Jimmy John’s Facing Antitrust Lawsuit Over ‘No-Hire’ Agreement Between Restaurants [UPDATE]
by Erin Shaak
Last Updated on September 30, 2021
Butler v. Jimmy John's Franchise, Llc et al
Filed: January 24, 2018 ◆§ 3:18cv133
Three operating companies of the Jimmy John’s sandwich restaurant franchise have been named as defendants in a proposed class action lawsuit that alleges the parties unlawfully instructed franchisees not to hire each other’s employees.
Illinois
Case Updates
September 30, 2021 – Private Settlement Reached
The judge overseeing the case detailed on this page has ordered that the lawsuit be dismissed with prejudice after 60 days to allow the parties to finalize a private settlement, the details of which have not been revealed in court documents.
In a September 28 order, U.S. District Judge Nancy J. Rosenstengel noted that she had been informed by the parties that a settlement had been reached and ordered that the plaintiff and defendants abide by the terms and conditions of the yet-to-be finalized settlement documents.
The private deal comes almost two months after Judge Rosenstengel denied the plaintiff’s motion to certify the class, ruling that the plaintiff had failed to show that the proposed class was “sufficiently cohesive” to warrant class-wide representation. More specifically, the judge wrote in a July 30 order that those who the lawsuit sought to represent were governed by different versions of the Jimmy John’s franchise agreement and that the alleged no-poach provision was enforced differently by the franchisees.
Moreover, most of the individuals who would have been covered under the suit, including the plaintiff himself, “were never actually denied the chance to change shops” because they either were allowed by the franchisees to move to another store or they never attempted to, according to the order.
“In the end,” Judge Rosenstengel wrote, “a class action is not superior to individual suits when the class is ‘defined so broadly as to include many members who could not bring a valid claim even under the best of circumstances.’”
Given “overwhelming” individualized inquiries would be required to establish whether and how each proposed class member was harmed, not to mention several other issues that preclude class certification, the judge refused to allow the plaintiff to move forward with representing the proposed class, according to the July order.
Three operating companies of the Jimmy John’s sandwich restaurant franchise have been named as defendants in a proposed class action lawsuit that alleges the parties unlawfully instructed franchisees not to hire each other’s employees. The suit claims the defendants’ contracts specify that employees at each franchisee may not be recruited as partners/investors/owners or be hired at another Jimmy John’s restaurant for at least 12 months after their employment at their current shop is terminated.
“The no-hire agreement between and among Jimmy John’s franchisees eliminated franchisees’ incentives and ability to compete for employees, and restricted employees’ mobility,” the complaint reads, adding that employees were deprived of better salaries, benefits, and opportunities to grow as a result.
The plaintiff in the case, who worked as a delivery driver and in-store employee, claims that despite his desire to work more hours and earn more, his supervisor continuously reduced his schedule until he was working only four hours per week, leaving him with no other option but to quit his job.
The suit then references two actions filed by the attorneys general of Illinois and New York in which the defendants were accused of anti-competitive behavior and, in one case, were forced to pay a fine. Nevertheless, the complaint attests, the defendants have not removed the anti-competitive agreements from their contracts and documentation and continue to injure their employees.
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