Labor & Employment Law Daily Wrap Up, COVERAGE, LIABILITY—S.D. Fla.: Burger King workers can press Sherman Act claim, (Apr 16, 2025)

By Justin Marcus Smith, J.D.

Whether the court should apply the per se, rule of reason, or quick look approach to liability was a question of law, but the court said it needed more factual development.

On a reversal of dismissal and remand from the Eleventh Circuit, the federal district court in Miami, Florida, held that current and former employees of Burger King -franchised restaurants plausibly alleged an unreasonable restraint of trade claim under Section 1 of the Sherman Act in connection with the standard no-hire agreement in Burger King franchise agreements throughout the country. The court concluded the workers plausibly alleged that the no-hire agreement was unreasonable under both the per se rule and “quick look” analysis. However, beyond that, the court reserved and said it needed more factual development to decide which approach to apply. The court also held the workers alleged more than mere corporate affiliation and place of incorporation to keep various Burger King corporate entity defendants in the case. The court explained it could “reasonably infer” alleged involvement of all of the defendants in the purported conspiracy. The workers also successfully argued that fraudulent concealment meant that claims arising before 2014 could proceed. On this point, the court found the workers plausibly pleaded they had no way of knowing about the no-hire agreements (Arrington v. Burger King Corp., No. 1:18-cv-24128-JEM (S.D. Fla. Apr. 9, 2025)).

Background. Current and former employees of Burger King -franchised restaurants complained that the franchisees colluded with franchisor Burger King Corporation (BKC) to depress wages and employment opportunities of workers at Burger King -branded restaurants throughout the United States. The workers alleged the standard 6-month no-hire (no-poach) agreement provisions of Burger King franchise agreements enabled the alleged collusion and asserted they were per se unlawful under Section 1 of the Sherman Act, 15 U.S.C. § 1. The workers pleaded in the alternative that the defendants were liable under the “quick look” because observers with a rudimentary understanding of economics could conclude the franchise agreement no-hire arrangements would have an anti-competitive effect on employees and labor. The workers sought an award of damages and equitable relief on behalf of every person who worked at a Burger King restaurant from at least 2010 to the present.

The district court previously found the workers failed to allege that Burger King Corporation and its franchisees were separate economic actors for antitrust purposes and dismissed the complaint on that ground. The district court reasoned that a franchisor and franchisee were legally incapable of conspiring over the terms of their franchise agreement. The court said the relationship was more like that of parent and subsidiary acting as a single enterprise.

The workers appealed to the United States Court of Appeals for the Eleventh Circuit. In 2020, the U.S. Department of Justice Antitrust Division filed an amicus brief in the appeal seeking to correct the district court statement in its dismissal order that a franchisor and franchisee are legally incapable of conspiracy in connection with a franchise agreement. Other than that, the Department of Justice took no position on the matter. The American Antitrust Institute filed its own amicus brief concurring with the Department of Justice that the lower court concerted action analysis was faulty.

In 2022, the Eleventh Circuit reversed dismissal. The Eleventh Circuit held the workers had adequately pleaded a Sherman Act restraint-of-trade claim by plausibly asserting that the franchise agreements contained a 6-month no-hire provision. In rejecting the district court ruling that Burger King Corporation and its franchisees were a single economic enterprise, the Eleventh Circuit found a plausible allegation of concerted action between them to restrain trade and remanded (see Antitrust Law Daily, Sep. 6, 2022).

The district court now ruled on the Burger King defendants’ remaining arguments for dismissal, i.e., 1) whether the workers failed to state a claim under Section 1 of the Sherman Act; 2) whether they failed to allege that defendants BKW, RBI, and RBI LP engaged in wrongful conduct; and, 3) whether claims arising before October 2014 were time-barred. Defendant BKW (Burger King Worldwide, Inc.) was the owner of defendant BKC. Defendant RBI (Restaurant Brands International) in turn owned BKW and was the sole general partner of defendant RBI LP (Restaurant Brands International Ltd. Partnership) (collectively, the Burger King defendants).

The court considered the franchise agreement attached to the Burger King defendants’ motion to dismiss because their complaint incorporated it by reference; it was central to the workers’ claim; the workers’ alleged its contents in the complaint; and, no party disputed those contents.

Sherman Act. The court held the workers plausibly alleged a claim under Section 1 of the Sherman Act. The workers alleged that the Burger King no-hire agreement was a horizontal restraint of trade and a per se violation or else liability should attach under the quick look approach. The Burger King defendants disagreed and urged the court to apply the rule of reason and dismiss.

The court reasoned it could not decide whether to apply the per se, rule of reason, or quick look approach at the pleading stage. Which approach to apply was a question of law, but the court concluded more factual development was necessary to decide it. The defendants attacked the second element of a Sherman Act Section 1 claim, i.e., whether they had unreasonably restrained trade. The defendants contended alleged restraint of trade was subject to rule of reason analysis and that the workers failed to define their relevant market.

The court concluded that the workers plausibly alleged that the no-hire agreement was unreasonable under both the per se rule and quick look analysis. However, as already mentioned, more factual development was needed to determine which standard of review to apply. In any event, the court held the workers plausibly pleaded a violation of Section 1 of the Sherman Act.

Parent defendants. The court held that the workers sufficiently alleged that each of the defendants, even the corporate entities BKW, RBI, and RBI LP, played a role in the purported conspiracy. The court explained that the workers alleged more than mere corporate affiliation and place of incorporation. In particular, the workers noted that RBI LP was responsible for BKC’s franchise -related liabilities, and RBI was liable for RBI LP’s actions and debts as its sole general partner. The court found the allegations sufficient to allow the court to “reasonably infer” alleged involvement of all of the defendants in the purported conspiracy.

Fraudulent concealment. The court held the workers sufficiently pleaded fraudulent concealment to survive the defendants’ argument that the four-year limitations period had run on the claims arising before 2014. The defendants resisted limitations period dismissal on the basis that the workers failed to allege an affirmative act and that the franchise agreements were readily accessible. However, the court disagreed because it found the workers alleged that the Burger King defendants concealed putative misconduct in “many ways” such as by lying to prospective employees that the employment terms and conditions varied and were solely determined by the franchisees. The court concluded the franchisees’ hiring decisions were facially “constrained by the No-Hire Agreement and were not truly independent.” The workers, meanwhile, pleaded they had neither actual or constructive notice of the alleged conspiracy and no reasonable diligence would have put them on notice of it. More specifically, they said they had “no reason to know of the No-Hire Agreement.” Taking all of this as true, which the court said it must do at the pleading stage, the court held the workers sufficiently pleaded fraudulent concealment.

The Case is No. 1:18-cv-24128-JEM.

Judge: Martinez, J.

Attorneys: Stuart Andrew Davidson (Robbins Geller Rudman & Dowd LLP) for Jarvis Arrington. Carl Edward Goldfarb (Boies Schiller Flexner LLP) for Burger King Worldwide Inc.

Companies: Burger King Worldwide Inc.

Cases: WageHour ContractClaims CoverageLiability FloridaNews