Sophia Serrao
Tue, 10/04/2022
Former Burger King employees have renewed hope in their case alleging violations of antitrust law. The Eleventh Circuit recently reversed a decision to dismiss the proposed class action lawsuit alleging that Burger King violated antitrust laws through its noncompete and no-poach agreements. The provisions in the context of franchise chains are generally heavily scrutinized but because the pacts include both restrictions amongst rivals and agreements with brand owners, courts have been divided on how to interpret or restrict them.
Three former employees brought a claim against Burger King and its franchisees for restricting hiring in a way that made it impossible for the employees to seek better opportunities, including better wages and benefits.
The three-judge appellate panel found that the independent franchisees acted together with the Burger King Corporation through a noncompete agreement that restricted hiring. The panel opinion, written by U.S. Circuit Judge Rosenbaum, said that the Burger King workers sufficiently established that Burger King violated the Sherman Antitrust Act when it took “concerted action” through its no-hire agreement. The agreement kept former Burger King employees from being hired at other restaurants for at least six months. The agreement is one that each franchisee signs with Burger King.
A lower court dismissed the complaint in August 2020, finding that Burger King and its franchisees were a single overarching company and therefore could not conspire with others to restrict the market. The Eleventh Circuit appellate panel disagreed. The panel emphasized that Burger King restaurants are independently owned and operated that are intended to be kept separate and intentionally compete against each other.
The class action lawsuit has been remanded to the district court to determine whether and to how Burger King restricted trade in violation of antitrust laws.
