Court Blocks Football Franchise From Joining New League
Jun 6, 2024 - Judge’s Distribution and Franchise Rulings from the Front Lines by Jeffrey M. Goldstein |In the competitive realm of sports franchising, conflicts frequently emerge over the interpretation and enforcement of contractual terms. This is demonstrated by the case between National Arena League, Inc. (“National Arena League”), and WTX Indoor Football, LLC (“WTX”), the owner of the indoor football team the West Texas Desert Hawks. Nat’l Arena League, Inc. v. WTX Indoor Football, LLC, 2024 WL 2000647 (N.D. Ga. May 6, 2024). National Arena League sought a preliminary injunction against WTX to prevent it from joining and participating in the Arena Football League (AFL). The Court’s decision hinged on whether WTX’s actions constituted a breach of the Membership Agreement (“MA”) and whether National Arena League was entitled to injunctive relief. National Arena League entered into a MA with WTX on August 12, 2022, for the team, then known as the West Texas Warbirds, to operate in Odessa, Texas, and compete in National Arena League’s indoor football league. According to the MA, the team would be National Arena League’s exclusive franchisee within a 35-mile radius of Odessa for a three-year term. The MA prohibited the team and its owners from participating in any other men’s professional or semi-professional arena or indoor football league in the United States for three years after the termination of the MA. Additionally, the MA granted National Arena League the right to terminate the MA upon any violation by WTX. In August 2023, after only one year in National Arena League’s league, WTX left to join the AFL, which National Arena League claimed […]
Court Upholds Restrictive Covenant Against Manager’s Claims of Unenforceability
Jun 6, 2024 - Judge’s Distribution and Franchise Rulings from the Front Lines by Jeffrey M. Goldstein |In the complex legal dispute between Charles Baldwin (“Mr. Baldwin”) and Express Oil Change, LLC (“Express Oil Change”), the Eleventh Circuit Court of Appeals examined the application of restrictive covenants under the Georgia Restrictive Covenants Act (“GRCA”). Baldwin v. Express Oil Change, LLC, 87 F.4th 1292 (11th Cir. 2023). The appeal stemmed from a preliminary injunction issued by the United States District Court for the Northern District of Georgia, which challenged the restrictive covenant’s geographic scope and duration. Plaintiff Mr. Baldwin brought suit against Defendant Express Oil Change alleging that the restrictive covenants imposed on him were not enforceable under the GRCA due to their unreasonable geographic scope and duration. In this dispute, Mr. Baldwin was intricately involved in the operations of various franchisees under Express Oil Change. Though not a franchisee himself, Mr. Baldwin’s roles and the nature of the restrictive covenants in question are highly pertinent to franchisee-franchisor relationships, especially given the complex interactions and agreements between Mr. Baldwin, the franchisees, and the franchisor, Express Oil Change. This case, thus, offers valuable insights into the dynamics and legal considerations within franchising networks. Mr. Baldwin’s journey with Express Oil Change began in 1998, initially as a store manager. Over two decades, his role expanded significantly, with Mr. Baldwin eventually becoming an area manager, overseeing multiple franchise locations. His relationship with franchisees Adam Fuller (“Mr. Fuller”) and Darrell Lamb (“Mr. Lamb”) was pivotal in his career progression. As Mr. Fuller and Mr. Lamb expanded their number of franchise locations under Express […]
McDonald’s Fails to Shake Off Antitrust Fangs of Hourly Workers in Poaching Clause Case
Jan 9, 2024 - Recent Published Cases by Jeffrey M. Goldstein |McDonald’s Fails to Shake Off Antitrust Fangs of Hourly Workers in Poaching Clause Case By: Jeffrey M. Goldstein, Goldstein Law Firm, LLC Until recently, some franchise agreements, including those in the McDonald’s system, included a ‘no-poaching’ clause for workers from other franchises. These clauses historically had gone unchallenged by the government, franchisees, and workers. In a recent case involving the McDonald’s no-poaching clause, however, a United States District Court for the Seventh Circuit (“Court”) considered hourly workers’ claims that the no-poaching clause prevented them from taking higher-paying offers at other franchises and, as such, violated the antitrust laws. The district court decision that was challenged on appeal recognized that under Sherman Act Section 1, claims fall into two distinct categories: “naked restraints, akin to cartels, are unlawful per se, while other restraints are evaluated under the Rule of Reason. (The quicklook approach, see NCAA v. University of Oklahoma, 468 U.S. 85 (1984), is a subset of analysis under the Rule of Reason.).” In this regard, the district court rejected the per se theory of liability stating that “the anti-poach clause is not a naked restraint but is ancillary to each franchise agreement—and, as every new restaurant expands output, the restraint is justified.” The district court also deemed the complaint deficient under the Rule of Reason because it did not allege that McDonald’s and its franchises collectively had power in the market for restaurant workers’ labor. Under the Rule of Reason, failing to allege that the defendant or defendants held […]
Auto Franchise Dealer Termination Claim Permitted to Proceed
Jun 9, 2019 - Judge’s Distribution and Franchise Rulings from the Front Lines by Jeffrey M. Goldstein |Auto Franchise Dealer Termination Claim Permitted to Proceed By: Jeffrey M. Goldstein Judicial Update — Nissan N. Am., Inc. v. Tillman, No. 2018-CC-00462-SCT, 2019 Miss. LEXIS 220 (June 6, 2019) In a recent case, the Supreme Court of Mississippi ruled that in an auto franchise dealer termination dispute between an automobile dealer and an automobile manufacturer the dealership had timely filed a complaint under the Mississippi Dealership Act after the auto franchisee received the auto manufacturer’s letter providing notice that the dealership was being terminated. The MDA has two provisions applicable to the dispute: first, the MDA statute requires an auto manufacturer seeking to terminate a dealer agreement to provide a notice of termination to is vehicle dealer at least sixty days before the effective date of the termination; and, second, another statutory provision provides a dealer an opportunity to challenge a notice of termination by filing a verified complaint with the Mississippi Motor Vehicle Commission “within the sixty-day notice period.” In this case, because the parties’ franchise agreement required ninety days’ notice before a termination, the franchisor Nissan served the 90-day notice on November 23, 2016. In turn, the franchisee car dealership filed its complaint on February 17, 2017; although the dealership’s filing was within the 90 days period it was not within the initial 60 days period following service of the notice. The Motor Vehicles Board, in dismissing the franchisee’s complaint as untimely, framed the issue as: “does the statutory language ‘within the sixty-day notice period’ refer to the […]
