— Johnson Fistel, LLP (@JF_LLP) January 13, 2020
The Honorable W. Louis Sands, U.S. District Judge for the U.S. District Court for the Middle District of Georgia, recently granted final approval of a $21 million settlement in In re Flowers Foods Securities Litigation, a class action charging Flowers Foods, Inc. and certain of its officers and directors with claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (“Exchange Act”) and SEC Rule 10b-5 promulgated thereunder. The time to appeal the court’s order granting final approval expired on January 10, 2020, and the settlement is now final. That means that Flowers Foods shareholders who purchased or acquired common stock issued by Flowers Foods between February 7, 2013 through August 10, 2016, and who submitted a valid and timely proof of claim, will be receiving their pro rata portion of the net settlement fund once the claims administration process is completed.
The detailed 158-page Consolidated Complaint alleged that, among other things, Defendants violated the Exchange Act by misrepresenting the competitive advantages of the Company’s independent direct-store-distribution business model and the associated risks by omitting facts concerning: (i) the probability of the Company being forced to cease classifying distributors as independent contractors; and (ii) the gravity of the resulting consequences should such event occur. The Consolidated Complaint further alleged that the price of Flowers Foods’ common stock was artificially inflated as a result of Defendants’ allegedly false and misleading statements and declined when the truth was revealed.
Defendants sought dismissal of the case, which the court denied, finding the Consolidated Complaint sufficiently alleged that the “Defendants’ statements about Flowers’ business, operations, and prospects were false and misleading and/or lacked a reasonable basis.” The court held further that “the allegations taken collectively would lead to a reasonable inference that Defendants were at least severely reckless as to the falsity of their statements.”
“This settlement is an outstanding result for Flowers Foods shareholders and was only achieved through the relentless hard work by the lawyers on our team,” said Frank J. Johnson, Managing Partner of Johnson Fistel. “This case was not an easy one to win; we not only faced tough opposing counsel but without a settlement, the class risked receiving nothing following a lengthy and complex jury trial.” The trial court agreed. At the December 11, 2019 hearing on final approval of the settlement, Judge W. Louis Sands expressed his satisfaction with the settlement and offered the following commentary:
I’d also just like to acknowledge just really the professional way you all handled this case. . . and I think it is that type of substantial work from opposing sides that I think that is what we look at a settlement that both sides of this case have been well represented and represented so the Court is satisfied that it has been in the hands of people who knew what they were doing, and therefore the Court could well adopt and accept the representations made that are supported by the record with regard to just the settlement here.
Johnson Fistel attorneys Frank J. Johnson, Michael I. Fistel, Jr., William W. Stone, and Adam J. Sunstrom, serving as court-appointed co-lead counsel for Lead Plaintiff, led the prosecution of the litigation for the firm and helped achieve this superb result for investors.
In re Flowers Foods, Inc. Securities Litigation, No. 7:16-CV-00222-WLS (M.D. Ga.)