Rachel Lerner
Wed, 08/03/2022
In January of 2019, a federal court in Kentucky consolidated three cases filed against Papa John’s, alleging violations of the Sherman Antitrust Act. Papa John’s franchises are independently owned and operated, but Papa John’s International, Inc. enters into a standard franchising agreement with each new franchise owner. Beginning in 2010 and through at least November 2017, each of these franchising agreements contained a “no-poach” provision, which barred a franchise owner from employing or seeking to employ any person who works at a different Papa John’s franchise.
The plaintiffs- who were current and former Papa John’s employees – alleged that the “no-poach” provision of the franchise agreements was an unreasonable restraint on trade and violated the Sherman Antitrust Act. According to the plaintiffs, the “no-poach” provision harmed them by suppressing wages and benefits and decreasing employment opportunities. The provision eliminated competition among the franchises, and between the franchises and the parent company.
After the case survived a motion to dismiss, the parties reached a preliminary settlement agreement for $5 million dollars on July 27, 2022. Under the agreement, Papa John’s is required to conduct antitrust compliance training for executives, instruct the parent company to tell franchisees not to enforce the existing “no-poach” provision in their contracts, and assure that Papa John’s will not include a “no-poach” provision in any new franchise agreements for the next five years.
If you have questions or believe your employer may be violating your rights, please feel free to contact us at info@mselaborlaw.com or (202)-780-8874.
