Blanton v. Domino's Pizza Franchising LLC

          David R. Grand Magistrate Judge.

          OPINION AND ORDER DENYING DEFENDANTS' MOTION TO DISMISS (DOC. #26)

          Victoria A. Roberts United States District Judge

         I. INTRODUCTION

         On October 15, 2018, Harley Blanton, individually and as a representative of similarly-situated persons, filed suit against Defendants Domino's Pizza Franchising LLC, Domino's Pizza Master Issuer LLC, Domino's Pizza LLC, and Domino's Pizza, Inc. (collectively, “Defendants”).

         Blanton says Defendants violated the Sherman Antitrust Act by orchestrating an employee no-hire agreement among their nationwide network of franchisees. Under the no-hire provision at issue-included in every Domino's franchise agreement from at least January 2013 to April 2018-Domino's franchisees agreed not to solicit or hire current employees of other Domino's franchisees and affiliated entities.

         Blanton alleges that this is a “horizontal” restraint of trade that is sufficiently pled. Defendants disagree and move to dismiss under Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6); they say that Blanton failed to sufficiently allege injury and state a claim upon which relief can be granted. Oral argument was heard on April 15, 2019.

         The Court finds that Blanton has sufficiently pled a horizontal restraint of trade between franchisees at the same level. The Court also finds that-contrary to what Defendants urge-it need not now decide what standard of review will ultimately govern once all facts become known.

         Defendants' motion to dismiss is DENIED.

         II. BACKGROUND

         Blanton worked for a Domino's franchise in Port Orange, Florida, from January 2017 until April or May of that year; he says he quit because his hours were repeatedly cut back. The Domino's franchise that Blanton worked for is one of many in the nation that signed the Domino's franchise agreement and agreed to the no-hire provision.

         Defendant Domino's Pizza Franchising, LLC-the current franchising arm of Defendant Domino's Pizza, Inc.-enters into a standard franchise agreement with each new Domino's franchise owner; Domino's franchises are independently owned and operated as separate entities from Defendants.

         Until at least April of 2018, each franchise agreement included the no-hire provision. The no-hire provision required franchisees to agree not to:

Directly or indirectly, solicit or employ any person who is employed by Domino's, by any entity controlled by or affiliated with Domino's, or by any other of our franchisees, nor will you induce any of these people to leave their employment without the prior written consent of their employers.

[Doc. No. 1, pp. 3].

         This provision prohibits a Domino's franchisee from recruiting or hiring a current employee of another Domino's franchisee without prior written consent. Franchisees also agree that a violation of the no-hire provision will cause “irreparable harm” to Defendants; moreover, a violation triggers termination of the violating franchisee's franchise agreement.

         Blanton says that Defendants used the franchise agreements to orchestrate a conspiracy among their franchisees to not compete for labor; Blanton says that the no-hire provision is evidence of that conspiracy and violates the Sherman Antitrust Act because it unreasonably restrains competition for Domino's franchise employees and depresses employee wages, lessens employee benefits, and stifles employee mobility.

         III. STANDARD OF REVIEW

         A motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6) tests a complaint's legal sufficiency. Although the federal rules only require that a complaint contain a “short and plain statement of the claim showing that the pleader is entitled to relief, ” see Rule 8(a)(2), the statement of the claim must be plausible. Indeed, “[t]o survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A claim is plausible where the facts allow the Court to infer that the defendant is liable for the misconduct alleged. Id. This requires more than “bare assertions of legal conclusions”; a plaintiff must provide the “grounds” of his or her “entitlement to relief.” League of United Latin Am. Citizens v. Bredesen, 500 F.3d 523, 527 (6th Cir. 2007).

         In deciding a motion under Rule 12(b)(6), the Court must construe the complaint in the light most favorable to the plaintiff and accept as true all well-pled factual allegations. Id. The Court “may consider the Complaint and any exhibits attached thereto, public records, items appearing in the record of the case and exhibits attached to defendant's motion to dismiss so long as they are referred to in the Complaint and are central to the ...