Judge Rejects $5 Million Settlement in Papa John’s No-Poaching Suit

Papa John’s has been the main target of a recent legal dispute surrounding its agreements that restrict its franchisers from poaching employees from each other.

On Tuesday, U.S. District Court Judge Joseph Beaton declined to preliminarily approve the proposed $5 million settlement. However, the opposing sides were given 30 days to resubmit a proposed settlement or file a status report.

Employees sued Papa John’s in 2018 over accusations that the company had unlawfully restricted employee mobility, reported Reuters. These same no-poach agreements were also the main target of a U.S. Appeals Court this month, which stated that McDonald’s must face claims that their franchise agreements unlawfully restricted worker hiring.

Commenting on the case, Dean Harvey, lawyer from Lieff Cabraser Heiman & Bernstein argues that “The plaintiff’s position is that agreements here are unlawful per se. But that’s not entirely obvious.” The lawsuit filed back in 2018 was in representation of 401,000 Papa John’s employees who were part of a prospective class. Lawyers for the proposed class have called the deal “fair and reasonable”.

Judge Beaton also made inquiries into the position put forward by the sole named plaintiff – a manager – regarding its representativeness of the class interests and how the lawyers would prove that the no-poach agreement violates U.S. antitrust laws. Although Papa John’s denies any wrongdoing, they are also reportedly motivated by the “array of risks” and the “uncertainties” of the case.

Source: Reuters