises its workers, and demonstrates the ability to enforce its rules, this supplies strong evidence of classwide control. See, e.g., Randolph v. Powercomm Const., Inc., 309 F.R.D. 349, 368 (D. Md. 2015) (citing evidence that all workers “essentially had the same job,” are “subject to a single set of standards,” and CEO discussed governing standards “in general terms”); cf. Bayfield Alternative Staffing, Inc. v. Herman, 163 F.3d 668, 676 (1st Cir. 1998) (finding sufficient control under FLSA joint-employer standard, notwithstanding “absence of direct supervisory oversight of the workers’ Case 7:16-cv-00233-FL Document 334 Filed 02/25/19 Page 24 of 42 19 day-to-day activities,” where putative employer “retained the authority to intervene if problems arose with a worker’s job performance”). The key, therefore, is whether the putative employer supervised workers’ compliance with their duties and could seize control from the worker. Even if control is rarely exercised, the right to control can be seen as actual control where workers know they are subject to the exercise of those rights. See, e.g., Brock, 840 F.2d at 1060-61 (finding “substantial control” where employer visited sites “only once or twice a month” but “unequivocally expressed the right to supervise … and the [workers] were well aware that they were subject to such checks as well as to regular review of their … notes”). When such evidence of control is present, courts routinely deny motions for decertification. See, e.g., Scantland, 721 F.3d at 1315 (finding putative employer effectively controlled jobs and pricing and closely monitored the work); Young, 2018 WL 989543 at *2 (citing common job duties, working conditions, and contractual terms); cf. Troy v. Kehe Food Distribs., Inc., 276 F.R.D. 642, 650 (W.D. Wash. 2011) (finding workers had similar job duties “setting up shelves, resetting shelves, and stocking product according to the stores’ planograms or schematics”).9 Defendants do not dispute that, under materially identical terms in their Distributor Agreements, all Plaintiffs are required to comply with Defendants’ expectations for “best efforts” and “good industry practice.” Ex. 4 at 53-55; Ex. 5 at 28-30. Nor have Defendants addressed common mandates, such as the Field Operations Manual or their description of Distributors’ core responsibilities in their 10K Filings to the SEC, which establish Plaintiffs’ fundamental job duties. Ex. 1 at 9; Ex. 6. As shown by this common evidence, corroborated by other common evidence in the form of testimony from Defendants’ management, as well as undisputed testimony of all Distributors, Plaintiffs’ work primarily consists of picking up baked 9 Defendants heavily rely on the unpublished decision in Spellman v. American Eagle Express, Inc. No. 10- 2013, 2013 WL 1010444 (E.D. Pa. Mar. 14, 2013). But that decision is distinguishable in several respects: workers were free to accept or reject jobs, had discretion to reject underpaying routes, and were not bound by non-compete agreements, giving them the freedom to offer similar services to their putative employer’s competitors. See id. at *1-2, *4. The putative employer there only did occasional “field audits” to check that workers’ vehicles were safe, whereas in the current litigation, Defendants require frequent “market checks” to ensure that Plaintiffs comply with “best practices” and merchandising requirements. See Ex. 5 at 15-19; Ex. 19 at 64, 67-69, 74-75. Case 7:16-cv-00233-FL Document 334 Filed 02/25/19 Page 25 of 42 20 goods from warehouses, delivering them to customers, placing them on customers’ shelves according to a planogram, and removing stale or “out-of-code” goods. See supra Part II.A.2. Defendants’ argument that some of the requirements Distributors must follow come from customers is both belied by the record and irrelevant to the control analysis. First, the record shows that Defendants routinely solicited these “requirements” from customers, and in some cases, drafted requirements for them. Ex. 15 at 138, 141-52; Ex. 24 at 20-22, 24-32. Second, it is undisputed that Defendants expect Distributors to comply with them and can punish Distributors for failing to do so. Ex. 5 at 135-36; Ex. 19 at 39-40; Ex. 24 at 21-22. Because Defendants actively solicit and even supply draft requirements to their customers, which they then pass off to Distributors as customer “requests,” and because Defendants, not customers, enforce the requirements, those requirements constitute actual control by Defendants. See, e.g., Craig v. Fedex Package System, Inc., 686 F.3d 423, 429 (7th Cir. 2012) (stating in response to similar argument, “[I]t is FedEx that decides what services are provided to its customers, and when.”); Slayman v. FedEx Ground Package Sys., Inc., 765 F.3d 1033, 1043 (9th Cir. 2014) (finding employee relationship where putative employer negotiated time windows for drivers’ deliveries). Not only is control found in Defendants’ common Distributor Agreement, their policies and practices, and their training materials, but Defendants employ sales and management teams to ensure that all Distributors comply with these fundamental expectations. In other words, these practices constitute common evidence of Defendants’ exercise of Defendants’ reserved rights of control. Defendants’ sales and management teams supervise Distributors by conducting frequent “market checks” to ensure Distributors comply with their best practices standards and customer service requirements, and closely monitor orders, sales, and stale returns. See supra Part II.A.2. When Plaintiffs do not meet these expectations, Defendants at their discretion can impose sanctions and do so through breach letters and other disciplinary measures. See supra Part II.A.3; II.C. This evidence of control—which is representative evidence that applies to all Plaintiffs—easily surpasses the minimal threshold for actual control under the economic realities test. McFeely v. Jackson Street Entertainment, LLC, 825 F.3d 235, 242 (4th Cir. 2016) (“an employer’s potential power to enforce its rules … is a form of control.”); Pizzarelli v. Cadillac Lounge, LLC, No. 15-254, 2018 Case 7:16-cv-00233-FL Document 334 Filed 02/25/19 Page 26 of 42 21 WL 2971114 at *4 (D.R.I. Apr. 13, 2018) (“Contrary to Defendant’s contention, its ability to enforce its rules … is a means of controlling entertainers’ behavior.”). To avoid this outcome, Defendants place undue focus on minor elements of some Plaintiffs’ experiences, such as having some discretion over product placement and ordering with respect to a small number of small clients, then exaggerate differences between those few select Plaintiffs. But these differences are nominally relevant to whether Defendants have the right to and occasionally do exercise control over Plaintiffs’ work. Contrary to what Defendants imply, for the major accounts which represent nearly 90% of Defendants’ business, Plaintiffs have no control over product selection, pricing, space, or promotions, and nominal control over order volumes. See supra Part II.A.2.b; II.B. While Plaintiffs have slightly more control over pricing and shelf space for “cash accounts,” these stores only make up 11.5% of Franklin’s sales, minimizing their impact on Plaintiffs’ regular job duties. See Ex. 38; cf. Kelly v. Healthcare Servs. Grp., Inc., 106 F. Supp. 3d 808, 824 (E.D. Tex. 2015) (finding differences between workers’ tasks at various facilities were immaterial to collective resolution of case); Pizzarelli, 2018 WL 2971114 at *4 (holding that contractual mandates, such as fees and noncompetes, outweighed “minor freedoms” over matters such as scheduling). Defendants’ efforts to show individualized issues by hand-picking Plaintiffs who have not received breach letters, notwithstanding Defendants power to issue them which they lord over Distributors at all times, also fails. Overwhelming representative proof exists to show Defendants’ exercise of control through the use of, and threats to use, breach letters and other discipline. See supra Part II.A.2, II.A.3; see also Ex. 5 at 51-54; Ex. 19 at 23. The fact that Defendants do not always issue breach letters does not mean that they do not control Plaintiffs. Their ability to issue breach letters, along with Plaintiffs’ awareness of that threat, is enough to establish actual control. See, e.g., Brock, 840 F.2d at 1060 (finding actual control based on workers’ knowledge of defendant’s “right” to supervise). Case 7:16-cv-00233-FL Document 334 Filed 02/25/19 Page 27 of 42 22 b. Plaintiffs Are Similarly Situated as to Opportunity for Profit and Loss Dependent on Managerial Skill. Defendants make no effort to demonstrate individualized proof on two economic realities factors: the fourth factor, the degree of skill required for the work; and the sixth factor, whether the work is an integral part of the business. And for the remaining three factors, Defendants resort to weak and largely immaterial evidence, further showing why decertification must be denied. On closer scrutiny under the correct legal standards, the record contains overwhelming common evidence that Plaintiffs are similarly situated, despite the differences Defendants muster. The second factor considers whether a worker has “opportunities for profit or loss dependent on … managerial skill.” Schultz, 466 F.3d at 305 (emphasis added). If a worker lacks the power to negotiate prices, and the putative employer can unilaterally change them, this strongly weighs against opportunity for profit or loss. McFeeley, 825 F.3d at 243 (finding no opportunity to profit where putative employer “ultimately controlled a key determinant—pricing”); see also Scantland, 721 F.3d at 1317. And because simply pushing for more sales does not implicate managerial skill, this does not demonstrate a true opportunity for profit or loss. McFeeley, 825 F.3d at 243 (“It is natural for an employee to do his part in drumming up more business …. The skill that the employee exercises in that context is not managerial but simply good salesmanship.”). A related concern is whether the work takes up so much time that, as a practical matter, the worker cannot realistically pursue expanding profit opportunities. See, e.g., Martin v. Selker Bros., Inc., 949 F.2d 1286, 1294 (3d Cir. 1991) (finding no real opportunity where workers’ income “was derived primarily from their fixed commission from [the putative employer]”); Acosta v. Senvoy, LLC, No. 16-2293, 2018 WL 3722210 at *9 (D. Or. July 31, 2018) (finding that, where putative employer demanded considerable overtime work, long hours prevented worker from pursuing other opportunities). Common evidence demonstrates how Defendants uniformly limit Distributors’ opportunities for profit in running their routes. Plaintiffs are required to serve all accounts and could not deny service to less profitable accounts. Cf. Collinge v. Intelliquick Delivery, No. 12-824, 2015 WL 1292444 at *4 (D. Ariz. Case 7:16-cv-00233-FL Document 334 Filed 02/25/19 Page 28 of 42 23 Mar. 23, 2015) (holding that where delivery drivers had limited ability to reject unprofitable jobs, this favored employee status); Campos v. Zopounidis, No. 09-1138, 2011 WL 2971298 at *7 (D. Conn. July 20, 2011) (finding no meaningful opportunity for profit where drivers were “required to make all assigned deliveries”). Plaintiffs are also subject to a strict non-compete provision, which lasts for a year after they stop working, which bars them from using their “businesses” to deliver competitors’ bread. Ex. 17 §§ 5.1, 20.8. While Defendants cite a few Plaintiffs who—perhaps fortuitously—sold distributorships for more than they paid, or whose route value increased, the evidence shows that in their daily work, Plaintiffs had no meaningful opportunities for profit. Plaintiffs’ regular work overwhelmingly consists of delivering and stocking goods. For the major accounts that generate nearly all of Plaintiffs’ revenues, Plaintiffs lack the authority to negotiate prices or promotions. See supra Part II.B. To the extent Plaintiffs increase their earnings through aggressive sales tactics, those efforts do not implicate “managerial skill” and thus do not count as opportunities for profit or loss. See McFeeley, 825 F.3d at 243. And they generally testified that, because their work for Defendants demanded their full-time effort, they did not have time to make sales calls, and even if they did, they could not make any money on the small cash accounts they were able to pick up. See, e.g., Ex. 12 at 65, 185-86; Ex. 8 at 63. Under these circumstances, Plaintiffs are economically dependent on Defendants for their earnings, and all faced similar limitations on their opportunities for profit or loss. Because all Plaintiffs operated under these limitations, making them wholly dependent on Defendants for their income, they are similarly situated. Cf. Thomas v. Kellogg Co., No. 13-5136, 2016 WL 7057218 at *4 (W.D. Wash. Dec. 5, 2016) (finding differences between accounts, among distributors of snack foods to grocery stores, did not supply grounds for decertification). c. Because Defendants’ Investments in Distribution Infrastructure Dwarf Those by Any Individual Plaintiff, This Factor Will Be Resolved on Classwide Proof. When assessing workers’ investment in the business, federal courts require a realistic comparison between the investment made by the worker and that of the company. McFeeley, 825 F.3d at 244 (holding Case 7:16-cv-00233-FL Document 334 Filed 02/25/19 Page 29 of 42 24 that this factor focuses on “the worker’s … investment relative to the company’s”); see also Flores, 250 F. Supp. 3d at 486-88; Dixon v. Zabka, No. 11-982, 2014 WL 6084351 at *24-25 (D. Conn. Nov. 13, 2014). Where workers purportedly “invest” in vehicle costs or other business overhead, but these contributions are minimal compared to the employer’s investments in utilities, workspaces, marketing, and advertising, this points toward an employment relationship. See, e.g., Scantland, 721 F.3d at 1317-18; Dixon, 2014 WL 6084351 at *24-25; Campos, 2011 WL 2971298 at *6-7. The alleged “variations” in relative investment among the Distributor workforce is utterly irrelevant given such investments are indisputably dwarfed by Flowers’s investment in its national bakery distribution operation. Flowers’ marketing efforts—including coupons, ads, sweepstakes, and print advertising—to support its main brands total approximately $5 million for 2014-2017. Ex. 45. Flowers estimates its total marketing budget for its five main brands range from $10 million to $17 million per year. Ex. 46. Defendants maintain a vast National Accounts Team which exclusively handles marketing, advertising, and relationships with major accounts, giving them control over major accounts’ product selection, pricing, and promotions. Supra part II.B. And Defendants maintain a “trade budget” for each of their chain accounts, which they use to purchase shelf space and secure promotional opportunities. See Ex. 31 at 36-37; Ex. 47 at 7. Flowers also manages all the software that enables Plaintiffs to do their jobs, such as the uniform, company-wide operating system for the handheld, as well as the software that generates and transmits orders and maintains sales history, for which Defendants paid $169 million from 2013-2017. Ex. 43. These investments are directly necessary for Plaintiffs’ work, and without these investments, Plaintiffs would have no jobs at all. Ex. 5 at 98-99. None of these efforts could be undertaken by Plaintiffs alone. Plaintiffs are similarly situated with respect to their categories of investments, regardless of variations in the amounts they paid for their territories, when compared to Defendants’ massive investment in their bakery distribution operation. While Plaintiffs can hire helpers, that alone does not indicate significant investment. See Rehberg, 2015 WL 1346125 at *16 (denying motion to decertify and finding Distributors similarly situated upon Case 7:16-cv-00233-FL Document 334 Filed 02/25/19 Page 30 of 42 25 same factual record, including Distributors’ hiring of helpers); Richard, slip op. at 28-30 (Ex. 39) (same); cf. Slayman, 765 F.3d at 1047 (holding delivery drivers were employees as a matter of law, under the FLSA economic realities test, where some hired helpers to serve their routes); Craig v. FedEx Ground Package Sys. Inc., 335 P.3d 66 (Kan. 2014) (holding that delivery drivers are employees, under common-law standard, despite right to hire helpers). The variations between Plaintiffs, hiring helpers or not, does not defeat a finding that they are similarly situated. Flores, 250 F. Supp. 3d at 488; In re FedEx Ground Pkg. Sys., Inc. Employment Pracs. Litig., 662 F. Supp. 2d 1069, 1107-08 (N.D. Ind. 2009). The economic reality is that Defendants invest far more in Plaintiffs’ “businesses” than Plaintiffs do. Defendants manufacture goods, own the warehouses, handle marketing, cultivate client relationships, and set product selection and prices for all major customers. Cf. Campos, 2011 WL 2971298 at *7. These massive investments necessarily overwhelm Plaintiffs’ modest contributions to their work experiences. As a result, all Plaintiffs are similarly situated with respect to the parties’ investments in the business. d. The Degree of Skill Required for the Work Is Resolved on Common Evidence. Defendants’ briefing is entirely silent about the fourth factor, which considers the degree of skill required for the work. The reason is that Defendants cannot dispute the common proof for this factor. If a putative employer does not require its workers to have prior experience, no skill is required, which favors employee status. McFeeley, 825 F.3d at 244. Defendants do not demand that P.D.s have any particular skills,10 and they impose no requirements beyond a clean driving record and a negative drug test. See supra Part II.A.1. As a result, this factor applies uniformly to all Plaintiffs. 10 Courts consistently hold that driving and delivery services do not require skill. See, e.g., Flores, 250 F. Supp. 3d at 490; Ansoumana v. Gristede’s Operating Corp., 255 F. Supp. 2d 184, 191 (S.D.N.Y. 2003). Even if Distributors were considered salespersons, this is not a skilled occupation either. See, e.g., Dixon, 2014 WL 6084351 at *25 (“No reasonable juror could find … that Independent Dealers exercised skill and independent initiative in selling vacuums.”). Case 7:16-cv-00233-FL Document 334 Filed 02/25/19 Page 31 of 42 26 e. The Distributorship Agreement Contemplates an Ongoing and Permanent Relationship. Defendants argue that because Plaintiffs worked “for different amounts of time,” there is no common evidence as to the duration of the relationship. But under this factor of the economic realities test, the inquiry is whether workers are transient or whether they formed longer-term relationships with their putative employer. See, e.g., Martin, 949 F.2d at 1295 (considering “length and continuity” of relationship and whether work was done exclusively for the putative employer); Dole v. Snell, 875 F.2d 802, 811 (10th Cir. 1989) (“employees usually work for only one employer and such relationship is of continuous and of indefinite duration”). Defendants cite no evidence that the nature of the relationship and work settings resulted in particular Distributors being “transient.” In stark contrast, the common evidence shows that Defendants directed their managers to look for “quality” Distributors in order to avoid “more turnover, more wasted time and money, and more problems[.]” Ex. 44 at 29. In addition, when Plaintiffs began working their distributorships, Defendants issued loans to be paid back over a 10-year period. Ex. 40 at 20. Thus, the standardized Distributor Agreement does not have a specified duration and contemplates the relationship will continue indefinitely. If workers make an ongoing, substantial commitment to a single putative employer, this strongly favors an employee relationship. See, e.g., Scantland, 721 F.3d at 1318-19 (citing year-long terms and non- compete clause); see also Brock, 840 F.2d at 1060; Acosta, 2018 WL 3722210 at *9. Moreover, if “no particular agreement dictat[es] a particular term of work and the worker puts in significant hours over a substantial period of time,” this further supports a finding of permanence. Campos, 2011 WL 2971298 at *8. Distributors’ investment of time and money clearly shows that both parties intended these relationships to be long-term. Under these circumstances, there is common evidence the parties necessarily intended to form ongoing relationships, not transient ones. Such common evidence bolsters the conclusion that Plaintiffs are similarly situated. Case 7:16-cv-00233-FL Document 334 Filed 02/25/19 Page 32 of 42 27 f. Defendants Concede, as a Matter of Common Proof, That Plaintiffs’ Work Is an Integral Part of Their Business. In their motion, Defendants do not analyze the sixth factor—the extent to which Plaintiffs’ work is an integral part of their business—and only briefly take notice of it in a footnote. They concede this factor “does not lend itself to a consideration of differences among Plaintiffs,” and in doing so, tacitly admit all Plaintiffs are similarly situated. Notwithstanding Defendants’ attempt to downplay this factor, it is a critical part of the economic realities test, which asks whether Plaintiffs are “dependent on the business they served, or, conversely, are in business for themselves.” Schultz, 466 F.3d at 305. If a putative employer “could [not] function, much less be profitable” without the workers, their work is an integral part of the business, which favors employment status. McFeeley, 825 F.3d at 244. And where a putative employer makes distribution of goods a core element of its business, its delivery workers are an integral part of the business as a matter of law. See, e.g., Ansoumana, 255 F. Supp. 2d at 190-92; Flores, 250 F. Supp. 3d at 492; Acosta, 2018 WL 3722210 at *9-*10. A putative employer cannot parse away core goods or services by arguing its business is limited to sales or marketing, while attributing the underlying goods or services to its so-called independent contractors. See Gayle v. Harry’s Nurses Registry, Inc., 594 F. App’x 714, 717-18 (2d Cir. 2014) (rejecting this argument and holding that nursing was “not just an integral part but the sine qua non of Harry’s business”). Defendants’ business cannot exist without its delivery services. There is no reason to dispute that Plaintiffs form a critical part of Defendants’ business. Defendants rely almost exclusively on Plaintiffs to deliver their goods to retailers and restaurants. See Ex. 1 at 6. Without Plaintiffs’ delivery services, Defendants’ business model would collapse. Ex. 2. The structure of Defendants’ business, and the core function of Defendants’ business that Plaintiffs perform necessarily rests on facts that will be proven collectively. Under all six factors of the economic realities test, common evidence will resolve whether Plaintiffs are employees or independent contractors. More importantly, to answer the “ultimate” question of whether Plaintiffs “depend on [Defendants’] business for the opportunity to render service,” the factfinder will Case 7:16-cv-00233-FL Document 334 Filed 02/25/19 Page 33 of 42 28 necessarily focus on the same facts for all Plaintiffs. See generally Schultz, 466 F.3d at 305. When assessing the economic realities of the parties’ relationship, the factual and employment settings strongly demonstrate that Plaintiffs are similarly situated. 2. Plaintiffs Are Similarly Situated Because Defendants Uniformly Misclassified Plaintiffs Without Regard for Their Individual Circumstances. Where plaintiffs “perform similar, but not identical, duties, notwithstanding the highly fact-specific nature of the employment question,” an FLSA collective action should not be decertified. Scott v. Aetna Servs., 210 F.R.D. 261, 265 (D. Conn. 2002); see also Kelly, 106 F. Supp. 3d at 818 (holding that, notwithstanding alleged variations in class members’ job duties, all class members’ “primary job was to … clean” and other work was “secondary”). Such similarities have even greater force when the putative employer, after uniformly classifying class members as independent contractors, then categorically denies them overtime pay. See, e.g., Scovil v. Scovil v. FedEx Ground Package Systems, Inc., 886 F. Supp. 2d 45, 57 n. 18 (D. Me. 2012); Nerland v. Caribou Coffee Co., 564 F. Supp. 2d 1010, 1023 (D. Minn. 2007); see also Kerce v. West Telemarketing Corp., 575 F. Supp. 2d 1354, 1364 (S.D. Ga. 2008) (rejecting “superficial differences” between workers where putative employer classified all workers as independent contractors); Young, 2018 WL 989543 at *2 (holding delivery drivers were similarly situated where all “signed the same form independent contractor agreement and were treated in the same or similar manner regarding their compensation”); cf. Morgan v. Family Dollar Stores, Inc., 551 F.3d 1233, 1264 (11th Cir. 2008) (“There is nothing unfair about litigating a single corporate decision in a single collective action”). For this reason, when Flowers sought decertification in other cases—on essentially the same record that is now before this Court—those federal courts denied decertification and allowed the cases to proceed as a collective action. See Rehberg, 2015 WL 1346125 at *17 (“Defendants, who now argue that determining independent contractor status requires fact-intensive individualized inquiries, apparently had no difficulty classifying all Distributors as independent contractors when asking them to sign Distributor Case 7:16-cv-00233-FL Document 334 Filed 02/25/19 Page 34 of 42 29 Agreements.”); Noll, 2019 WL 206084 at *4-5; Richard, slip op. at 33 (Ex. 39) (finding collective action proper because Flowers “similarly classified” Distributors). At no point prior to classifying them as independent contractors and denying them overtime pay did Defendants individually assess Plaintiffs to determine whether they were employees or independent contractors under the FLSA. Ex. 5 at 155-56. Since Defendants categorically defined Plaintiffs as independent contractors in their regular operations, they cannot be allowed to create post hoc rationalizations when their classification is challenged. This question was categorically decided by Defendants in their business and the same question should be decided on a classwide basis in the courts.11 In such circumstances, the factual and employment settings strongly establish that Plaintiffs are similarly situated. C. Defenses Will Be Resolved on Substantially Similar Proof. To assess defenses, courts examine whether those defenses generally pertain to the class or require individualized proof at trial. See, e.g., LeFleur, 30 F. Supp. 3d at 474; Parker v. Smithfield Packing Co., No. 07-176, 2010 WL 11565605 at *5 (E.D.N.C. Aug. 23, 2010). In other Flowers litigation, courts have found that the same defenses Flowers asserts in this case do not impede collective action: The court finds … that the [Motor Carrier Act (“MCA”) and outside sales] exemptions, if applicable to any Distributors, do not overwhelm the “similarly situated” analysis. Moreover, the primary inquiry for the court at this point is to determine whether or not all Distributors were misclassified as independent contractors and whether they are truly employees within the meaning of the FLSA. The issue of whether the Distributors are entitled to overtime pay, all exemptions considered, can be dealt with after the court makes its initial decision as to whether they are “employees” within the meaning of the FLSA. At this time, the court does not find that decertification is appropriate based on the possibility that Defendants may be able to point to a statutory exemption that would affect their liability. Rehberg, 2015 WL 1346125 at *17-18; see also Noll, 2019 WL 206084 at *5 (holding that “it is possible to preserve and address individual defenses”); Richard, slip op. at 30-31 (Ex. 39) (finding no concerns with individualized defenses).12 11 Defendants argue that “by proceeding collectively, the Court will be forced to make a determination that applies to all Plaintiffs across the board” (Defs.’ Mem. at 32), conveniently disregarding the fact that this litigation was prompted by Defendants’ business decision to classify all Plaintiffs as independent contractors across the board. 12 Like many cases Defendants cite, the Eastern District of Louisiana decision in Johnson v. Big Lots Stores, Inc., involved unusual circumstances and is inapposite here. 561 F. Supp. 2d 567 (E.D. La. 2008). After a Case 7:16-cv-00233-FL Document 334 Filed 02/25/19 Page 35 of 42 30 1. The Motor Carrier Act Exemption Can Be Resolved for All Plaintiffs on a Classwide Basis. Defendants argue that their MCA exemption defense will raise individualized issues. But on scrutiny, this defense can and has been effectively litigated on a classwide basis. The MCA exempts motor carriers from paying overtime under certain circumstances. 29 U.S.C. § 213(b)(1); 49 U.S.C. § 31502(b). That exemption was limited by the Technical Corrections Act of 2008 (TCA), which reinstated overtime protections for workers who drive vehicles weighing 10,000 pounds or less. Rehberg v. Flowers Baking Co. of Jamestown, LLC, 162 F. Supp. 3d 490, 509 (W.D.N.C. 2016). Defendants assert these protections do not apply to Plaintiffs who drive large box trucks “more than a de minimis amount of time,” but this position has been roundly rejected by courts. See McMaster v. E. Armored Servs., Inc., 780 F.3d 167, 171-72 (3d Cir. 2015); Rehberg, 162 F. Supp. 3d at 510, 512. To the contrary, most courts agree that when workers do meaningful work in vehicles weighing 10,000 pounds or less, the MCA exemption does not apply. See, e.g., Rehberg, 162 F. Supp. 3d at 511; Heng v. Han Sun Sikpoom Trading Corp., No. 13-6789, 2015 WL 5567073 at *7 (E.D.N.Y. Sept. 21, 2015); see also Garcia v. JIA Logistics, Inc., No. 16-22870, 2017 WL 2346149 at *5 (S.D. Fla. May 30, 2017) (denying summary judgment under the MCA exemption where plaintiff drove a smaller vehicle “one or two times per month”); Smith v. Schwan’s Home Serv., Inc., No. 13-231, 2014 WL 6679129 at *29 (D. Me. Nov. 25, 2014) (finding more than de minimis use of lighter vehicles precluded summary judgment under the MCA exemption). And this issue has been litigated on a classwide basis in other litigation against Flowers. Rehberg, 162 F. Supp. 3d at 513. Consistent with this reasoning, other courts have found the MCA collective action trial covering over 900 assistant managers at hundreds of retail stores, the court found material variations in their job duties and their discretion to make managerial decisions. Id. at 583-84. Because these circumstances prevented the court from making a classwide decision about plaintiffs’ “principal, main, major, or most important duty” under the executive exemption, it granted a posttrial motion to decertify the class. Id. at 586-87; see also Grace v. Family Dollar Stores, Inc., No. 06-306, 2007 WL 2669699 at *2 (W.D.N.C. Sept. 6, 2007) (denying collective action that potentially encompassed managers at thousands of different retail stores); Scott v. Chipotle Mexican Grill, Inc., No. 12-8333, 2017 WL 1287512 at *9 (S.D.N.Y. Mar. 29, 2017) (finding material differences between 516 opt-in plaintiffs who worked in nine different corporate “regions” across 37 states). In the current case, by comparison, the class is much smaller and is supervised by Defendants’ common framework of sales and marketing managers. Case 7:16-cv-00233-FL Document 334 Filed 02/25/19 Page 36 of 42 31 exemption can be litigated collectively and rejected decertification. See Snively v. Peak Pressure Control, LLC, 314 F. Supp. 3d 734, 741-42 (W.D. Tex. 2018); Troy, 276 F.R.D. at 650; Collinge, 2015 WL 1292444 at *9 (litigating the MCA on a classwide basis “would likely be a simple, ministerial task”); see also Noll, 2019 WL 206084 at *3-5, n. 2 (finding Defendants’ defenses did not predominate or make a class action less efficient, and denying decertification); Richard, slip op. at 30-32 (Ex. 39) (same).13 2. The Outside Sales Exemption Will Be Resolved on Common Evidence. Defendants also invoke the outside sales exemption. For that defense, Defendants would have to prove that selling products is Plaintiffs’ “primary duty,” meaning sales is the “principal, main, major or most important duty that the employee performs.” 29 C.F.R. § 541.700(a). This goes beyond sales simply being part of Plaintiffs’ duties. It requires Defendants to prove, against the overwhelming weight of evidence in this case, that Plaintiffs’ most important duty is not to deliver bread but to sell bread. Where plaintiffs have largely consistent duties, the outside sales exemption does not affect whether they are similarly situated because the exemption is resolved collectively. See Romero v. Producers Diary Foods, Inc., 235 F.R.D. 474, 482 (E.D. Cal. 2006) (granting conditional certification); Thomas, 2016 WL 7057218 at *1 (denying decertification). For this reason, where workers chiefly do physical labor, the outside sales exemption does not raise individualized defenses. See, e.g., Troy, 276 F.R.D. at 646, 650 (finding plaintiffs’ activities primarily consisted of setting up and stocking shelves, whereas sales activities were “highly controlled at the … national level”). Plaintiffs’ primary duty, as shown through Defendants’ practices and procedures and numerous defense witnesses, is to deliver and stock bread. Consistent with this duty, Plaintiffs devote nearly all their work time to loading, transporting, unloading, and stocking Defendants’ products. See supra Part II.A.2. here is no evidence sales activity is a substantial portion of Plaintiffs’ work, much less their “principal, 13 If individualized fact-finding is needed, courts recognize that information about vehicle use can be efficiently litigated on a collective basis. See Snively, 314 F. Supp. 3d at 742 (vehicle use can be litigated collectively); Rehberg, 156 F. Supp. 3d at 513 (summarizing evidence of class members’ vehicle usage); cf. Kelly, 106 F. Supp. 3d at 830 (recognizing that court has discretion to adjudicate outliers without resorting to decertification). Here every Plaintiff has testified or submitted answers to Interrogatories indicating whether and how often he used personal vehicles. Case 7:16-cv-00233-FL Document 334 Filed 02/25/19 Page 37 of 42 32 main, major or most important duty.” Cf. Troy, 276 F.R.D. at 650; Thomas, 2016 WL 7057218 at *4. To the contrary, Defendants already maintain a full sales force, with dedicated staff for national chain accounts as well as local representatives. See supra Part II.B. In any event, Defendants’ corporate testimony is that they have no idea how much time Distributors spend making sales. Ex. 5 at 135. Under such circumstances, the outside sales exemption will be resolved collectively for all Plaintiffs, which further demonstrates how they are similarly situated. See Noll, 2019 WL 206084 at *3-5, n.2 (finding Defendants’ defenses did not predominate or make a class action less efficient, and denying decertification); Richard, slip op. at 30-32 (Ex. 39) (same).14 3. Plaintiffs’ Hours and Damages Can Be Collectively Determined as a Matter of Just and Reasonable Inference. Defendants further argue that they lacked knowledge of whether Plaintiffs worked overtime hours, and further, that there is no effective method for determining how many hours individual Plaintiffs worked. These concerns are strictly of Defendants’ own making, based on their illegal misclassification of Plaintiffs as independent contractors and their attendant failure to maintain time records. The FLSA requires employers to make, keep, and preserve time records. 29 U.S.C. 211(c). Where a putative employer categorically fails to maintain time records, this is no grounds for decertification. See, e.g., Kelly, 106 F. Supp. 3d at 830 (asserting it is “unjust in the extreme” to decertify based on defendant’s failure to maintain time records); Johnson v. Wave Comm GR LLC, 4 F. Supp. 3d 453, 461 (N.D.N.Y. 2014) (holding plaintiffs should not be penalized by defendant’s failure to keep time records); Monroe v. FTS USA, LLC, 763 F. Supp. 2d 979, 989 (W.D. Tenn. 2011) (stating “fundamental precept” that collective action cannot be denied for lack of accurate time records). 14 If individualized fact-finding is needed, courts recognize that information about vehicle use can be efficiently litigated on a collective basis. See Snively, 314 F. Supp. 3d at 742 (vehicle use can be litigated collectively); Rehberg, 156 F. Supp. 3d at 513 (summarizing evidence of class members’ vehicle usage); cf. Kelly, 106 F. Supp. 3d at 830 (recognizing that court has discretion to adjudicate outliers without resorting to decertification). Here every Plaintiff has testified or submitted answers to Interrogatories indicating whether and how often he used personal vehicles. Case 7:16-cv-00233-FL Document 334 Filed 02/25/19 Page 38 of 42 33 An employer can be held liable for FLSA violations where it had actual or constructive knowledge of unpaid overtime work. See, e.g., Davis v. Food Lion, Inc., 792 F.2d 1274, 1276 (4th Cir. 1986). And in collective action proceedings, a pattern of overtime violations can be proven with representative testimony from some of the plaintiffs. Alston v. DirecTV, Inc., 254 F. Supp. 3d 765, 788-89 (D.S.C. 2017); Parker, 2010 WL 11565605 at *6 (quoting Donovan v. Bel-Loc Diner, Inc., 780 F.2d 1113, 1116 (4th Cir. 1985)); see also Martin, 949 F.2d at 1298 (“It is not necessary for every single affected employee to testify in order to prove violations …. The testimony and evidence of representative employees may establish prima facie proof of a pattern and practice of FLSA violations.”). For these reasons, where an employer complains that some workers did not consistently meet the 40-hour threshold for overtime, that question appropriately goes to damages instead of liability. Butler, 47 F. Supp. 3d at 313-14 (“[T]hese concerns are not so individualized to move the needle away from certification especially when there is evidence of overarching practices. The fact that some … worked fewer than forty hours during some weeks can be handled during the damages phase ….”); see also LaFleur, 30 F. Supp. 3d at 470 (“[D]ifferences as to time actually worked, wages actually due and hours involved do not preclude a finding of a similarly situated class[.]”) (quoting Romero v. Mountaire Farms, Inc., 796 F. Supp. 2d 700, 705 (E.D.N.C. 2001)); Parker, 2010 WL 11565605 at *3 (“Variations in damages … do not warrant decertification.”) (quotation omitted). Under these circumstances, plaintiffs’ damages can be calculated as a matter of just and reasonable inference. See, e.g., Alston, 254 F. Supp. 3d at 788-89; Butler, 47 F. Supp. 3d at 309. Any concerns about the scope and extent of Plaintiffs’ unpaid overtime, therefore, can be efficiently and reasonably managed during collective action proceedings. D. Fairness and Procedural Considerations Strongly Favor a Collective Action. In considering the remaining factor, fairness and procedural concerns, courts consider the primary objectives of a collective action under the FLSA: (1) to lower costs to plaintiffs through pooling of resources; and (2) to limit the controversy to one proceeding which efficiently resolves common issues of law and fact. See, e.g., Randolph v. Powercomm Const., Inc., 309 F.R.D. 349, 369 (D. Md. 2015) (quoting Case 7:16-cv-00233-FL Document 334 Filed 02/25/19 Page 39 of 42 34 Moss v. Crawford & Co., 201 F.R.D. 398, 410 (W.D. Pa. 2000)); Rehberg, 2015 WL 1346125 at *18. When individual plaintiffs’ cost to litigate is disproportionate to their potential recovery, and a collective action offers practical avenue for resolving Plaintiffs’ FLSA claims, Plaintiffs have established the fairness factor. See, e.g., Butler, 47 F. Supp. 3d at 314; LaFleur, 30 F. Supp. 3d at 475. Federal courts have observed that it would be a waste of limited judicial time and resources to grant decertification if that only prompts relitigation in numerous, separate cases. See Morgan, 551 F.3d at 1264- 65; see also Rivet, 207 F. Supp. 3d at 428 (“[L]itigating hundreds of individual wage and hour claims arising out of the same corporate policy would place an onerous—and totally unnecessary—burden on this Court.”); Young, 2018 WL 989543 at *3 (“It would be an unnecessarily burdensome task and an enormous waste of resources to undertake separate damages trials for more than 200 putative plaintiffs.”). As detailed above, the relevant facts are common to all Plaintiffs. Discovery has revealed ample representative evidence for this collective action to proceed to trial and for the court to make a classwide decision on the common issue of whether Plaintiffs are Defendants’ employees as a matter of economic reality. One trial will allow Plaintiffs to pool their resources and be more efficient for the Court as well. A single trial also eliminates the risk of conflicting opinions with respect to Plaintiffs’ legal status. Cf. Saunders, 2014 WL 12539643 at *8 (finding that fairness favored collective proceedings where the alternative was “nearly 100 separate trials involving many of the same witnesses, the same evidence and the same legal issues”). The Court should deny Defendants’ motion to decertify the collective action.15 15 Even if the Court finds that resolution of the collective action will call for individualized analyses of certain elements of the claims or defenses, decertification is not necessary. The Court may permit the case to proceed to trial as a collective action with respect to those issues in which the collective group is similarly situated and divide the group into sub-groups for determination of the more particularized issues, if any, which the Court does not consider suitable for determination on a classwide basis. Courts across the country have approved this alternative approach to decertification. See, e.g., Butler, 47 F. Supp. 3d at 314; Rawls v. Augustine Home Health Care, Inc., 244 F.R.D. 298, 302 (D. Md. 2006); see also Kelly, 106 F. Supp. 3d at 830 (“[I]t is possible to handle these types of outliers collectively without decertifying the class.”). Case 7:16-cv-00233-FL Document 334 Filed 02/25/19 Page 40 of 42 35 IV. CONCLUSION Plaintiffs have similar claims, seek similar relief, and have similar circumstances of employment. And because common proof decides whether Plaintiffs depend on Defendants for their livelihood, Plaintiffs are similarly situated under the economic realities test. Defendants failed to apply the correct standards, simply disregarding critical factors that are inconvenient for their defense, and exaggerate immaterial differences between Plaintiffs. Given crucial similarities on the central disputes in this case, a single trial will fairly and efficiently resolve this litigation. Plaintiffs accordingly ask this Court to deny Defendants’ motion for decertification. Case 7:16-cv-00233-FL Document 334 Filed 02/25/19 Page 41 of 42 36 Dated: February 25, 2019. s/Shawn J. Wanta Shawn J. Wanta, pro hac vice Christopher D. Jozwiak, pro hac vice Scott A. Moriarity, pro hac vice BAILLON THOME JOZWIAK & WANTA LLP 100 South Fifth Street, Suite 1200 Minneapolis, MN 55402 Telephone: (612) 252-3570 Fax: (612) 252-3571 samoriarity@baillonthome.com sjwanta@baillonthome.com cdjozwiak@baillonthome.com Susan E. Ellingstad, pro hac vice Rachel A. Kitze Collins, pro hac vice Brian D. Clark, pro hac vice LOCKRIDGE GRINDAL NAUEN P.L.L.P. 100 Washington Avenue South, Suite 2200 Minneapolis, MN 55401 Telephone: (612) 339-6900 Fax: (612) 339-0981 seellingstad@locklaw.com rakitzecollins@locklaw.com bdclark@locklaw.com Gordon Rudd, pro hac vice David Cialkowski, pro hac vice ZIMMERMAN REED PLLP 111 IDS Center 80 South 8th Street Minneapolis, MN 55402 Telephone: (612) 341-0400 Gordon.Rudd@zimmreed.com David.Cialkowski@Zimmreed.com Charles E. Schaffer, pro hac vice LEVIN SEDRAN & BERMAN 510 Walnut Street, Suite 500 Philadelphia, PA 19106 Telephone: (215) 592-1500 Fax: (215) 592-4663 cschaffer@lfsblaw.com Leto Copeley COPELEY JOHNSON & GRONINGER PLLC 300 Blackwell Street, Suite 101 Durham, NC 27701 Telephone: (919) 240-4054 Fax: (888) 412-0421 leto@cjglawfirm.com Local Rule 83.1 Counsel Attorneys for Plaintiffs Case 7:16-cv-00233-FL Document 334 Filed 02/25/19 Page 42 of 42