Monthly Archives: February 2017

CKE Restaurants Hit With Antitrust Class Action

Share us on: By Braden Campbell Law360, New York
(February 8, 2017, 4:26 PM EST) — Managers at CKE Restaurants Group, the fast food chain headed by Trump labor secretary nominee Andy Puzder, filed an antitrust class action in California state court Wednesday alleging the company and flagship burger brand Carl’s Jr. illegally suppress wages by preventing franchisees from hiring each other’s workers.

Though they don’t name him as a defendant, the workers slammed Puzder for publicly touting the value of a free market where businesses compete for labor while at the same time leading a company that artificially — and illegally — stifles that competition among its franchisees.

“As Puzder has himself explained, ‘if employers are competing for the best employees, they will pay more,’” the workers said. “And yet, CKE has participated in an illegal scheme not to compete for the best employees.”

The suit centers on a portion of CKE’s contracts with franchisees barring them from “employ[ing] or seek[ing] to employ” supervisors who work at other CKE-branded restaurant franchises or have worked at one in the prior two years. This so-called “no hire” agreement covers shift leaders, assistant managers and general managers, whom the workers allege work grueling, often unpredictable shifts for annual salaries ranging from about $25,000 for shift leaders to between $35,000 and $40,000 per year for general managers. All franchisees must sign these agreements before opening a CKE-branded restaurant, the workers claim.

While CKE encourages its franchisees to compete among each other by choosing their location, choosing how much they invest in their facilities and equipment and setting the prices they charge, it suppresses competition for labor, the workers said. This in turn keeps wages low for management staff and impedes their mobility, according to the workers.

The workers also criticized the seeming contradiction of Puzder claiming CKE is not a joint employer under federal labor law while the company restricts franchisees’ hiring autonomy through its no hire policy.

“CKE and Puzder cannot have it both ways,” the workers said. “They cannot eschew their responsibilities under the labor and employment laws by embracing a ‘free market’ model constituted by independent, competing franchisees, while at the same time restraining free competition to the detriment of thousands of workers employed by CKE and its franchisees.”

The suit was filed by named plaintiffs Luis Bautista, a current Carl’s Jr. shift leader, and Margarita Guerrero, who was a shift leader until late 2016. Bautista and Guerrero are asking to represent a class of all current and former shift leaders, assistant managers and general managers at corporate and franchisee-owned CKE restaurants in California. The CKE brand operates Carl’s Jr. Hardee’s, Green Burrito and Red Burrito.

The workers are backed by nonprofit workers’ rights group Towards Justice, which connects workers with attorneys and files and backs impact litigation.

“While CKE and its franchisees secretly collude to hold down wages and maintain poor working conditions, our clients struggle to get by,” Towards Justice Executive Director Nina DiSalvo said in a statement. “That is not the result of free market capitalism, but the result of illegal restrictions on the market that undermine wages.”

Puzder has faced a torrent of opposition from progressive groups, Democratic Party leaders and labor advocates since Donald Trump nominated him to head the Department of Labor in December, with many critics claiming CKE brands have poor track records for labor violations that make Puzder a poor fit for the job. Puzder’s nomination has also prompted worker’s advocacy group the Fight for $15 to back dozens of worker suits against Carl’s Jr. and Hardee’s franchises across the country.

A representative for CKE did not immediately respond Wednesday to a request for comment.

The workers are represented by Jon Tostrud of Tostrud Law Group PC, Jonathan W. Cuneo and Matthew E. Miller of Cuneo Gilbert & Laduca LLP and Nina DiSalvo, Alexander Hood and David Seligman of Towards Justice.

Attorney information for CKE was not available Wednesday.

The case is Luis Bautista et al v. Carl Karcher Enterprises LLC et al, case number BC649777, in the Superior Court of California, Los Angeles County.