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Date of Verdict:

April 3.

Court and Case No.:

M.D. of Pennsylvania No. 1:15-cv-02196-CCC.

Judge:

Michael D. Young.

Type of Action:

Employment.

Injuries:

Wages and hours, Fair Labor Standards Act.

Plaintiffs Counsel:

Chastity L. Christy and Anthony J. Lazzaro, The Lazzaro Law Firm, Cleveland; Hans A. Nilges and Shannon M. Draher, Nilges Draher, Massillon, Ohio.

Defense Counsel:

Richard J. Reibstein, Pepper Hamilton, New York City; Brian P. Downey, Pepper Hamilton, Harrisburg; Christopher J. Moran, Pepper Hamilton, Philadelphia; Kali T. Wellington-James, Pepper Hamilton, Berwyn.

Comment:

In September 2012, plaintiffs Jason Swiger and Julio Cruz started working as “route sales professionals” for Utz Quality Foods Inc., of Hanover.

The two men claimed that their duties included delivering Utz products to groceries and keeping shelves stocked, but that their duties did not include sales. They asserted that the company incorrectly classified them as exempt from the overtime pay requirements of federal law under the outside salespersons exemption, and thereby denied them overtime wages.

Swiger and Cruz sued Utz, alleging violations of the Federal Labor Standards Act (Brian Jurden, initially a named plaintiff, was dismissed, early in litigation).

The lawsuit was joined by about 480 Utz drivers, of which less than 10 percent were current employees. Swiger and Cruz worked in their positions until September 2016.

Their counsel asserted that the workers were in fact route drivers whose responsibilities were primarily to transport food products to supermarkets, and their duties did not spread to actually selling or making sales on Utz products. Therefore, classifying them as exempt outside salespersons was incorrect, and denying them overtime wages violated federal law, counsel maintained.

Utz contended that Swiger and Cruz were properly classified as exempt outside salespersons, whose primary duty was to make sales to the customers on their routes, and that the delivery of snack food products was in furtherance of such sales. In addition to delivering its products to stores, they were able to upsell, take orders, and make sales. Given their abilities to make outside sales, Swiger and Cruz were exempt from receiving overtime wages, Utz argued.

Counsel for Swiger and Cruz claimed that, over a three-year period, for 10 hours of overtime, the approximately 400 current and former Utz workers were entitled to a total of $10 million, and were entitled to $5.6 million for five hours of overtime for that period. For a two-year period, the drivers sought $6.7 million for 10 hours of overtime, and $3.7 million for five hours of overtime.

Counsel for Utz argued that Swiger and Cruz were entitled to no recovery, because they were properly classified. Utz also maintained that the action was not suitable to be brought as a class or collective action. According to Utz, there were significant disparities in the duties of the 400 or so drivers.

The parties settled for $2.5 million, during the early stages of discovery. Allocation of the settlement will be determined once the court approves the settlement.

In a statement on the settlement, Utz cited the litigation’s expense and use of “management time,” without admitting liability. It noted that the settlement would not require the company to change its business practices or compensation system.

This report is based on information that was provided by plaintiffs and defense counsel.

—This report first appeared in VerdictSearch, an ALM publication •