Family Dollar 2011 Annual Report Download - page 59

Additionally, the Company has outstanding standby letters of credit (which are primarily renewed on an annual
basis), of which the majority are used as surety for future premium and deductible payments to the Company’s
workers’ compensation and general liability insurance carrier. The following table shows the Company’s other
commercial commitments as of August 27, 2011:
(in thousands)
Total Amounts
Committed
Standby letters of credit .......................................... $137,982
Surety bonds ................................................... 9,445
Total ..................................................... $147,427
Litigation
Since 2004, certain individuals who held the position of Store Manager for the Company have filed lawsuits
alleging that the Company violated the Fair Labor Standards Act (“FLSA”), and/or similar state laws, by
classifying them as “exempt” employees who are not entitled to overtime compensation. The majority of the
complaints in each action also request that the cases proceed as collective actions under the FLSA or as class
actions under state laws and request recovery of overtime pay, liquidated damages, and attorneys’ fees and court
costs. The Company currently has 22 such cases pending against it.
Grace v. Family Dollar Stores, Inc. and Ward v. Family Dollar Stores, Inc. are both pending in the U.S. District
Court for the Western District of North Carolina, Charlotte Division (the “N.C. Federal Court”). In those cases,
the N.C. Federal Court has returned orders finding that the plaintiffs were not similarly situated and, therefore,
that neither nationwide notice nor collective treatment under the FLSA is appropriate. Hence, the Grace and
Ward cases are proceeding as 43 individual plaintiff cases.
On July 9, 2009, the N.C. Federal Court granted summary judgment against Irene Grace on the merits of her
misclassification claim under the FLSA. The Company has filed summary judgment motions related to each of
the remaining 42 plaintiffs in the Grace and Ward cases. The plaintiffs appealed certain rulings of the N.C.
Federal Court to the United States Court of Appeals for the Fourth Circuit including the court’s summary
judgment order against Irene Grace. On March 22, 2011, the Fourth Circuit affirmed the district court’s decision
finding that Ms. Grace was exempt from overtime compensation under the FLSA. The Fourth Circuit did not
address the class certification issue in the Grace and Ward cases since Ms. Grace’s lawsuit would be dismissed
on the merits.
Including Grace and Ward, a total of 16 class and/or collective or single plaintiff misclassification cases are now
pending before the N.C. Federal Court since Hamilton v. Family Dollar Stores of Florida, Inc., Friedman v.
Family Dollar Stores, Inc., et al. were dismissed on July 26, 2011, and September 23, 2011, respectively.
Additionally, in Itterly v. Family Dollar Stores, Inc., the N.C. Federal Court has dismissed the named plaintiff’s
and opt-ins’ collective action and individual claims under the FLSA. The state law class and individual claims
under the Pennsylvania Minimum Wage Act remain in the Itterly litigation. The named plaintiff and opt-in
intervenors are seeking to have the case transferred back to the district court in Pennsylvania. The Company has
opposed the transfer.
On July 29, 2011, and August 11, 2011, the N.C. Federal Court granted summary judgment against Tanya
Lakitska Warren and Catherine M. Dawson, respectively, on the merits of their misclassification claims under the
FLSA. Additionally, on September 26, 2011, the N.C. Federal Court granted two additional summary judgments
against John Gersch and Jodi Hare on the merits of their misclassification claims. Then, on October 14, 2011, the
N.C. Federal Court granted two more summary judgments against Brenda Bilbrey and Sally Villanueva. Warren,
Dawson, Gersch, Hare and Bilbrey are all intervenors in the Grace litigation. Villanueva is an intervenor in the
Ward litigation. Warren and Dawson have filed Notices of Appeal with the United States Court of Appeals for
the Fourth Circuit. These appeals have been consolidated and Warren and Dawson are scheduled to file their
appellant brief in October 2011.
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