Class Action Against Amazon, Whole Foods Dismissed – Report

Amazon and its subsidiary Whole Foods have been cleared of wrongdoing by a US federal judge for allegedly illegally punishing employees who chose to show support for the Black Lives Matter (BLM) movement in solidarity with their black colleagues by wearing BLM facemasks, according to Reuters.

The class action, filed in July last year accused Whole Foods and its parent Amazon (AMZN) of “disciplining employees for wearing these masks” by sending them home without pay and even threatening them with termination, Reuters reported.

The lawsuit read, “Whole Foods’ selective enforcement of its dress code in disciplining employees who wear apparel expressing support for the Black Lives Matter movement constitutes unlawful discrimination on the basis of race and on the basis of employees’ affiliation with and advocacy for Black employees. Whole Foods has further unlawfully retaliated against its employees in violation of Title VII for their opposition to its unlawful and discriminatory practices.”

According to the Reuters report, U.S. District Judge Allison Burroughs disagreed and on Friday wrote in her judgement that “At worst, they were selectively enforcing a dress code to suppress certain speech in the workplace,” adding, “However unappealing that might be, it is not conduct made unlawful by Title VII.”

According to Reuters, the judge encouraged the employees that if they didn’t like the companies’ policies, they should try influence a change in policy or perhaps even find somewhere else to work.

A spokesperson for Whole Foods and on behalf of parent Amazon responded to the judge’s decision saying that its dress code was “facially neutral” and that the companies support the BLM movement. (See Amazon stock analysis on TipRanks)

Jefferies analyst Brent Thill reiterated his Buy rating on Amazon last week following the release of its better-than-expected Q4 financial results and raised his price target to $4,000 from $3,800. This implies upside potential of around 19% from current levels.

Thill believes that Amazon will be a primary beneficiary of a permanent increase in e-commerce adoption and is confident that Amazon can continue “printing upside to expectations” in the upcoming three quarters despite tougher comps.

The rest of the Street is in line with Thill’s outlook and gives Amazon a Strong Buy consensus rating based on 30 unanimous Buy recommendations. The average analyst price target of $4,106.14 suggests upside potential of more than 22% over the next 12 months.

Amazon receives a 9 out of 10 on TipRanks’ Smart Score which implies that the stock has strong potential to outperform analysts’ expectations.

Amazon analysis

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