According to the law firm press release, on August 10, 2016, Flowers Foods disclosed in a Current Report filed with the SEC that the U.S. Department of Labor notified Flowers Foods that the Company was scheduled for a compliance review under the Fair Labor Standards Act. The Company further stated that it intended to cooperate with the Department, and that because the review process was confidential, Flowers Foods would not comment further at that time. On this news, Flowers Foods’ stock price fell $1.60 per share, or 9%, to close at $16.15 per share on August 10, 2016, on unusually heavy trading volume.
Then, after the market closed on August 10, 2016, the Company issued a press release announcing Q2 2016 financial results. Therein, the Company announced disappointing financial results for the quarter, and that it was lowering its 2016 guidance. On this news, Flowers Foods’ stock price fell $1.20 per share, or 7.4%, to close at $14.95 per share on August 11, 2016, on unusually heavy trading volume.
The complaint charges Flowers Foods and certain of its officers with violations of the federal securities laws. Specifically, the complaint alleges that Defendants made false and/or misleading statements and/or failed to disclose: (1) that the Company was improperly classifying employees as independent contractors; (2) that the misclassification exposed the Company to legal liability and/or negative regulatory action; (3) that proper classification would have a negative impact on the Company’s operations; and (4) that, as a result of the foregoing, Defendants’ statements about Flowers Foods’ business, operations, and prospects, were false and misleading and/or lacked a reasonable basis.
On October 21, 2016, the Court issued an Order appointing Lead Plaintiff and Counsel.