NOTICE OF CLASS ACTION SETTLEMENT Garcia, et al. v. Lowe s et al. Superior Court, County of San Diego, Case No. GIC

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1 NOTICE OF CLASS ACTION SETTLEMENT Garcia, et al. v. Lowe s et al. Superior Court, County of San Diego, Case No. GIC ATTENTION: THIS NOTICE EXPLAINS YOUR RIGHT TO RECOVER MONEY AS THE RESULT OF A $1.65 MILLION CLASS ACTION SETTLEMENT OF CLAIMS BROUGHT ON BEHALF OF CERTAIN CURRENT AND FORMER DELIVERY WORKERS WHO DELIVER LOWE S MERCHANDISE FROM LOWE S STORES THROUGH DEDICATED DELIVERY & INSTALL SERVICES, INC. A/K/A 3P DELIVERY, INC. ( DDI/3P ). ACCORDING TO DDI/3P S RECORDS, YOU ARE A MEMBER OF THE CLASS AND ENTITLED TO RECOVER $. TO RECEIVE YOUR SHARE OF THE SETTLEMENT, YOU MUST SIGN AND RETURN THE ENCLOSED CLAIM FORM [THE YELLOW FORM] SO THAT IT IS POSTMARKED OR RECEIVED BY JANUARY 21, IF YOU DO NOT RETURN A CLAIM FORM BY THIS DEADLINE, YOU WILL NOT RECEIVE MONEY UNDER THE SETTLEMENT BUT YOU MAY STILL BE BOUND BY THE TERMS OF THE SETTLEMENT. PLEASE READ THIS NOTICE CAREFULLY. 1. WHAT THE CASE IS ABOUT. On January 12, 2005, the above entitled class action lawsuit was filed in San Diego, California against defendants Lowe s Home Centers, Inc., and Lowe s HIW, Inc. ( Lowe s ) and DDI/3P. The lawsuit sought recovery of unpaid wages on behalf of delivery drivers and helpers who deliver Lowe s merchandise to Lowe s customers through DDI/3P in the State of California. On March 30, 2006, the Court certified a class of all drivers and helpers who delivered Lowe s merchandise in California through DDI/3P ( the Class ). The Class Period runs from May 1, 2003 to August 31, In general, the action claims that defendants should have treated the drivers and helpers as employees and should have paid them overtime pay because they do not qualify as exempt under federal or state law. The action also alleges that DDI/3P took improper deductions from the wages of the contract drivers to pay for such business-related expenses as worker s compensation insurance premiums ( WCIPs ) in violation of state law. Lowe s and DDI/3P deny all of the plaintiffs allegations. Specifically, they deny that the drivers and helpers were misclassified as independent contractors, and believe that the deductions at issue are permissible. Lowe s and DDI/3P generally deny that drivers and helpers are owed any compensation for overtime hours or business-related expenses because they were independent contractors. This action has been actively litigated since it was filed. The parties have conducted formal discovery and have exchanged detailed information about the claims, defenses, and alleged damages at issue. The Settlement was reached after approximately 2½ years of litigation and was settled at the eve of trial only after a marathon seventeen hour mediation session before an independent and experienced mediator. The terms of the Settlement, as well as the procedure for making a claim, are described below. 2. CLASS COUNSEL RECOMMENDS THE SETTLEMENT. Class Counsel, who was appointed by the Court to represent the Class, strongly recommends that the Class accept the Settlement. The claims alleged in the actions are novel and highly technical. For instance, there is no reported court decision that holds that delivery drivers through a third party broker, are entitled to overtime pay or reimbursement of business-related expenses. Recent court decisions in California and elsewhere suggest that the drivers and helpers may or may not be independent contractors and if employees, -1-

2 the drivers might be exempt from overtime under the Federal Motor Carriers Act. In other words, the claims alleged in the action are uncertain. Furthermore, even if the Class obtained a favorable judgment in the Superior Court, that judgment would likely be tied up for several years on appeal. Recently, a federal appellate court reversed a multi-million judgment for plaintiffs in an overtime class action. In light of the substantial risk that the Class might not receive anything at all if the action proceeded to trial, Class counsel strongly believes that the Settlement is in the best interests of the Class. Please be advised that this Settlement does not cover any claims that may arise after August 31, Moreover, your decision to accept or refuse money under the Settlement will have no effect on DDI/3P s current or future compensation plans. 3. THERE WILL BE NO ADVERSE CONSEQUENCES IF YOU MAKE A CLAIM. Under state law, it is illegal for Lowe s and/or DDI/3P to retaliate or take any adverse action against a member of the Class for making a claim under the Settlement. DDI/3P also agreed, specifically as a term of the Settlement, that it will comply with the law and has provided the enclosed letter to all current contract drivers guaranteeing that no adverse action will be taken against them if they make a claim. 4. TERMS OF THE SETTLEMENT. The terms of the Settlement are as follows: A. Total Settlement Payment. DDI/3P will pay up to a maximum of $1.65 million, (the Settlement Amount ), in full and final settlement of this action. The Settlement Amount will pay all timely and valid claims, a service payment of up to $15,000 to be split between the three named plaintiffs who were twice deposed and produced personal records, and the costs of claims administration. B. Persons Eligible to Recover Under the Settlement. You are eligible to make a claim under the Settlement if you were a driver and/or helper delivering Lowe s merchandise to Lowe s customers through DDI/3P from May 1, 2003 to August 31, C. Allocation of Settlement Amount. In an effort to divide the Settlement Amount fairly among members of the Class, the division will be based on the number of weeks each driver and/or helper worked. The Net Settlement Fund (less the costs of administration and a service payment to the named plaintiffs) shall be allocated, without regard to whether those members of the Class have returned Claim Forms, as follows: 1. $55.00 per week for each claiming contract driver work week for restitution of the Workmen's Compensation Insurance Premiums ( WCIPs ) or Occupational Accident Insurance Premiums ("OAIPs") deducted from the contract driver's weekly settlement (or 50% of the weekly deduction amount for periods when the deduction was less than $110 per week); 2. $25.00 per week for each work week by a secondary driver who worked under a claiming contract driver for WCIPs/OAIPs deducted from the contract driver's weekly settlement (or 28% of the weekly deduction amount for periods when the deduction was less than $110 per week); and -2-

3 3. Once the WCIPs/OAIPs allocation is paid to the contract drivers, weighted Work Week Overtime Amounts calculated by the Claims Administrator, in consultation with the Class Settlement Counsel and plaintiffs expert, will be allocated to all class members who worked as a driver or helper in California from May 1, 2003 to August 31, The Work Week Overtime Amount assumes that each driver and/or helper averaged approximately ten (10) hours of overtime per week and is entitled to an additional $140 per contract driver week and $125 per secondary driver or helper week based on the average compensation per week of the drivers and helpers during the Class Period. The weighted Work Week Overtime Amount will be prorated among all claimants after restitution for WCIPs/OAIPs is made to the contract drivers. 4. Any amounts allocated to class members as above that is not actually claimed by class members shall remain the property of defendant DDI/3P. If the Court grants approval of the Settlement, you will receive $ based on the calculation of your amount settlement as described above. D. Calculation of Number of Weeks Worked. The number of work weeks you worked as a driver during the class period will be determined from DDI/3P s payroll records. The number of weeks that workers compensation insurance premiums ( WCIP ) was deducted from the weekly settlement of a contract driver or paid by a contract driver on behalf of any secondary driver will be determined from DDI/3P s payroll records. If you are a helper, the number of weeks you worked during the Class Period is determined by information provided by the contract driver along with DDI/3P s records. These numbers are listed on the enclosed Claim Form. (The Claim Form is the yellow document.) If you disagree with the number of weeks listed on the Claim Form, you must provide documents (for example, pay stubs or wage statements) that support your claim. DDI/3P s records are presumed to be correct unless you prove otherwise. Any disputes regarding the number of work weeks you worked will be decided by the neutral claims administrator, and its decision in this regard will be final. E. Attorney s Fees, Litigation Expenses, and Service Payments. Under the Settlement, DDI/3P agrees to pay Class Counsel $1.6 million in attorney s fees for handling this lawsuit on behalf of the class, plus up to $250,000 in litigation expenses. In addition, Class Counsel will ask the Court to award up to $15,000 in total to be split between three named plaintiffs for the time they spent, and the risk they undertook, in bringing the action on behalf of the Class. The amounts that the Court awards as attorney s fees, and litigation expenses, will not affect the amount you receive under the Settlement. F. Release of Claims. 1. The Class, including without limitation the named plaintiffs, hereby releases, discharges, and covenants not to sue Defendants including their predecessors, parents, subsidiaries, affiliates, and related companies, and all of its and their respective past and present employees, directors, officers, attorneys, representatives, insurers, agents, successors, and assigns (individually and collectively the Defendants Releases ) from and with respect to any and all wage and hour actions, causes of action, suits, liabilities, claims, and demands whatsoever, and each of them, whether known or unknown, from May 1, 2003 through and including August 31, 2007 (the Applicable Release Period ), which the Class, or individual members thereof, has, had, or hereafter may claim to have, against the Defendants Releases, or any of them, which are based on: (1) the claims and facts alleged in this action; (2) any claim for unpaid overtime or missed meal or rest periods based on the Class members alleged misclassification as an independent contractor working as a driver and/or helper in California; (3) any claim for improper deductions of WCIPs while working as a driver and/or helper in California including claims arising from or related to deductions for employee benefits, including without limitation health insurance deductions, 401 (K) deductions, deferred compensation deductions, and stock purchase deductions; and (4) any penalty or additional damages which -3-

4 arise from the claims described in (1) through (3) above under federal or applicable California state or local law, excluding any claims arising under the Internal Revenue Code or other federal tax regulations (collectively, the Released Claims ). 2. This release of claims is intended as a complete release of the Released Claims. In furtherance of this intention, members of the Class expressly waive any rights or protections under any statute, legal doctrine, or other authority that restricts the release of unknown claims, including but not limited to Section 1542 of the California Civil Code (and any other similar state statute). Section 1542 states: A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR. 3. Notwithstanding any other provision of this Agreement, Released Claims shall not include claims under the Fair Labor Standard Act of 1938, 29 U.S.C. 201 et seq. arising from a Class member s working as a driver or helper in the State of California unless that Class member has affirmatively approved such a release by submitting a timely and valid Claim Form, as provided in Section 5 below. 5. YOUR RIGHTS AS A CLASS MEMBER. You have four options under this Settlement, each of which is discussed below. You may: (A) remain in the Class and claim money under the Settlement; or (B) remain in the Class and object to the Settlement; or (C) remain in the Class and do nothing; or (D) exclude yourself from the Class and from the Settlement. If you remain in the Class and either claim money under the Settlement or do nothing (options A and C), you will be represented at no cost to yourself by Class Counsel Betsy C. Manifold of Wolf Haldenstein Adler Freeman & Herz LLP, 750 B Street, Suite 2770, San Diego, CA and the other plaintiffs counsel who have filed the action. Class Counsel cannot represent you if you choose to object to any aspect of the Settlement. You may retain counsel at your own expense to represent you if you wish. A. To Claim Money Under the Settlement: If you wish to remain in the Class and claim money under the Settlement, you must sign the enclosed Claim Form (the yellow document) and return it by mail to the claims administrator at the following address: Garcia, et al. v. Lowe s et al. c/o The Garden City Group, Inc. P.O. Box 9203 Dublin, OH YOUR CLAIM FORM MUST BE POSTMARKED OR RECEIVED NO LATER THAN JANUARY 21, If your Claim Form is not postmarked or received by that date, you will not receive any payment but you will be bound by the Release and all other terms of the Settlement. If the Claim Form is sent from within the United States, it must be sent through the United States Postal Service by first class U.S. Mail or the equivalent. Do not use a postage meter because that may not result in a postmark appearing on the envelope containing your Claim Form. If you lose, misplace, or require another Claim Form, you should contact the claims administrator as set forth above. Federal and state law protects class members from retaliation based on their decision to participate in a class action settlement. B. To Object to the Settlement: If you do not exclude yourself from the Settlement but you disagree with any part of the Settlement, you may object to the Settlement. To object, you must file a written objection that clearly explains the basis for your objection and file that objection in the Office of the -4-

5 Clerk, Superior Court of California, County Of San Diego, Hall of Justice, 330 West Broadway, Dept. 69, San Diego, CA received on or before December 6, 2007, with copies to the following attorneys: CLASS COUNSEL Betsy C. Manifold, Esq. Wolf Haldenstein Adler Freeman & Herz LLP 750 B Street, Suite 2770 San Diego, CA Tel. (619) Fax. (619) LOWE S COUNSEL Phillip J. Eskenazi Akin Gump Strauss Hauer & Feld LLP 2029 Century Park East, Suite 2400 Los Angeles, CA Tel: (310) Fax: (310) DDI/3P S COUNSEL Eric L. Barnum Schiff Hardin LLP One Atlantic Center, Suite West Peachtree Street Atlanta, GA Tel: (404) Fax: (404) If you file a written objection to the Settlement, you or your attorney may also appear in Court to argue your objection at the Final Approval Hearing. The date, time, and place of the Final Approval Hearing are listed in Section 6 below. Unless you file a timely written objection, you will not be allowed to speak at the Final Approval Hearing. IF YOU INTEND TO OBJECT TO THE SETTLEMENT BUT WISH TO RECEIVE YOUR SHARE OF THE SETTLEMENT IF IT IS APPROVED, YOU MUST SUBMIT A TIMELY AND VALID CLAIM FORM UNDER SECTION 5.A ABOVE. C. Doing Nothing. If you do nothing and the Court approves the Settlement, you will be bound by the terms of the Settlement, but you will not receive any money under the Settlement. D. To Exclude Yourself from the Settlement: If you do not wish to participate in the Settlement, you may exclude yourself ( opt out ) by filling out and returning the enclosed Request for Exclusion form (the blue form) to the claims administrator at the address listed above. To be valid, the Request for Exclusion must be postmarked no later than December 6, If you submit a Request for Exclusion after that date, your Request for Exclusion will be rejected and you will be bound by the Release of Claims as described in Section 4 above and all other Settlement terms. If the Request for Exclusion is sent from within the United States, it must be sent through the United States Postal Service by first class U.S. Mail, or the equivalent. Do not use a postage meter as that may not result in a postmark appearing on the envelope containing your Request for Exclusion. If you submit a complete and timely Request for Exclusion, you will no longer be a member of the class and will receive no benefits under the Settlement, but you will retain whatever claims you may have against defendants. DO NOT SUBMIT BOTH THE CLAIM FORM [YELLOW FORM] AND A REQUEST FOR EXCLUSION [BLUE FORM]. IF YOU SUBMIT BOTH, THE REQUEST FOR EXCLUSION MAY BE INVALID, AND YOU MAY BE INCLUDED IN THE CLASS, AT WHICH POINT YOU WILL BE BOUND BY THE TERMS OF THE SETTLEMENT. 6. FINAL APPROVAL HEARING. The Court will hold a hearing on December 28, 2007 at 9:00 a.m. (Pacific Time) to determine whether the Settlement should be finally approved as fair, reasonable, and adequate. At the hearing, the Court will also be asked to approve Class Counsel s request for attorney s fees, litigation expenses, and the service payments to the three settling plaintiffs. The Court is located at 330 West Broadway, Dept. 69, San Diego, CA The hearing may be continued without further notice to the class. YOU ARE NOT REQUIRED TO APPEAR AT THE HEARING. -5-

6 7. ADDITIONAL INFORMATION. This is a summary of the basic terms of the Settlement. For the precise terms and conditions of the Settlement, you should consult the Joint Stipulation of Class Action Settlement and Release, which is on file with the Clerk of the Court. If you have any questions about the Settlement, you may contact either Class Counsel or the claims administrator at the addresses and telephone numbers listed below. PLEASE DO NOT TELEPHONE THE COURT ABOUT THIS NOTICE. CLASS COUNSEL Betsy C. Manifold, Esq. Wolf Haldenstein Adler Freeman & Herz LLP 750 B Street, Suite 2770 San Diego, CA Tel. (619) Fax. (619) CLAIMS ADMINISTRATOR Garcia, et al. v. Lowe s et al. c/o The Garden City Group, Inc. P.O. Box 9203 Dublin, OH Toll Free: REMINDER AS TO TIME LIMITS. Please note that the deadline for filing a Claim Form is January 21, 2008, and the deadline for filing a Request for Exclusion or an objection to the Settlement is December 6, BY ORDER OF THE SUPERIOR COURT, COUNTY OF SAN DIEGO. -6-