Eleventh Circuit Revives Putative Class Action Against Burger King For Violation Of Federal Antitrust Laws Based On No-Poaching Provisions In Franchise Agreements

• Published date: 15 November 2022
• Law Firm: Bilzin Sumberg Baena Price & Axelrod LLP
• Author: Mr Adrian K. Felix

Arrington v. Burger King Worldwide, Inc., No. 20-13561 (11th Cir. Aug. 31, 2022) - In October 2018,a former line cook of a Burger King franchise restaurant in Illinois, filed a class action complaint in the District Court for the Southern District of Florida against Burger King Worldwide and Burger King Corporation (collectively, "Burger King" or "BKC")¹, for violation of Section 1 of the Sherman Act, 15 U.S.C. ' 1, based on Burger King's inclusion of an employee no-solicitation and no-hire provision (the "No-Poaching Clause") in its standard franchise agreement.

Specifically, the employee plaintiffs² alleged in their complaint that every Burger King franchisee who entered into BKC's standard franchise agreement, between 2010 and September 13, 2018,³ was required to agree to the following provision:

Neither BKC nor Franchisee will attempt, directly or indirectly, to entice or induce, or attempt to entice or induce any employee of the other or of another Franchisee of BKC to leave such employment, or employ such employee within six (6) months after his or her termination of employment with such employer, except with the prior written consent of such employee.

According to the plaintiffs, the foregoing No-Poaching Clause gave Burger King and its franchisees the power to suppress restaurant employee wages and eliminate competition for labor between Burger King restaurants, by restricting employee mobility, and thus, limiting employee bargaining power to seek increased wages and...