Antitrust, UCL and Privacy

Competition: Fall 2019, Vol 29, No. 2

THE COMPLEXITIES OF LITIGATING A NO-POACH CLASS CLAIM IN THE FRANCHISE CONTEXT

By Jason Hartley and Fatima Brizuela1

After a week of training at Returns R Us ("RRU"), Paloma Navarro was excited to start her new job as a tax preparer. Although her starting hourly wage was not very high, she saw a future with RRU, a nationwide tax services company with nearly 1,000 stores in 30 states. At least it was a big improvement over her prior work as an executive assistant who did little more than run menial errands for an arrogant senior law partner. RRU presented Paloma with the opportunity to start a career and grow. After all, Paloma knew that RRU had hundreds of locations around the country. She could build her experience at her local branch, work hard, and eventually move to a store near the coast, fulfilling her dream of living by the ocean.

Paloma applied to location after location in her favorite coastal cities. But she could not even get an interview despite responding to advertisements from RRU franchises that were specifically looking for workers with her precise skills, and each advertising a nearly identical compensation range for Paloma’s position. It was not until she followed up with a call to one of those places that she learned the real reason for her rejections. "We can’t hire you," said the manager of that RRU store. "There is a no-poaching provision in our franchise agreement. We aren’t allowed to solicit or hire anyone who works at another RRU location. Sorry." This was devastating news to Paloma. She could not believe that her years of hard work for RRU meant that she had to work for that same RRU franchise or change companies. She decided to see a lawyer.

Karen Danielle was an accomplished trial lawyer. She had scored some of the largest verdicts for her employment clients, both individually and in class actions. Paloma came to her distraught. After some consoling, Karen answered Paloma’s first question, "What, exactly, is a no-poach agreement?"

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