In morning trade the Domino's Pizza Enterprises Ltd (ASX: DMP) share price has dropped lower after the pizza chain operator provided a response to the class action it was served this week.
At the time of writing the pizza chain operator's shares are down 0.5% to $37.86.
What did Domino's announce?
This morning Domino's advised that it has not yet been formally served with the class action court documents, though it has received an unsealed copy of documents which are said to have been filed in the Melbourne Registry of the Federal Court of Australia on June 24 2019.
The release explains that, on the face of the documents, the class action is a representative proceeding brought by the lead applicant on behalf of an alleged group comprising franchisee employees who were employed as in-store workers or delivery drivers between June 24 2013 and January 23 2018.
The documents allege that Domino's misled franchisees who, in reliance upon Domino's representations and conduct, paid their employees in accordance with a number of industrial agreements rather than under the Fast Food Industry Award 2010.
However, Domino's confirms that it did not mislead its franchisee employers as to their employee payment obligations. Furthermore, the company stressed that the entitlements of franchisee employees during the relevant period were contained in a series of industrial instruments that were lawful, valid, and applicable at the time.
It added that there is no claim that the industrial instruments were not valid at the relevant time, but rather the lead applicant claims compensation against Domino's for alleged underpayment by the lead applicant's franchisee employer.
It also explains that the lead applicant does not make any claim against his franchisee employer and no franchisee employer is a party to the action.
There has been concerns that the class action could cost Domino's upwards of $230 million, but the documents do not quantify any loss by the lead applicant or the alleged group. So this remains a matter of speculation.
Domino's has rejected the allegations made in the documents and intends to defend the action.
It certainly has been a better week for quick service restaurant rival Collins Foods Ltd (ASX: CKF). The Collins Foods share price has been on fire this week following the release of a strong full year result. Its shares have continued to rise this morning and are up 1.5% to $8.42 at the time of writing.
