McDonald’s Defeats No-Poach Antitrust Suit

A federal judge granted summary judgment in favor of McDonald’s in a long-running legal battle with employees over a no-poaching provision in its franchise agreements.

In his 13-page order, US District Judge Jorge Alonso found that the case had to be decided under the rule of reason, meaning the plaintiffs carry the burden of showing that an agreement or contract has an anticompetitive effect on a given market within a given geographic area.

The Obama-appointed judge rejected the employees’ argument that “employment by McDonald’s restaurants constitutes a market all its own, separate from the market for employment by other quick-serve restaurants.”

“Plaintiffs could have sold their labor to other customers,” Alonso wrote. 

Attorneys from both sides did not immediately respond to an email seeking comment.

Lead plaintiff Leinani Deslandes filed a class action lawsuit against the fast-food giant in 2017 challenging its no-poaching policy that prohibits employees from moving from franchise to franchise within the corporation for a period of six months unless released by their original franchise.

Deslandes claimed that the policy restricts wage competition and suppresses employees’ pay. Plaintiff Stephanie Turner filed a related lawsuit that was eventually consolidated with Deslandes’ complaint.

The court denied Deslandes’ request for class certification, finding that individual issues would predominate. That ruling meant each plaintiff would need to establish that the restraint was anticompetitive in the relevant market in which she sold her labor.

After the class certification was denied, Deslandes and Turner each sought relief under the Sherman Act for reduced wages due to the no-hire restriction.

“As defendants point out, neither Deslandes nor Turner ever included in her respective complaint a plausible claim under the rule of reason, which is to say neither ever alleged a relevant market within which defendants have market power to suppress wages,” Alonso wrote.

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