Duane Morris Class Action Review - 2023 - Report - Page 45
requirement of Rule 23(b)(3). The court denied class certification primarily because
individual issues would predominate over common ones. That conclusion stemmed
from the court’s holding that the antitrust rule of reason applied to the no-poach
provisions, which meant that plaintiffs would need to establish anticompetitive effects in
each individual relevant market. Id. at *28-29. The court found that because there were
“hundreds or thousands” of potentially relevant local labor markets at issue, individual
questions about the no-poach provisions’ effects within those markets, like the number
of McDonald’s competitors who could blunt the provisions’ impact on wages, precluded
class certification. Id. at *34. The court’s ruling left only the individual claims of the two
named plaintiffs in the case.
In June of 2022, the court dismissed those remaining claims in Deslandes, et al. v.
McDonald's USA, LLC, 2022 U.S. Dist. LEXIS 113524 (N.D. Ill. June 28, 2022). In so
doing, the court reaffirmed its earlier holding that the rule of reason applies to no-poach
provisions in franchise agreements. The court again rejected the plaintiffs’ arguments
that the agreements should be either declared per se illegal or rejected after only a
quick look. Id. The court relied heavily on the U.S. Supreme Court’s recent decision
in NCAA v. Alston, et al, 141 S.Ct. 2141 (2021). There, the Supreme Court held the
Sherman Act “presumptively” calls for rule-of-reason analysis and that “quick look”
analysis is reserved “only for restraints at opposite ends of the competitive spectrum …
rather than restraints in the great in-between….” Id. at 2155. The court
in Deslandes found that the no-poach provisions at issue fell in the “great in-between” of
restraints that require rule-of-reason analysis. Deslandes, at *13-14. It further concluded
that courts do not have enough experience with no-poach provisions in franchise
agreements to “predict with confidence that they must always be condemned.” Id. The
court also reasoned that the no-poach provisions could not be illegal per se because
they were “ancillary” to the underlying franchise agreements, which served a
procompetitive purpose in that the underlying agreements “increased output of burgers
and fries.” Id. at *6.
The Deslandes case is important in the antitrust class action context because it
illustrates the DOJ’s about-face in regards to its push for courts to apply per se
treatment to no-poach agreements. Deslandes shows that despite the DOJ’s newly
adopted position, courts are simply not familiar with the alleged anti-competitive effects
of no-poach agreements to analyze them under the per se test. As a result, per se and
rule reason test will continue to be the ultimate battleground and the determinative
factor in whether a no-poach class action can be certified.
B.
Other “No Poach” Rulings
Defendants’ counsel in other class actions quickly attempted to capitalize on the
Deslandes denial of class certification. In In Re Outpatient Medical Center Employee
Antitrust Litigation, 2022 U.S. Dist. LEXIS 173925 (N.D. Ill. Sep. 26, 2022), the
defendants filed a notice of supplemental authority in support of a motion to dismiss
citing the court’s rejection of per se analysis of non-solicitation agreements in
Deslandes.
44
© Duane Morris LLP 2023
Duane Morris Class Action Review – 2023
