Antitrust Law Daily Wrap Up, FRANCHISING & DISTRIBUTION NEWS: IFA’s suit against Seattle’s $15 minimum wage law proceeds, (Oct 20, 2014)

By Greg Hammond, J.D.

The International Franchise Association, Inc. (IFA) has filed a reply brief in the federal district court in Seattle, arguing in favor of its motion for a limited preliminary injunction, preventing the City of Seattle from enforcing a new minimum wage ordinance against small franchised businesses (International Franchise Association, Inc. v. City of Seattle, Case No. C14-848RAJ).

According to the IFA, Seattle’s new $15 minimum wage law discriminates against small franchise businesses by classifying them as large businesses if their franchise network collectively employs more than 500 employees nationwide. The ordinance provides for a seven-year phase-in period for employers with 500 or fewer employees. Being classified as large businesses would require the small franchised businesses to pay higher wages sooner than other small businesses. As such, they would be at a significant competitive disadvantage, potentially resulting in job losses and closed businesses.

In its reply to the City’s brief regarding injunctive relief, the IFA argues that: (1) the small franchised business plaintiffs are likely to prevail on the merits because the ordinance violates the Equal Protection Clause, the First Amendment, and Article 1, Section 12 of the Washington Constitution; (2) the ordinance is preempted by the Lanham Act and the Employee Retirement Income Security Act; (3) the plaintiffs will suffer irreparable harm without a preliminary injunction, including deprivation of constitutional rights, competitive injury, loss of customers, loss of goodwill, and the potential of being forced out of the market; (4) the balance of equities and public interest support injunctive relief; and (5) the City failed to respond to IFA’s reliance on the “serious questions” test. Specifically, the IFA argues that there are serious questions regarding whether the ordinance’s “discriminatory treatment of small franchisees was motivated by economic protectionism, animus, and a desire to ‘break’ the franchise model.”

“With such a blatant discriminatory attack on the business community, Seattle may find it difficult to attract future business conventions like the American Bar Association (ABA) franchise conference, which has drawn 1,200 franchise attorneys to Seattle this week and brought at least $1.5 million to Seattle hotels, restaurants and other businesses,” stated IFA President & CEO Steve Caldeira. “Franchise businesses are one of the largest drivers to Seattle’s economy, with 600 local franchise business owners employing 19,000 people, and this economic strength is on display with the ABA conference this week.”

Attorneys: Paul D. Clement, Viet D. Dinh, H. Christopher Bartolomucci (Bancroft PLLC), and David J. Groesbeck for International Franchise Association, Inc.

Companies: International Franchise Association, Inc.

News: FranchisingDistribution WashingtonNews