In our article last month, we discussed the Federal Trade Commission (FTC) and the Department of Justice’s (DOJ) jointly issued guidance to HR professionals warning that naked employee no-poach agreements could be criminally prosecuted. In early 2018, assistant attorney general for the DOJ’s antitrust division Makan Delrahim expressed his “shock” at “how many of these agreements there are.” He also divulged that the DOJ would be unveiling criminal indictments over the next couple of months in appropriate no-poach cases.

Following in the wake of the FTC/DOJ guidance and Delrahim’s startling announcement, franchises such as Pizza Hut, Jimmy John’s and others were hit with class action lawsuits alleging they violated Section 1 of the Sherman Act by imposing employee no-hire agreements on their franchisees. Relying in part on the FTC/DOJ guidance, each of these lawsuits alleged per se violations of the Sherman Antitrust Act, potentially exposing them to treble damages and attorney fees without regard to the potentially procompetitive effects of these arrangements. But will the courts be as eager to analyze these agreements under the per se rule? History suggests the answer is no.

Rule of Reason v. Per Se

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