Ex Burger King workers get another bite at ‘no-hire’ conspiracy lawsuit

A prospective class action lawsuit against Burger King has been resurrected by a federal appeals court because the company previously used a “no-hire” provision that prohibited all franchisees from employing one other’s employees.

On Wednesday, the 11th U.S. Circuit Court of Appeals overturned a district court judge’s dismissal of the workers’ claims that the no-hire condition constituted an illegal scheme to stifle salaries and reduce job turnover.

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The Miami-based Burger King Worldwide, its parent businesses, and its franchisees had all operated as a “single economic enterprise,” which was absolutely incapable of colluding with itself, according to the 11th Circuit, which found that this was incorrect.

The absence of the No-Hire Agreement would allow each franchised restaurant to “pursue its own economic interests and, as a result, potentially and fully make its own hiring decisions, including about wages, hours, and positions,” Circuit Judge Robin Rosenbaum wrote for the panel. “(T)here’s just no question that Burger King and its franchisees compete against one another and have separate and different economic interests,” she added.

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“They might even make an effort to lure exceptional staff members away from one restaurant and into their own. But the No-Hire Agreement takes away that option,” said Rosenbaum, who was joined in the letter by Senior Circuit Judge Frank Mays Hull and Circuit Judge Charles Wilson.

Lead attorney for Jarvis Arrington, Sandra Munster, and Geneva Blanchard Dean Harvey of Lieff Cabraser Heimann & Bernstein declined to comment on the ongoing action. The U.S. Justice Department provided amicus curiae support for the workers’ appeal.

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Requests for comment from Burger King and its counsel were not immediately fulfilled.

The U.S. Justice Department and the Washington State Attorney General started focusing on the industry’s pervasive use of no-hire or “no-poach” agreements in 2016, and since then, fast-food workers have filed numerous lawsuits.

In 2018, Burger King agreed to a settlement with the Washington attorney general that saw the no-hire clause removed from its franchise agreements. Many more fast food restaurants followed suit.

However, the chains have contended that there was no conspiracy or, alternatively, that any trade restraint was not unreasonable in claims brought by pre-2018 employees.

Burger King petitioned the 11th Circuit to maintain the dismissal on that reason even though the judge in the Burger King case deemed it unnecessary to evaluate the latter point. In separate amicus briefs, the International Franchise Association and the Florida Chamber of Commerce concurred.

On remand, the panel refused, stating that “such inquiries are best left to the district court.”

Burger King Worldwide Inc., Burger King Corp., and Restaurant Brands International Inc. v. Arrington, et al., 11th U.S. Circuit Court of Appeals, No. 20-13561.

Dean Harvey of Lieff Cabraser Heimann & Bernstein is representing Arrington et al.

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Ex Burger King workers get another bite at ‘no-hire’ conspiracy lawsuit

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