Rehberg et al. v. Flowers Baking Co. of Jamestown et al.: Answers to Common Distributor Questions

How much money will I receive?

If you sign and date the claim form and mail it by June 19, 2017 or submit a claim online by June 19, 2017, you will receive approximately the amount of money stated on the notice form. If you do not sign and date the claim form, you will receive approximately $3,000 less (if you were a distributor for the past two years). The final payment amounts cannot be determined until final approval of the settlement because the amount paid for the FLSA release depends upon how many people choose to sign the release. Please call us if you have a question about your payment amount.

I am a current distributor; can I sign the top part of the claim form (Choice 1) and check one of the boxes at the bottom of the claim form (Choice 2)?

Yes, you can and should make an election for each of the two choices. You can sign the form to receive a payment for releasing FLSA claims and choose one of the distributor agreement options. If you do not make a choice at the bottom of the form, your distributor agreement will not change and you will not be entitled to any of the money or additional discount listed in connection with the different distributor agreement options. If you do not sign the top portion, you will not release your FLSA claims and not receive a payment for doing so.

If I choose to incorporate, will the bakery require me to classify my helpers as W2 employees?

No, you are free to classify your helpers as you believe is appropriate; but you must comply with federal and state laws.

Can I purchase more than five territories from the bakery?

The sale of additional territories will be handled on a case-by-case basis. There is no limit on the number of territories a distributor can purchase. So long as you can effectively operate your current territory or territories and have a sound business plan, the bakery will consider selling you additional territories. Distributors are also able to purchase additional territories from other Distributors.

Can I form an LLC to operate by territory?

You may establish an LLC, it will not alter the business arrangement between yourself and the bakery. If you form an LLC, the bakery, pursuant to IRS regulations, will continue to treat you as the distributor and will consider you for tax purposes to be a statutory employee, meaning you will receive an IRS Form W-2 at the conclusion of each tax year. And if you establish an LLC, the bakery will not provide you with an enhanced margin on classes 2 and 4. Note that if you choose Option 1 (new Distributor Agreement and incorporation) or Option 3 (keep your current Distributor Agreement and sign an incorporation addendum), you MUST incorporate your business (INC.) and cannot form an LLC. In exchange for incorporating your business (INC.) the bakery will provide you with an enhanced margin on classes 2 and 4.

If I choose to sell my territory back to the bakery within 30 days of final approval of the settlement, how will the company calculate the value of my territory?

The bakery has ended the practice of purchasing territories from distributors. However, as part of the settlement, the bakery will repurchase a distributor’s territory upon request. To request a repurchase, the distributor must send a written request to the bakery’s Director of Distributor Relations within 30 days from the final approval of the settlement. The price at which the bakery will repurchase the territory is ten times the preceding 52 week average sales of branded products. When determining the 52 week average the company will include branded sales made to all accounts during the preceding 52 weeks regardless of whether those accounts are currently open. If a distributor wants to sell his or her territory to a third party, he can sell it for any price which he can negotiate.

If I choose to sell my territory back to the bakery within 30 days of final approval of the settlement, how long will I be required to continue to run the territory?

How long you will need to run your territory after giving notice of your intent to sell the territory to the bakery depends on the number of people who choose this option and the order of written notices given to the bakery. The timing of the sale will be at the bakery’s reasonable discretion depending on bakery business needs and/or ability to service the territory, subject to the following: (1) for the first 5 Settlement Class Members who exercise this option, this time period shall not exceed 30 days from the date of final approval of this settlement; (2) in the event up to 15 additional Settlement Class Members exercise this option, this time period shall not exceed 60 days from the date that written notice of intent to sell is provided to the Company or 60 days from the date of Final Approval, whichever is later; and (3) in the event greater than 20 Settlement Class Members exercise this option, for such 20 Settlement Class Members, this time period shall not exceed 180 days from the date of Final Approval, although the Company will do all practically possible to effectuate such buy-backs as soon as possible. However, if you abandon your distribution territory or your right to operate the distributor business is terminated due to your failure to cure a breach of your distributor agreement, you will not be eligible to be repurchased under the settlement and your distribution rights will be sold pursuant to the termination provision of your Distributor Agreement with the bakery.

How do I notify the bakery of my intent to sell my territory back to the bakery?

Within 30 days from the final approval of the settlement, you must give dated, written notice of your intent to sell your territory to the bakery’s Director of Distributor Relations – Ron Chandler. Save a copy of the notice for your own files.

Can the Distributor Advocate or Distributor Review Panel help me resolve a dispute that has already occurred?

The Distributor Advocate and Distributor Review Panel will help you resolve disputes between you and the bakery after final approval of the settlement. They cannot go back and resolve problems that have already happened, unless the dispute is ongoing (it has not been resolved). You will be provided additional information on how to utilize the Distributor Advocate and Distributor Review Panel after final approval of the settlement.

Can I return stale product to any thrift store of my choice?

After final approval of the settlement, you will be able to return stale product to any thrift store at which accepts the return of stale product so long as you give reasonable notice to your sales manager of the alternate location at which you want to return your stale. You cannot return stale to company locations that do not have a thrift store, such as your warehouse (unless your warehouse already accepts the return of stale product).

How long will the settlement agreement last?

The settlement agreement, once approved by the court, lasts indefinitely. The court will retain jurisdiction over the settlement agreement for five years to resolve any disputes under it.

Will I be taxed on my settlement share?

Yes, your settlement share will be divided into two halves. One half will be reported to the IRS as W2 statutory employeeincome for which the bakery will make the necessary withholdings; the other half will be reported as 1099 miscellaneous income and the bakery will not make any withholdings.