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Medrano v. Flowers Food, Inc.

United States District Court, D. New Mexico

July 3, 2017

PAUL MEDRANO, on his own behalf and on behalf of all others similarly situated, Plaintiff,
v.
FLOWERS FOODS, INC., and FLOWERS BAKING CO. OF EL PASO, LLC, Defendants.

          MEMORANDUM OPINION AND ORDER

         This matter is before the Court on Plaintiff's Motion for Conditional Certification to Proceed As A Collective Action And For Court-Authorized Notice [Doc. 26]. Plaintiffs claim that Defendants Flowers Foods, Inc. (“Flowers Foods”) and Flowers Baking Co. of El Paso, LLC (“Flowers El Paso”) violated the Fair Labor Standards Act (“FLSA”), 29 U.S.C. § 201 et seq., by misclassifying Medrano and the putative plaintiffs, who are bakery distributor drivers, as independent contractors. This misclassification, Medrano claims, has deprived them of overtime pay due under the FLSA. After reviewing the motion, the response, the reply, and supplemental authorities, the Court concludes that the motion for conditional certification under the FLSA should be granted. Plaintiff also moves to include his state law claim under the New Mexico Minimum Wage Act (“NMMWA”), N.M. Stat. Ann. § 50-4-22 et seq., within his FLSA conditional certification on the grounds that the state statute's provisions for collective action, as well as its standard for conditional certification, are virtually identical to those of the FLSA. Defendants oppose this portion of the motion, arguing that when one pursues a class action for state law claims in federal court, the Rules Enabling Act requires the Court to apply Rule 23 of the Federal Rules of Civil Procedure to the class certification process. The Court agrees with the Defendants, and therefore at this time will deny the portion of the motion requesting certification of the NMMWA claim.

         FACTUAL AND PROCEDURAL BACKGROUND

         The Court draws the following facts from Plaintiff's Complaint [Doc. 1], the motion for conditional certification [Doc. 26], and Defendants' response brief [Doc. 31].

         Flowers Foods is a Georgia corporation that develops and markets bakery products for national sale through a network of subsidiary bakeries. One of these is Flowers El Paso, which operates thirteen warehouses throughout New Mexico and ten warehouses in Texas. Like the other subsidiaries, Flowers El Paso is responsible for distributing baked goods in a specific geographical area and operating Flowers Foods' local sales and distribution operations. Individual distributors such as Plaintiff are hired to sell and distribute the products to Defendants' customers.

         In order to work as a distributor, which Defendants characterize as an “independent contractor franchisee, ” one must enter into a Distributor Agreement with Defendants. Medrano has alleged that the Distributor Agreement that he signed is substantially similar in all material respects to those signed by each of the plaintiffs who have already consented to join the lawsuit, as well as to those signed by the putative collective action plaintiffs. Under the agreements, distributors purchase the right to buy baked goods from Flowers El Paso at a discount and then sell those products to various customers in an assigned geographical area. Plaintiffs allege that although the Defendants and the Distributor Agreements represent that distributors would have the ability to run their businesses independently, use their business judgment, and manage their businesses to increase profitability, in reality the Defendants exercised complete control over all the material aspects of the distributors' business. According to declarations [Docs. 26-3 and 26-4] filed by Medrano and Ernest Martinez (who has joined the lawsuit as a plaintiff), the Defendants negotiated all the material terms of the relationship with the buyers of the baked goods, including product selection, shelf space, wholesale and retail pricing, the right to display promotional materials, and print advertisement in retailers' newspaper ads. Both Medrano and Martinez state that Defendants required them to work more than 40 hours per week, and they also state their belief that Defendants required other distributors to do the same. Plaintiffs contend that Defendants even controlled which days they were required to deliver baked goods to certain buyers, required them to process all transactions through a handheld computer provided by Defendants, and forced them to follow Defendants' instructions regarding pricing, policies, and procedures negotiated between Flowers Foods and its retail customers. Plaintiffs claim that despite this, Defendants improperly classified them as independent contractors and refused to pay them for overtime hours worked. On the other hand, Defendants dispute this, contending that a distributor is an independent contract who can maximize his profits by increasing sales to his customers, controlling his expenses, and exercising discretion regarding product pricing, selections, promotions, and displays with regard to “cash customers, ” which are generally smaller retailers.

         On April 27, 2016, Medrano filed his Complaint in this judicial district asserting claims that Defendants had improperly characterized him (and those similarly situated) as independent contractors in order to escape their obligation to pay overtime, in violation of the Fair Labor Standards Act (“FLSA”), 29 U.S.C. § 201 et seq., and the New Mexico Minimum Wage Act (“NMMWA”), N.M. Stat. Ann. § 50-4-22 et seq. On May 23, 2016, Defendants filed their answer. Doc. 7. Subsequently, eight other distributors have filed their consents to become named plaintiffs in this case. See Docs. 23-25, 29, 32, 34-35, 42. On October 6, 2016, Medrano filed the motion for conditional certification of collective action that is currently before the Court.

         DISCUSSION

         I. COLLECTIVE ACTION UNDER THE FLSA

         A. Legal Standard

         The FLSA expressly allows employees to maintain a class action for overtime pay on their own behalf and on behalf of all others “similarly situated.” 29 U.S.C. § 216(b). Section 216(b) of the FLSA provides, in pertinent part:

Any employer who violates [the minimum wage or maximum hours provisions of this title] shall be liable to the employee or employees affected in the amount of their unpaid minimum wages, or their unpaid overtime compensation, as the case may be, and in an additional equal amount as liquidated damages. Action to recover such liability may be maintained in any court of competent jurisdiction by any one or more employees for and in behalf of himself or themselves and other employees similarly situated. No employee shall be a party plaintiff to any such action unless he gives his consent in writing to become such a party and such consent is filed in the court in which such action is brought.

         District courts have discretionary power to authorize the sending of notice to potential class members in a collective action brought pursuant to § 216(b) of the FLSA. See Hoffmann-La Roche Inc. v. Sperling, 493 U.S. 165, 170 (1989); Hipp v. Liberty Nat'l Life Ins. Co., 252 F.3d 1208, 1219 (11th Cir. 2001) (“The decision to create an opt-in class under § 216(b), like the decision to certify a class under Rule 23, remains soundly within the discretion of the district court”). The power to authorize notice must, however, be exercised with discretion and only in appropriate cases. See Haynes v. Singer Co., 696 F.2d 884, 886 (11th Cir. 1983).

         The Tenth Circuit Court of Appeals has approved a two-tiered, “ad hoc” approach to determine whether named and prospective plaintiffs are “similarly situated” such that certification is proper. Thiessen v. General Elec. Capital Corp., 267 F.3d 1095, 1102 (10th Cir. 2001). The standard for certifying an FLSA collective action is fairly loose initially, until discovery is completed. During this initial “notice stage, ” courts require only “substantial allegations that the putative class members were together the victims of a single decision, policy, or plan.” Id.; Morisky v. Pub. Serv. Elec. and Gas Co., 111 F.Supp.2d 493, 497 (D.N.J. 2000). Then, the parties send notice to prospective class members and discovery proceeds. The prospective class members must affirmatively express their desire to join the litigation.[1] After the completion of discovery, the defendant may file a motion for decertification. Because at that point the record has been fully developed, the court applies a “stricter standard, ” analyzing factors, such as “(1) disparate factual and employment settings of the individual plaintiffs; (2) the various defenses available to defendant which appear to be individual to each plaintiff; (3) fairness and procedural considerations ....” Thiessen, 267 F.3d at 1102-03 (quoting Vaszlavik v. Storage Tech. Corp., 175 F.R.D. 672, 678 (D. Colo. 1997)).

         B. ...


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