No-Poach Agreements

No-Poach Agreements

History suggests that the courts will apply the rule of reason or at most the rule of quick choice in ordinary non-poach franchise cases, i.e. in cases between franchisor and franchisee. First, the courts seem to view them as essentially vertical, even if they have some horizontal impact on attitude. Second, they generally limit the recruitment of intra-brand trademarks, while the Supreme Court has long found that “the primary purpose of antitrust laws is to protect inter-brand competition.” [14] Third, the rule is reserved in itself for agreements that undoubtedly harm competition and with which the courts have “considerable experience”; [15] It is probably too early for the courts to enter into non-poach franchise agreements that have no exchange value. On the heels of enforcement actions by states and the federal government and other legislative efforts to stop or limit the implementation of non-vaccination agreements in the private sector, advocates for class actions have gained momentur, and private complaints against non-poaching agreements are rising from coast to coast. See z.B. Deslandes v. McDonald`s USA, LLC (N.D. III. 2017); Ion v. Pizza Hut, LLC (E.D.

Tex. 2017); Frost v. LG Electronics, Inc. (N.D. Cal. 2018); Butler v. Jimmy John`s franchise, LLC, et al. (S.D. III. 2018); Yi v.

SK Bakeries, LLC, et al. (W.D. Wash. 2018); Ogden v. Little Caesars Enterprises, Inc., et al. (E.D. Mich. 2018); Michel v. Restaurant Brands Int`l Inc., et al. (S.D. Fla.

2018); Avery v. Albany Shaker Donuts LLC, et al. (S.D.N.Y. 2018); Newbauer v. Jackson Hewitt Tax Services, Inc. (E.D. Vir.); In re: H-R Block Employee Antitrust Litigation (MDL – N.D. III.); In re: Railway Industry Employee No-Poach Antitrust Litigation (MDL – W.D. Pa).

These lawsuits generally argue that the non-poaching clauses in the franchise agreements are contrary to the Sherman Act and the Clayton Act as an illegal restriction on the employment trade. The next shoe that was to fall was enforcement measures against franchises with bare non-poaching agreements. In January 2018, for example, the Washington district attorney`s office launched an investigation into non-poaching and non-hire agreements between franchise-based fast food companies. These studies have resulted in discontinuous insurance agreements with more than 30 national fast food chains and restaurants to remove non-poaching clauses from their franchise agreements. Since then, the Washington Prosecutor`s Office has said that other sectors, including hotels, auto repairs, home health services and other areas of the franchise, are under investigation for illegal, poach-free agreements. As a result of the transaction, more than 15 private complaints were filed by current or former employees of the companies. These cases were consolidated in the Western District of Pennsylvania. The defendants dismissed the complaint.

In their letter of application, the defendants argued that all non-poach agreements should be assessed in accord accordableing the rule of reason. In-depth diligence on cartels and abuse of dominance, including possibly interviews with staff executives, should be conducted in targeted cases.

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