Nos. 22-2333, 22-2334 

IN THE 

United States Court of Appeals 

for the Seventh Circuit 

LEINANI DESLANDES, ON BEHALF OF HERSELF AND ALL OTHERS SIMILARLY SITUATED, 

Plaintiff-Appellant, 

v. 

MCDONALD’S USA, LLC, ET AL., 

 Defendants-Appellees. 

STEPHANIE TURNER, ON BEHALF OF HERSELF AND ALL OTHERS SIMILARLY SITUATED, 

Plaintiff-Appellant, 

v. 

MCDONALD’S USA, LLC, ET AL., 

 Defendants-Appellees. 

On Appeal from the 

United States District Court for the Northern District of Illinois 

Honorable Jorge L. Alonso

Nos. 1:17-cv-04857, 1:19-cv-05524 

BRIEF FOR THE UNITED STATES OF AMERICA AND 

THE FEDERAL TRADE COMMISSION AS AMICI CURIAE 

IN SUPPORT OF NEITHER PARTY 

ANISHA S. DASGUPTA JONATHAN S. KANTER 

General Counsel Assistant Attorney General 

JOEL MARCUS DOHA MEKKI 

Deputy General Counsel Principal Deputy Assistant Attorney General 

MATTHEW M. HOFFMAN MAGGIE GOODLANDER 

Counsel Deputy Assistant Attorney General 

Federal Trade Commission DAVID B. LAWRENCE 

600 Pennsylvania Ave., NW Policy Director 

Washington, D.C. 20580 JACOBUS VAN DER VEN 

Attorney Advisor 

DANIEL E. HAAR 

NICKOLAI G. LEVIN 

PETER M. BOZZO 

Attorneys 

U.S. DEPARTMENT OF JUSTICE 

ANTITRUST DIVISION 

950 Pennsylvania Ave., NW, Room 3224 

Washington, DC 20530-0001 

(202) 803-1196 

peter.bozzo@usdoj.gov 

Counsel for the United States and the Federal Trade Commission 
TABLE OF CONTENTS 

TABLE OF AUTHORITIES.......................................................................ii 

INTEREST OF AMICI ...............................................................................1 

ISSUES PRESENTED ...............................................................................2 

FACTUAL BACKGROUND.......................................................................2 

ARGUMENT...............................................................................................8 

I. THE DISTRICT COURT MISAPPLIED THE ANCILLARY-RESTRAINTS 

DOCTRINE...........................................................................................13 

A. The District Court Correctly Recognized that No-Hire/NoSolicitation Provisions in Franchise Agreements May 

Be Horizontal and, If So, Are Per Se Illegal Unless 

Defendants Establish Ancillarity .............................................14 

1. No-Hire/No-Solicitation Provisions in Franchise

Agreements Can Be Horizontal............................................14 

2. The Per Se Rule Applies to Horizontal EmployeeAllocation Agreements Unless Defendants Establish 

Ancillarity..............................................................................18 

B. The District Court Erred in Failing to Require Defendants 

to Establish that the Challenged Restraint Is “Reasonably

Necessary” to Achieve a Procompetitive Objective of the

Franchise Agreement................................................................21 

II. ALSTON DID NOT CHANGE THE LEGAL STANDARDS GOVERNING 

WHETHER THE PER SE RULE OR QUICK-LOOK CONDEMNATION 

APPLIES ..............................................................................................30 

CONCLUSION .........................................................................................36 

CERTIFICATE OF COMPLIANCE ........................................................38 

CERTIFICATE OF SERVICE ..................................................................39 

i 
TABLE OF AUTHORITIES 

Page(s) 

Cases 

Addyston Pipe & Steel Co. v. United States, 

175 U.S. 211 (1899) ............................................................................... 24 

Agnew v. NCAA, 

683 F.3d 328 (7th Cir. 2012) ................................................................. 35 

Anderson v. Shipowners' Association of Pacific Coast, 

272 U.S. 359 (1926) ........................................................................... 9, 19 

Arizona v. Maricopa County Medical Society, 

457 U.S. 332 (1982) ..................................................................... 8, 33, 34 

Arrington v. Burger King Worldwide, Inc., 

47 F.4th 1247 (11th Cir. 2022) ............................................................. 16 

Aya Healthcare Services, Inc. v. AMN Healthcare, Inc., 

9 F.4th 1102 (9th Cir. 2021) ........................................................... 20, 24 

Blackburn v. Sweeney, 

53 F.3d 825 (7th Cir. 1995) ....................................................... 21, 24, 25 

Blue Cross & Blue Shield United of Wisconsin v. Marshfield Clinic, 

65 F.3d 1406 (7th Cir. 1995) ................................................................. 20 

Board of Regents of University of Oklahoma v. NCAA, 

707 F.2d 1147 (10th Cir. 1983) ....................................................... 21, 22 

Butler v. Jimmy John's Franchise, LLC, 

331 F. Supp. 3d 786 (S.D. Ill. 2018) ..................................................... 17 

California Dental Association v. FTC, 

526 U.S. 756 (1999) ..................................................................... 9, 34, 35 

Catalano, Inc. v. Target Sales, Inc., 

446 U.S. 643 (1980) ................................................................................. 8 

ii 
Page(s) 

Cases 

Chicago Professional Sports Limited Partnership v. NBA, 

95 F.3d 593 (7th Cir. 1996) ................................................................... 27 

Continental T V., Inc. v. GTE Sylvania Inc. , 

433 U.S. 36 (1977) ........................................................................... 28, 29 

Fleet Wholesale Supply Co. v. Remington Arms Co., 

846 F.2d 1095 (7th Cir. 1988) ............................................................... 29 

Freeman v. San Diego Association ofRealtors, 

322 F.3d 1133 (9th Cir. 2003) ............................................................... 21 

Freyd v. University ofOregon, 

990 F.3d 1211 (9th Cir. 2021) ............................................................... 10 

FTC v. Indiana Federation ofDentists, 

476 U.S. 447 (1986) ................................................................................. 8 

Gunn v. Continental Casualty Co., 

968 F.3d 802 (7th Cir. 2020) ........................................................... 27, 28 

Hammes v. AAMCO Transmissions, Inc. , 

33 F.3d 774 (7th Cir. 1994) ................................................................... 20 

In re Animation Workers Antitrust Litigation, 

123 F. Supp. 3d 1175 (N.D. Cal. 2015) ................................................. 20 

In re Geisinger Health & Evangelical Community Hospital 

Healthcare Workers Antitrust Litigation, 

No. 4:21-CV-00196, 2021 WL 5330783 (M.D. Pa. Nov. 16, 2021) ....... 20 

In re High-Tech Employee Antitrust Litigation, 

856 F. Supp. 2d 1103 (N.D. Cal. 2012) ................................................. 20 

In re Insurance Brokerage Antitrust Litigation, 

618 F.3d 300 (3d Cir. 2010) .................................................................. 23 

111 
Page(s)

Cases 

In re NCAA Athletic Grant-in-Aid Cap Antitrust Litigation, 

375 F. Supp. 3d 1058 (N.D. Cal. 2019) ........................................... 31, 32 

In re Outpatient Medical Center Employee Antitrust Litigation, 

No. 21-cv-00305, 2022 WL 4465929 (N.D. Ill. Sept. 26, 2022) ............ 20 

In re Railway Industry Employee No-Poach Antitrust Litigation, 

395 F. Supp. 3d 464 (W.D. Pa. 2019) ................................................... 20 

In re Sulfuric Acid Antitrust Litigation, 

743 F. Supp. 2d 827 (N.D. Ill. 2010) ............................................... 24, 25 

Interstate Circuit v. United States, 

306 U.S. 208 (1939) ............................................................................... 17 

Klor's, Inc. v. Broadway-Hale Stores, Inc., 

359 U.S. 207 (1959) ............................................................................... 17 

Leegin Creative Leather Products, Inc. v. PSKS, Inc., 

551 U.S. 877 (2007) ......................................................................... 28, 31 

Lektro-Vend Corp. v. Vendo Co., 

660 F.2d 255 (7th Cir. 1981) ........................................................... 24, 25 

Mandeville Island Farms, Inc. v. American Crystal Sugar Co., 

334 U.S. 219 (1948) ............................................................................... 19 

Marion Healthcare, LLC v. Becton Dickinson & Co., 

952 F.3d 832 (7th Cir. 2020) ................................................................. 18 

Markson v. CRST International, Inc., 

No. 5:17-cv-01261-SB-SP, 2021 WL 1156863 (C.D. Cal. 

Feb. 10, 2021) ........................................................................................ 20 

Medical Center at Elizabeth Place, LLC v. Atrium Health System, 

922 F.3d 713 (6th Cir. 2019) ................................................................. 25 

iv 
Page(s)

Cases 

NCAA v. Alston, 

141 S. Ct. 2141 (2021) ................................................................... passim 

NCAA v. Board of Regents of University of Oklahoma, 

468 U.S. 85 (1984) ..................................................................... 22, 32, 35 

Nichols v. Spencer International Press, Inc., 

371 F.2d 332 (7th Cir. 1967) ..................................................... 19, 20, 21 

O’Bannon v. NCAA, 

802 F.3d 1049 (9th Cir. 2015) ............................................................... 32 

Ohio v. American Express Co., 

138 S. Ct. 2274 (2018) ....................................................................... 8, 35 

Omnicare, Inc. v. UnitedHealth Group, Inc., 

629 F.3d 697 (7th Cir. 2011) ................................................................. 19 

Palmer v. BRG of Georgia, Inc., 

498 U.S. 46 (1990) ....................................................................... 8, 17, 19 

Polk Brothers v. Forest City Enterprises, Inc., 

776 F.2d 185 (7th Cir. 1985) ............................................... 21, 24, 25, 35 

Quinonez v. National Association of Securities Dealers, Inc., 

540 F.2d 824 (5th Cir. 1976) ................................................................. 19 

Roman v. Cessna Aircraft Co., 

55 F.3d 542 (10th Cir. 1995) ................................................................. 19 

Rothery Storage & Van Co. v. Atlas Van Lines, Inc., 

792 F.2d 210 (D.C. Cir. 1986) ................................................... 15, 22, 23 

Schering-Plough Corp. v. FTC, 

402 F.3d 1056 (11th Cir. 2005) ............................................................. 23 

v 
Page(s)

Cases 

Standard Oil Co. v. United States, 

221 U.S. 1 (1911) ..................................................................................... 8 

Texaco Inc. v. Dagher, 

547 U.S. 1 (2006) ....................................................................... 22, 34, 35 

Toys “R” Us, Inc. v. FTC, 

221 F.3d 928 (7th Cir. 2000) ................................................................. 18 

United States v. Addyston Pipe & Steel Co., 

85 F. 271 (6th Cir. 1898) ................................................................. 24, 25 

United States v. Apple, 

791 F.3d 290 (2d Cir. 2015) .................................................................. 17 

United States v. Cadillac Overall Supply Co., 

568 F.2d 1078 (5th Cir. 1978) ............................................................... 19 

United States v. Cooperative Theatres of Ohio, Inc., 

845 F.2d 1367 (6th Cir. 1988) ............................................................... 19 

United States v. eBay, Inc., 

968 F. Supp. 2d 1030 (N.D. Cal. 2013) ........................................... 20, 26 

United States v. General Motors Corp., 

384 U.S. 127 (1966) ............................................................................... 17 

United States v. Manahe, 

No. 2:22-cr-00013-JAW, 2022 WL 3161781 (D. Me. Aug. 8, 2022) ..... 33 

United States v. Topco Associates, 

405 U.S. 596 (1972) ............................................................................... 19 

Statutes 

15 U.S.C. § 1 ...........................................................................................1, 8 

vi 
Page(s) 

Rules 

Fed. R. App. P. 29 ....................................................................................... 7 

Fed. R. Civ. P. 12 .................................................................... 12, 13, 27, 30 

Other Authorities 

PHILLIP E. AREEDA & HERBERT HOVENKAMP, ANTITRUST LAW: AN 

ANALYSIS OF ANTITRUST PRINCIPLES AND THEIR APPLICATION 

(4th ed. 2022) ......................................................................................... 23 

U.S. Bureau of Labor Statistics, Occupational Employment & Wage

Statistics (last updated Mar. 31, 2022),

https://www.bls.gov/oes/current/oes353023.htm .................................. 10 

U.S. Dep’t of Treasury, The State of Labor Market Competition

(Mar. 7, 2022), https://home.treasury.gov/system/files/136/State-ofLabor-Market-Competition-2022.pdf ................................................... 10 

vii 
INTEREST OF AMICI 

The United States and the Federal Trade Commission 

(“Commission”) enforce the federal antitrust laws and have a strong 

interest in their correct application. The United States enforces 

Section 1 of the Sherman Act, 15 U.S.C. § 1, against employers who 

enter into market-allocation agreements, including agreements not to 

hire, solicit, and/or otherwise compete for employees. See, e.g., 

United States v. Manahe, No. 2:22-cr-00013-JAW (D. Me. Jan. 27, 

2022); United States v. Hee, No. 2:21-cr-00098-RFB-BNW (D. Nev. 

Mar. 30, 2021); United States v. Surgical Care Affiliates, LLC, No. 3:21-

cr-00011-L (N.D. Tex. July 8, 2021). The United States has filed amicus 

briefs and statements of interest addressing such employee-allocation 

agreements. See, e.g., Aya Healthcare Servs., Inc. v. AMN 

Healthcare, Inc., No. 20-55679 (9th Cir. Nov. 19, 2020) (Doc. 14); 

Markson v. CRST Int’l, Inc., No. 5:17-cv-01261-SB (SPx) (C.D. Cal. 

July 15, 2022) (Doc. 637); In re Outpatient Med. Ctr. Emp. Antitrust 

Litig., No. 1:21-cv-00305 (N.D. Ill. Dec. 9, 2021) (Doc. 91); Seaman v. 

Duke Univ., No. 1:15-cv-00462-CCE-JLW (M.D.N.C. Mar. 7, 2019) 

1 
(Doc. 325); In re Ry. Indus. Emp. No-Poach Antitrust Litig., No. 2:18-

mc-00798-JFC (W.D. Pa. Feb. 8, 2019) (Doc. 158). 

The United States and the Commission file this brief under 

Federal Rule of Appellate Procedure 29(a)(2) to address the legal 

framework governing agreements among employers not to hire or solicit 

each other’s employees in the franchise setting. We take no position on 

other issues or the disposition of this appeal. 

ISSUES PRESENTED 

1. Whether the District Court misapplied the ancillary-restraints 

doctrine. 

2. Whether the District Court misread NCAA v. Alston, 141 S. Ct. 

2141 (2021), as changing the legal standards governing when a 

restraint is per se unlawful or can be condemned after a quick look. 

FACTUAL BACKGROUND 

1. The complaints allege that defendants—McDonald’s 

Corporation and its subsidiary, McDonald’s USA, LLC—“sell[] food to 

customers primarily through independently owned and operated 

franchise restaurants.” Am. Compl., Dkt. 32 ¶ 15; Compl., No. 1:19-cv2 
 

                                                            

05524, Dkt. 1 ¶ 20.1 Defendants serve as the franchisor for the 

McDonald’s restaurants. Am. Compl., Dkt. 32 ¶ 26; Compl. No. 1:19-cv05524, Dkt. 1 ¶ 30. According to the complaints, franchisees own 90% 

of U.S. restaurants that operate under the McDonald’s brand; the rest 

are owned by “McDonald’s Operating Companies” or “McOpCos,” 

“subsidiaries of Defendant McDonald’s Corporation.” Am. Compl., 

Dkt. 32 ¶¶ 21, 25; Compl., No. 1:19-cv-05524, Dkt. 1 ¶¶ 25, 29. 

Plaintiffs, former employees of McDonald’s restaurants, allege 

that, until 2017, defendants and franchisees “entered into express 

contractual agreements forbidding competition for employees among 

franchisees and McDonald’s company-owned stores.” Am. Compl., 

Dkt. 32 ¶¶ 59-70, 86; Compl., No. 1:19-cv-05524, Dkt. 1 ¶¶ 63-70, 86. 

According to the complaints, each franchisee signed a franchise 

agreement with McDonald’s, and until 2017, the “standard language” in 

McDonald’s franchise agreements contained a provision that stated: 

Interference With Employment Relations of Others. During

the term of this Franchise, Franchisee shall not employ or

seek to employ any person who is at the time employed by 

McDonald’s, any of its subsidiaries, or by any person who is 

1 Docket citations refer to Deslandes v. McDonald’s USA, LLC, No. 1:17-

cv-04857, unless otherwise noted. 

3 
at the time operating a McDonald’s restaurant or otherwise 

induce, directly or indirectly, such person to leave such 

employment. This paragraph [] shall not be violated if such 

person has left the employ of any of the foregoing parties for

a period in excess of six (6) months. 

Am. Compl., Dkt. 32 ¶¶ 3, 26, 87; Compl., No. 1:19-cv-05524, Dkt. 1 

¶¶ 5, 30, 87. Plaintiffs allege that “this provision was interpreted and 

enforced by McDonald’s itself as applying not only to franchisee hiring, 

but also to McDonald’s hiring in its company-owned McOpCo stores.” 

Am. Compl., Dkt. 32 ¶ 88; Compl., No. 1:19-cv-05524, Dkt. 1 ¶ 88. 

“In 2017,” plaintiffs allege, “McDonald’s removed the no-hire and 

no-solicitation provision from its standard franchise agreement.” 

Am. Compl., Dkt. 32 ¶ 92; Compl., No. 1:19-cv-05524, Dkt. 1 ¶ 92. In 

addition, in 2018, McDonald’s entered into an agreement with the 

Washington Attorney General that required McDonald’s to stop 

including the no-hire/no-solicitation provision “in future franchise 

agreements” and “to stop enforcing” the provision nationwide. Compl., 

No. 1:19-cv-05524, Dkt. 1 ¶ 11. 

2. Plaintiff Leinani Deslandes alleged that she began working at 

a franchisee-owned McDonald’s as a crew person earning $7 an hour in 

2009. Am. Compl., Dkt. 32 ¶ 59. According to the complaint, she rose 

4 
through the ranks, eventually earning $12 an hour as a department 

manager, but decided to look for another job because, among other 

reasons, her employer denied her the opportunity to become a general 

manager due to her pregnancy. Id. ¶ 64. A manager at a nearby 

McOpCo restaurant allegedly “expressed a desire to hire” Deslandes for 

a department-manager position that would have paid $13.75 an hour 

(with the potential for an increase to $14.75 an hour after 90 days). Id. 

¶¶ 67-68. The complaint claims, however, that Deslandes was told that 

she needed to obtain a “release” from her current franchisee-employer in 

order to work at the McOpCo restaurant. Id. The franchisee allegedly 

denied Deslandes’s request for a release. Id. ¶ 69. 

Deslandes sued, claiming that the no-hire/no-solicitation 

agreement violated Section 1 under the “per se” rule or “a ‘quick look’ 

analysis.” Id. ¶¶ 1, 133-34. 

3. Defendants moved to dismiss. The District Court stated that 

the complaint alleged a horizontal “no-hire” agreement that, if “naked,” 

“would be a per se violation.” June 25, 2018 Order, Dkt. 53 at 10-12. 

But the District Court declined to apply the per se rule because it 

viewed the alleged agreement as “ancillary to an agreement with a 

5 
procompetitive effect”—the “franchise agreement.” Id. at 13-14. The 

District Court emphasized: “That is not to say that the provision itself 

was output enhancing. The very fact that McDonald’s has managed to 

continue signing franchise agreements even after it stopped including 

the provision in 2017 suggests that the no-hire provision was not 

necessary to encourage franchisees to sign.” Id. at 13. The District 

Court permitted the claim to proceed “under quick-look analysis” 

because “[e]ven a person with a rudimentary understanding of 

economics would understand” that the agreement could cause wages to 

“stagnate.” Id. at 14. 

4. Plaintiff Stephanie Turner brought a similar suit, alleging that 

she had worked at several McDonald’s locations and considered 

applying to positions at other locations. Compl., No. 1:19-cv-05524, 

Dkt. 1 ¶¶ 63-69. She allegedly declined to do so, however, after her 

supervisors informed her of the release requirement and led her to 

believe that any request for a release would be denied. Compl., 

No. 1:19-cv-05524, Dkt. 1 ¶¶ 66, 68-69. 

Both plaintiffs moved for class certification. Holding that full 

rule-of-reason analysis would apply, the District Court denied the 

6 
                                                            

motion partly because individual issues would predominate over 

common ones. July 28, 2021 Order, Dkt. 372 at 10-24. According to the 

District Court, quick-look analysis was no longer available to plaintiffs 

after NCAA v. Alston, 141 S. Ct. 2141 (2021). July 28, 2021 Order, 

Dkt. 372 at 10-11. 

5. Defendants moved for judgment on the pleadings or, 

alternatively, summary judgment.2 The District Court granted the 

motion for judgment on the pleadings, reiterating the view that neither 

the per se rule nor quick-look analysis applied. June 28, 2022 Order, 

Dkt. 453 at 8-9. The District Court held that plaintiffs had not alleged 

(and could not plausibly allege) facts supporting a full rule-of-reason 

claim and denied the summary-judgment motion as moot. Id. at 10-13. 

2 As Appellants correctly point out (Appellants’ Br. 56), the District 

Court was wrong to reject the United States’ request to file a statement 

of interest below. There was no “separation of power[s]” issue here, as 

the District Court believed. Congress has explicitly authorized the 

United States to express its views in Article III proceedings: 28 U.S.C. 

§ 517 allows “any officer of the Department of Justice” to “attend to the 

interests of the United States in a suit pending in a court of the 

United States.” Cf. Fed. R. App. P. 29(a)(2) (The “United States . . . may

file an amicus brief without the consent of the parties or leave of 

court.”). 

7 
ARGUMENT 

Section 1 of the Sherman Act bars every “contract,” “combination,” 

or “conspiracy” that unreasonably restrains trade. 15 U.S.C. § 1; FTC v. 

Ind. Fed’n of Dentists, 476 U.S. 447, 457 (1986). “Restraints can be 

unreasonable in one of two ways.” Ohio v. Am. Express Co., 138 S. Ct. 

2274, 2283 (2018). First, Congress condemned certain horizontal 

restraints—including market-allocation agreements—as per se 

unreasonable based on their inherently anticompetitive “nature and 

character.” Standard Oil Co. v. United States, 221 U.S. 1, 64-65 (1911); 

see Palmer v. BRG of Ga., Inc., 498 U.S. 46, 49-50 (1990); Catalano, Inc. 

v. Target Sales, Inc., 446 U.S. 643, 647 (1980). “The anticompetitive 

potential inherent in all” per se illegal agreements “justifies their facial 

invalidation even if procompetitive justifications are offered for some.” 

Arizona v. Maricopa Cnty. Med. Soc’y, 457 U.S. 332, 351 (1982). 

Second, “[r]estraints that are not unreasonable per se are judged under 

the ‘rule of reason,’” a “fact-specific assessment” of “the restraint’s 

actual effect on competition.” Am. Express, 138 S. Ct. at 2284 (internal 

quotation marks and brackets omitted). 

8 
If a court determines that the rule of reason applies, there is no 

one-size-fits-all analysis that automatically applies. The rule of reason 

is flexible, and it entails an “enquiry meet for the case.” Cal. Dental 

Ass’n v. FTC, 526 U.S. 756, 781 (1999). In some cases, a full rule-ofreason analysis is required, which can entail an analysis of the 

defendants’ market power. In other cases, however, the Supreme Court 

has recognized that “no elaborate industry analysis is required to 

demonstrate” a restraint’s “anticompetitive character” under the rule of 

reason because “an observer with even a rudimentary understanding of 

economics could conclude that the arrangements in question would have 

an anticompetitive effect.” Id. at 770 (citation omitted). The version of 

the rule of reason applied in these cases is called “abbreviated or ‘quicklook’ analysis.” Id. 

The Supreme Court has made clear that the Sherman Act protects 

workers and competition in labor markets. Alston, 141 S. Ct. at 2154-

60; Anderson v. Shipowners’ Ass’n of Pac. Coast, 272 U.S. 359, 363-64 

(1926). This protection promotes competition among employers for 

9 
                                                            

workers’ labor, contributing to higher wages and benefits.3 Fast-food 

workers stand especially to benefit from the Sherman Act’s enforcement 

in labor markets: As of May 2021, the Bureau of Labor Statistics 

classified nearly 3.1 million workers as “Fast Food and Counter 

Workers” and calculated their mean hourly wage as just $12.53 and 

their mean annual wage as $26,060. U.S. Bureau of Labor Statistics, 

Occupational Employment & Wage Statistics (last updated Mar. 31, 

2022), https://www.bls.gov/oes/current/oes353023.htm. 

Despite the Sherman Act’s role in protecting workers, the District 

Court misapplied the law in a way that would make it unduly difficult 

for McDonald’s restaurant workers to plead Section 1 claims against 

their employers. The proper analysis starts from the premise— 

applicable both within and outside the franchise context—that 

3 See, e.g., U.S. Dep’t of Treasury, The State of Labor Market 

Competition 1, 23-25 (Mar. 7, 2022), https://home.treasury.gov/system 

/files/136/State-of-Labor-Market-Competition-2022.pdf; Freyd v. Univ.

of Or., 990 F.3d 1211, 1224-25 (9th Cir. 2021) (citing evidence that, 

because female employees “receive[d] fewer competing” job offers, they 

were less likely to “enter[] into retention negotiations” with employers 

and received lower salaries). 

10 
horizontal employee-allocation agreements are per se unlawful unless 

defendants raise and establish the ancillary-restraints defense. 

An agreement is horizontal if it limits competition among parties 

to the agreement that are actual or potential competitors. If a 

franchisor and franchisee compete to hire workers from the same labor 

pool, an employee-allocation agreement between the franchisor and 

franchisee is horizontal. And if a franchisor orchestrates an employeeallocation agreement among franchisees that are actual or potential 

competitors for workers, that agreement is horizontal—even though the 

franchisor also participates in it. 

When an employee-allocation agreement is horizontal, defendants 

may avoid the per se rule by raising and establishing an ancillarity 

defense. To do so, defendants must show that the restraint is both 

(i) subordinate and collateral to a separate, legitimate collaboration 

among defendants, such as a joint venture, and (ii) reasonably 

necessary to achieving a procompetitive objective of the collaboration. If 

defendants satisfy both requirements, the rule of reason applies, and 

the court must next determine what version of the rule of reason 

(whether a full analysis or a more truncated analysis) would apply. 

11 
In this case, the District Court applied the correct legal framework 

to find that plaintiffs alleged a horizontal restraint. It subsequently 

erred in two independent ways. 

First, the District Court misapplied the ancillary-restraints 

doctrine. The court held at the Rule 12(b)(6) and 12(c) stages that the 

alleged restraint was ancillary to the McDonald’s franchise 

arrangement—despite recognizing that defendants likely could not 

make a reasonable-necessity showing. Forgoing that essential element 

erroneously lightened defendants’ burden and misapplied the law. 

Under a correct application of controlling law, if a defendant fails to 

establish that a horizontal employee-allocation agreement is an 

ancillary restraint (i.e., reasonably necessary to achieving a 

procompetitive objective of a separate, legitimate transaction or 

collaboration), the restraint is condemned under the per se rule. 

Second, the District Court independently erred in suggesting that 

Alston changed the applicable legal standards. The District Court 

relied on Alston to reject per se treatment of the employee-allocation 

agreement—independent of whether or not the agreement satisfied the 

ancillary-restraints doctrine. And after concluding that the agreement 

12 
satisfied the ancillary-restraints doctrine, the District Court’s Rule 12(c) 

decision walked back its own prior holding that a “quick look” version of 

the rule of reason applied to the McDonald’s franchise-agreement 

provision. It did so, in part, based on the belief that the Supreme 

Court’s intervening decision in Alston required that change in course. 

Both interpretations of Alston are wrong. Contrary to the District 

Court’s view, Alston effected no such change to the legal standards 

governing the per se rule and quick-look condemnation. 

I. THE DISTRICT COURT MISAPPLIED THE ANCILLARY-RESTRAINTS 

DOCTRINE 

If an employee-allocation agreement in the franchise setting is 

horizontal and defendants do not properly assert and establish a 

defense under the ancillary-restraints doctrine, the per se rule applies. 

Although the District Court correctly recognized that no-hire/nosolicitation provisions in franchise agreements may be horizontal, it 

erred in its subsequent analysis of whether the restrictions at issue are 

ancillary to the franchise agreement. Under a correct ancillaryrestraints analysis, whether the no-hire/no-solicitation provisions are 

ancillary to the franchise agreement turns on whether they are 

“reasonably necessary” to a procompetitive objective of the franchise 

13 
agreement. The District Court failed to account for this part of the 

governing test. 

A. The District Court Correctly Recognized that No-Hire/NoSolicitation Provisions in Franchise Agreements May Be 

Horizontal and, If So, Are Per Se Illegal Unless Defendants 

Establish Ancillarity 

The District Court correctly recognized that (1) employeeallocation agreements among franchisors and franchisees, including nohire and no-solicitation provisions in franchise agreements, may be 

horizontal under certain conditions and (2) horizontal employeeallocation agreements in the franchise setting are per se unlawful 

unless defendants establish ancillarity. 

1. No-Hire/No-Solicitation Provisions in Franchise 

Agreements Can Be Horizontal 

As the District Court explained, employee-allocation agreements 

among franchisors and franchisees, including no-hire and no-solicitation 

provisions in franchise agreements, can be horizontal under certain 

conditions. June 25, 2018 Order, Dkt. 53 at 10-11; June 28, 2022 Order, 

Dkt. 453 at 3, 9. Specifically, if a franchisor and franchisee actually or 

potentially compete for employees, a no-hire agreement between them is 

horizontal. So is a no-hire agreement among franchisees that actually 

14 
 

or potentially compete for employees, even if the agreement is 

orchestrated in whole or in part by a franchisor. 

1. “[H]orizontal restraints . . . eliminate some degree of rivalry 

between persons or firms who are actual or potential competitors.” 

Rothery Storage & Van Co. v. Atlas Van Lines, Inc., 792 F.2d 210, 229 

(D.C. Cir. 1986). If defendants and franchisees hire from the same 

labor pool, they are “actual or potential competitors” for employees, and 

an employee-allocation agreement among them “eliminate[s] some 

degree of rivalry.” See id. 

To the extent defendants’ corporate headquarters competes with 

franchisees for employees, an employee-allocation agreement among 

defendants and the competing franchisees is horizontal—even if the 

franchisees have not agreed among themselves to stop competing. 

Am. Compl., Dkt. 32 ¶ 83 (“But for the no-hire agreement, each 

McDonald’s franchise (and McDonald’s itself) would compete with each 

other for the best-performing employees.”); Compl., No. 1:19-cv-05524, 

Dkt. 1 ¶ 83 (same). Similarly, to the extent McOpCos compete with 

franchisees for employees, an employee-allocation agreement by which 

defendants and the competing franchisees agree to end this competition 

15 
is horizontal—even if the franchisees have not agreed among 

themselves to stop competing. Am. Compl., Dkt. 32 ¶ 83; Compl., 

No. 1:19-cv-05524, Dkt. 1 ¶ 83. The Eleventh Circuit illustrated this 

principle by holding that Burger King—which, like McDonald’s, both 

enters into franchise agreements and runs company-owned 

restaurants—“compete[s] . . . for employees” against “its separate and 

independent franchise restaurants.” Arrington v. Burger King 

Worldwide, Inc., 47 F.4th 1247, 1250 (11th Cir. 2022); see id. at 1253 

(similar). 

2. Even if defendant-franchisors do not actually or potentially 

compete with franchisees for employees, an employee-allocation 

agreement among defendant-franchisors and franchisees (including one 

that is contained in a franchise agreement) may still be horizontal. 

When a horizontal agreement is per se unreasonable, a verticallyrelated firm’s participation in the agreement does not alter the 

agreement’s horizontal character. As the Second Circuit explained, 

where a “vertical organizer has not only committed to vertical 

agreements, but has also agreed to participate in the horizontal 

conspiracy,” “the court need not consider whether the vertical 

16 
agreements restrained trade because all participants agreed to the 

horizontal restraint.” United States v. Apple, 791 F.3d 290, 325 (2d Cir. 

2015); see, e.g., United States v. Gen. Motors Corp., 384 U.S. 127, 132-

38, 140-41, 144-46 (1966) (vertically-related manufacturer enforced 

horizontal restraint agreed upon by distributors); Klor’s, Inc. v. 

Broadway-Hale Stores, Inc., 359 U.S. 207, 212-13 (1959) (conspiracy “of 

manufacturers, distributors and a retailer”); Interstate Circuit v. 

United States, 306 U.S. 208, 225-27 (1939) (conspiracy among 

competing film distributors and certain exhibitors); see also Palmer, 

498 U.S. at 47, 49-50 (treating agreement as horizontal where it both 

created vertical licensor-licensee relationship and divided market in 

which licensor and licensee could compete). 

This principle may apply in the franchise setting if, for example, a 

franchisor participates in a horizontal agreement among franchisees by 

inserting and enforcing no-hire clauses in franchise agreements at the 

franchisees’ behest. Cf. Butler v. Jimmy John’s Franchise, LLC, 331 

F. Supp. 3d 786, 795-96 (S.D. Ill. 2018) (corporate headquarters and 

franchisees were participants in “horizontal agreement,” in a “hub-andspoke” structure, where “franchisees tacitly agree[d] amongst each 

17 
other to enforce the no-hire provision” and “the franchise agreements 

g[a]ve the franchisees a contractual right to enforce the no-hire 

agreements directly against each other”). Alternatively, a franchisor 

might “induc[e]” franchisees that compete in the labor market to enter 

into a no-hire agreement, Toys “R” Us, Inc. v. FTC, 221 F.3d 928, 934-36 

(7th Cir. 2000), by providing “assurance” that all other franchisees will 

“abid[e] by the agreement and behav[e] in the same way,” Marion 

Healthcare, LLC v. Becton Dickinson & Co., 952 F.3d 832, 842 (7th Cir. 

2020). This franchisor-orchestrated agreement, too, would be 

horizontal. Toys “R” Us, 221 F.3d at 935-36. 

2. The Per Se Rule Applies to Horizontal EmployeeAllocation Agreements Unless Defendants Establish 

Ancillarity 

The District Court further correctly explained that no-hire and nosolicitation agreements among labor-market competitors in the context 

of a franchise are horizontal employee-allocation agreements and that 

such agreements are per se unlawful unless defendants establish 

ancillarity. 

Horizontal agreements among competitors to divide customers or 

territories, including agreements to refrain from soliciting each other’s 

18 
                                                            

 

customers, are per se illegal. Palmer, 498 U.S. at 49-50; United States 

v. Topco Assocs., 405 U.S. 596, 608-12 (1972); see United States v. Coop. 

Theatres of Ohio, Inc., 845 F.2d 1367, 1373 (6th Cir. 1988); 

United States v. Cadillac Overall Supply Co., 568 F.2d 1078, 1088 

(5th Cir. 1978). Although these cases involved agreements among 

sellers, the same principles apply—and the per se rule applies—to 

agreements among competing buyers of products or services. 

Mandeville Island Farms, Inc. v. Am. Crystal Sugar Co., 334 U.S. 219, 

236 (1948); Omnicare, Inc. v. UnitedHealth Grp., Inc., 629 F.3d 697, 705 

(7th Cir. 2011). And the antitrust laws apply to the buying of labor just 

as they apply to the buying of goods. Alston, 141 S. Ct. at 2154-60 

(applying Sherman Act to labor-market restraints); Anderson, 272 U.S. 

at 360-65 (same); Nichols v. Spencer Int’l Press, Inc., 371 F.2d 332, 335-

37 (7th Cir. 1967) (same).4 

For this reason, agreements among competing employers not to 

hire or solicit each other’s employees are per se unlawful unless 

4 See also Quinonez v. Nat’l Ass’n of Sec. Dealers, Inc., 540 F.2d 824, 

826, 828-29 (5th Cir. 1976) (same); cf. Roman v. Cessna Aircraft Co., 55 

F.3d 542, 543-45 (10th Cir. 1995) (finding antitrust injury based on nohire agreement). 

19 
 

                                                            

defendants establish ancillarity. In re Outpatient Med. Ctr. Emp. 

Antitrust Litig., No. 21-cv-00305, 2022 WL 4465929, at *10-11 (N.D. Ill. 

Sept. 26, 2022).5 That is because employee allocations inherently 

“eliminat[e] . . . competition” by limiting employers’ ability to compete 

for employees not allocated to them. See Blue Cross & Blue Shield 

United of Wis. v. Marshfield Clinic, 65 F.3d 1406, 1415 (7th Cir. 1995) 

(discussing territorial allocations). The allocated employees cannot 

benefit from competition that would result in better wages and working 

conditions. See Hammes v. AAMCO Transmissions, Inc., 33 F.3d 774, 

782 (7th Cir. 1994) (discussing customer allocations).6 

5 See also Markson v. CRST Int’l, Inc., No. 5:17-cv-01261-SB-SP, 2021 

WL 1156863, at *4 (C.D. Cal. Feb. 10, 2021); In re Ry. Indus. Emp. NoPoach Antitrust Litig., 395 F. Supp. 3d 464, 480-85 (W.D. Pa. 2019);

In re Animation Workers Antitrust Litig., 123 F. Supp. 3d 1175, 1211-

14 (N.D. Cal. 2015); United States v. eBay, Inc., 968 F. Supp. 2d 1030,

1038-39 (N.D. Cal. 2013); In re High-Tech Emp. Antitrust Litig., 856 

F. Supp. 2d 1103, 1110-12, 1122 (N.D. Cal. 2012); Aya Healthcare

Servs., Inc. v. AMN Healthcare, Inc., 9 F.4th 1102, 1110 n.4 (9th Cir.

2021) (without deciding the issue, finding “considerable merit” in 

argument “that the per se rule applies to naked non-solicitation

agreements”); In re Geisinger Health & Evangelical Cmty. Hosp.

Healthcare Workers Antitrust Litig., No. 4:21-CV-00196, 2021 WL 

5330783, at *2-4 (M.D. Pa. Nov. 16, 2021) (denying motion to dismiss 

per se claim based on “no-poach agreement”). 

6 Despite defendants’ citation of Nichols, 371 F.2d 332 (Motion to

Dismiss, Dkt. 35 at 1), the District Court correctly declined to rely on it. 

20 
                                                            

B. The District Court Erred in Failing to Require Defendants to 

Establish that the Challenged Restraint Is “Reasonably

Necessary” to Achieve a Procompetitive Objective of the 

Franchise Agreement 

If an employee-allocation agreement is horizontal, defendants can 

still avoid the per se rule’s application by establishing the ancillaryrestraints defense (i.e., establishing that the restraint is not naked). 

See Polk Bros. v. Forest City Enters., Inc., 776 F.2d 185, 188-89 

(7th Cir. 1985) (“distinguish[ing] between ‘naked’ . . . and ‘ancillary’ 

restraints”). Defendants bear the burden of establishing ancillarity. 

Blackburn v. Sweeney, 53 F.3d 825, 828-29 (7th Cir. 1995) (rejecting 

ancillarity defense that “seem[ed] plausible” “[a]t first blush” because, 

“[o]n closer scrutiny,” defendants’ evidence and arguments did not 

support it); see also Freeman v. San Diego Ass’n of Realtors, 322 F.3d 

1133, 1152 (9th Cir. 2003) (defendants’ ancillarity argument “fail[ed] to 

state a valid defense”); Bd. of Regents of Univ. of Okla. v. NCAA, 707 

Nichols’ statement that “[a]greements not to compete are tested by a

standard of reasonableness” is dicta because it is followed by: “We do 

not attempt to deal with questions of this type at this stage of the 

proceeding.” 371 F.2d at 337. Subsequent Supreme Court and Seventh 

Circuit decisions make clear that certain “[a]greements not to compete,” 

such as market-allocation agreements, are per se unlawful. See supra

at 18-20. 

21 
F.2d 1147, 1154 n.9 (10th Cir. 1983) (burden of “proving the 

effectiveness and necessity” of allegedly ancillary restraints rightly 

placed on defendant), aff’d, 468 U.S. 85 (1984). 

The District Court concluded as a matter of law that the nohire/no-solicitation provision was ancillary to the franchise 

arrangement and that the franchise arrangement was “output 

enhancing in the market for fast food.” June 28, 2022 Order, Dkt. 453 

at 9; see June 25, 2018 Order, Dkt. 53 at 13-14. In doing so, the District 

Court erred by failing to require that defendants establish a necessary 

requirement of the ancillarity test—namely, that the challenged nohire/no-solicitation provision was “reasonably necessary” to achieve a 

procompetitive objective of the franchise agreement as a whole. 

See June 25, 2018 Order, Dkt. 53 at 13-14; June 28, 2022 Order, 

Dkt. 453 at 9. 

To establish an ancillary-restraints defense, defendants must 

make two showings. First, they must demonstrate that the challenged 

restraint is (i) “subordinate and collateral,” Rothery Storage, 792 F.2d 

at 224, to a separate, “legitimate business collaboration” among 

defendants, Texaco Inc. v. Dagher, 547 U.S. 1, 7 (2006). This 

22 
requirement ensures that any restraint is “secondary,” Schering-Plough 

Corp. v. FTC, 402 F.3d 1056, 1073 (11th Cir. 2005), to an “economic 

integration” or “fusion” of “productive capacities” that achieves 

“procompetitive” results—paradigmatically, a joint venture, Rothery 

Storage, 792 F.2d at 214, 230. 

The mere fact that an employee-allocation agreement is 

“subordinate and collateral to a separate, legitimate” franchise 

arrangement, however, is not enough. Restraints are “not 

automatically deemed ancillary simply because [they] facilitate[] a 

procompetitive arrangement,” since “some determination must be made 

whether the challenged agreement is an essential part of this 

arrangement.” In re Ins. Brokerage Antitrust Litig., 618 F.3d 300, 345-

46 (3d Cir. 2010) (internal quotation marks omitted). Put another way, 

a “restraint does not qualify as ‘ancillary’ merely because it 

accompanies some other agreement that is itself lawful.” PHILLIP E. 

AREEDA & HERBERT HOVENKAMP, ANTITRUST LAW: AN ANALYSIS OF 

ANTITRUST PRINCIPLES AND THEIR APPLICATION (4th ed. 2022) ¶ 1908b. 

As Appellants correctly point out, “[o]therwise, any businessperson 

23 
 

could shield an anticompetitive restraint merely by placing it within a 

broader contract.” Appellants’ Br. 23. 

For this reason, the second, and essential, step of the analysis 

under the ancillary-restraints doctrine is determining whether the nohire and no-solicitation agreement is reasonably necessary to achieve a 

procompetitive objective of the franchise agreement. Blackburn, 53 

F.3d at 828; see also United States v. Addyston Pipe & Steel Co., 85 F. 

271, 281 (6th Cir. 1898) (adopting a “reasonably necessary” standard), 

aff’d in relevant part & modified in part, 175 U.S. 211 (1899); Aya, 

9 F.4th at 1109 (same); see Lektro-Vend Corp. v. Vendo Co., 660 F.2d 

255, 265 (7th Cir. 1981) (assessing whether covenant not to compete 

was “(1) ancillary to the main business purpose of a lawful contract, and 

(2) necessary to protect the covenantee’s legitimate property interests”). 

The reasonable-necessity requirement ensures that any restraint helps 

promote the collaboration’s success and is not overbroad. See 

Blackburn, 53 F.3d at 828-29. As this Court has stated, in applying this 

part of the test, the District Court must assess whether the restraints 

at issue “promote[d]” the “success” of the “larger endeavor.” Polk Bros., 

776 F.2d at 189; see also In re Sulfuric Acid Antitrust Litig., 

24 
                                                            

743 F. Supp. 2d 827, 878 (N.D. Ill. 2010) (citing Polk Bros. for the 

proposition that a restraint must be “reasonably necessary to achieve a 

legitimate joint venture’s efficiency-enhancing benefits”). For example, 

in Blackburn, this Court rejected an ancillarity defense partly on the 

ground that the challenged restraint had an “infinite duration,” which 

was not reasonably “necessary” for a partnership’s dissolution. 53 F.3d 

at 828-29.7 

The District Court did not undertake this analysis. Instead, it 

rested its conclusion on the fact that the franchise agreement was 

“output enhancing” (June 28, 2022 Order, Dkt. 453 at 9), without 

looking to whether the no-hire/no-solicitation provision was reasonably 

necessary to achieve the franchise agreement’s procompetitive 

objectives. In fact, the District Court suggested that the no-hire/no7 The Sixth Circuit mistakenly stated that this Court applies the 

ancillary-restraints doctrine even if a restraint is not “necessary to 

achieve [a] joint venture’s efficiency-enhancing purpose.” Med. Ctr. at 

Elizabeth Place, LLC v. Atrium Health Sys., 922 F.3d 713, 726 (6th Cir. 

2019). That assertion contravenes Blackburn (which the Sixth Circuit

did not cite) and Lektro-Vend, as well as Polk Brothers’ definition of 

“‘ancillary’ restraints” as “those that are part of a larger endeavor 

whose success they promote,” 776 F.2d at 189. Defendants 

acknowledged that Addyston Pipe and other cases use a reasonablenecessity standard. Reply in Support of Motion for Judgment on the 

Pleadings or Summary Judgment, Dkt. 415 at 6 n.2. 

25 
 

                                                            

solicitation provision was not reasonably necessary to increase output 

or achieve any other procompetitive objective of the franchise 

arrangement. The District Court underscored that “the very fact that 

McDonald’s has managed to continue signing franchise agreements 

even after it stopped including the provision in 2017 suggests that 

the . . . provision was not necessary to encourage franchisees to sign.” 

June 25, 2018 Order, Dkt. 53 at 13. The District Court further made 

clear that it was not “say[ing] that the [no-hire/no-solicitation] provision 

itself was output enhancing.” Id. By concluding that the alleged 

restraint was ancillary without determining that it was reasonably 

necessary—and suggesting that the restraint likely was not reasonably 

necessary—the District Court erred by failing to address a required 

element that defendants must establish under the ancillary-restraints 

doctrine. See eBay, 968 F. Supp. 2d at 1039 (declining, on Rule 12(b)(6) 

motion, to treat restraint as ancillary “simply because [defendant] 

posits that it is”).8 

8 To the extent that this Court finds the United States’ statement of 

interest in Stigar v. Dough Dough, Inc., No. 2:18-cv-00244 (E.D. Wash.

Mar. 8, 2019) (Doc. 34) (the “Stigar Statement”) to be relevant to this

case, the Stigar Statement no longer represents the views of the 

26 
This error is especially worrisome in a ruling on the pleadings. As 

this Court has explained, an affirmative defense in a civil case provides 

a basis for a Rule 12(b)(6) motion only in the “narrow” class of cases 

where plaintiff “has pleaded herself out of court”; similarly, such a 

defense provides a basis for a Rule 12(c) motion only where defendant 

has met “the burden of showing that the allegations of the complaint 

and an answer show[]” that the defense “conclusively defeat[ed]” 

plaintiff’s claims “as a matter of law.” Gunn v. Cont’l Cas. Co., 968 F.3d 

802, 806-07 (7th Cir. 2020). Simply alleging that a restraint is “part of 

a franchise agreement,” as plaintiffs did here, June 28, 2022 Order, 

United States, nor does it represent the Federal Trade Commission’s

views. The legal assertions in that statement also rest on factual 

assumptions that may not apply to this case. For example, while the

Stigar Statement expresses general views about the verticality of

employee-allocation agreements in the franchise context, assessing an 

agreement’s horizontality requires a fact-bound evaluation of whether 

the agreement limits rivalry between actual or potential competitors. 

Similarly, while the Stigar Statement suggests that employee-allocation

agreements are “likely” subject to the ancillary-restraints doctrine, that

statement relied on a view that the franchise agreement is a legitimate

business collaboration “under the same brand.” But franchisees’ 

competition for employees’ labor is not intrabrand, see infra at 28-30, 

and the fact that “McDonald’s franchises [may] coordinate the release of 

a new hamburger does not imply their ability to agree on wages for 

counter workers,” Chi. Pro. Sports Ltd. P’ship v. NBA, 95 F.3d 593, 600 

(7th Cir. 1996). 

27 
Dkt. 453 at 9; see June 25, 2018 Order, Dkt. 53 at 13-14, neither pleads 

the case out of court nor “conclusively” establishes the ancillarity 

defense because it says nothing about reasonable necessity. See Gunn, 

968 F.3d at 806-07. 

Instead of analyzing reasonable necessity, as required by this 

Court’s law, the District Court relied on analogies to support its 

conclusion. In particular, analogizing dual-distribution and franchise 

arrangements, the District Court appeared to believe that the alleged 

restraint was ancillary because it merely eliminated intrabrand 

competition while promoting interbrand competition. June 28, 2022 

Order, Dkt. 453 at 9 n.4. But while defendants and franchisees engage 

in intrabrand competition when they compete to sell food to customers, 

their competition to purchase employees’ labor is not properly 

characterized as intrabrand. As the Supreme Court has explained, 

“intrabrand competition is the competition between the distributors 

wholesale or retail of the product of a particular manufacturer.” Cont’l 

T. V., Inc. v. GTE Sylvania Inc., 433 U.S. 36, 52 n.19 (1977); see Leegin 

Creative Leather Prods., Inc. v. PSKS, Inc., 551 U.S. 877, 890 (2007) 

(defining “intrabrand competition” as “competition among retailers 

28 
selling the same brand”). Job opportunities are not a branded “product 

of a particular manufacturer,” and competition among franchisees to 

purchase employees’ labor is not competition over distribution of a 

manufacturer’s branded product. See GTE Sylvania, 433 U.S. at 52 

n.19. As the District Court seemed to recognize when denying 

defendants’ motion to dismiss, this competition is not “intrabrand” as 

the Supreme Court defines that term. June 25, 2018 Order, Dkt. 53 at 

15 (“In the employment market, the various McDonald’s stores are 

competing brands.”). 

The analogy between dual distributors and franchisees fails for 

the same reason: It conflates product and labor markets. Dual 

distributors are “firm[s] with both wholesale and retail operations”— 

firms that both supply and compete with their retail customers. Fleet 

Wholesale Supply Co. v. Remington Arms Co., 846 F.2d 1095, 1096 

(7th Cir. 1988). Defendants may be analogous to dual distributors in 

the product market because they both license the McDonald’s brand to 

franchisees and compete for sales under that brand through McOpCos. 

However, there is no distribution at all, let alone dual distribution, in 

the labor market. Defendants are purchasers, not distributors, of 

29 
employees’ services and, as the District Court once recognized, are best 

understood as franchisees’ “direct, horizontal, competitors” for 

employees, not as participants in a dual relationship with franchisees. 

June 25, 2018 Order, Dkt. 53 at 14-15. 

II. ALSTON DID NOT CHANGE THE LEGAL STANDARDS GOVERNING 

WHETHER THE PER SE RULE OR QUICK-LOOK CONDEMNATION 

APPLIES 

The District Court relied on Alston in two ways. First, it thought 

that Alston required the District Court—independent of its ancillaryrestraints holding—to reject per se treatment of the employee-allocation 

agreement. June 28, 2022 Order, Dkt. 453 at 9. Second, in its prior 

ruling on a motion to dismiss, the District Court had concluded that the 

employee-allocation agreement satisfied the ancillary-restraints 

doctrine, and was thus subject to the rule of reason, but could be 

condemned under the “quick look” version of that test. June 25, 2018 

Order, Dkt. 53 at 18. But in its Rule 12(c) opinion four years later, the 

District Court concluded that the Supreme Court’s intervening decision 

in Alston required it to change course, and reject this abbreviated 

version of the rule of reason in favor of the full analysis. June 28, 2022 

30 
Order, Dkt. 453 at 8-9. Both views of Alston are wrong. Alston does 

not support the District Court’s analysis. 

Alston affirmed the district court’s judgment—following a full 

rule-of-reason trial—that several NCAA rules limiting student-athlete 

compensation had severe anticompetitive effects and thus violated 

Section 1. 141 S. Ct. at 2151; see In re NCAA Athletic Grant-in-Aid 

Cap Antitrust Litig., 375 F. Supp. 3d 1058, 1070 (N.D. Cal. 2019). The 

Court rejected the NCAA’s argument that the lower courts should have 

upheld these rules after “a quick look.” Alston, 141 S. Ct. at 2155-57 

(internal quotation marks omitted). 

The District Court unduly emphasized Alston’s dicta that “we take 

special care not to deploy [the per se rule and quick-look condemnation] 

until we have amassed ‘considerable experience with the type of 

restraint at issue’ and ‘can predict with confidence that it would be 

invalidated in all or almost all instances.’” Id. at 2156 (quoting Leegin, 

551 U.S. at 886-87). Nothing about Alston’s passing reference to the 

per se rule and quick-look condemnation, however, changed the legal 

standards governing when a restraint is per se unlawful or can be 

condemned after a quick look. Neither per se illegality nor quick-look 

31 
 

                                                            

condemnation (as opposed to quick-look approval) was at issue in 

Alston, and the Court “confined” its review to the NCAA’s objections to 

the lower courts’ rulings. Id. at 2154 (“Our review is confined to those 

restrictions now enjoined.”); id. at 2154-55 (“we focus only on the 

objections the NCAA does raise”).9 

1. While Alston referenced the Board of Regents precedent that 

declined to apply the per se rule to NCAA restraints, Alston noted that 

those restraints were exempt from per se scrutiny “only because they 

arose in ‘an industry’”—sports leagues—“in which some ‘horizontal 

restraints on competition are essential if the product is to be available 

at all.’” 141 S. Ct. at 2157 (quoting Bd. of Regents, 468 U.S. at 101-

02). This case differs materially because “horizontal restraints on 

9 The student-athletes never sought abbreviated examination of the 

challenged restraints. Consistent with controlling circuit precedent, the 

district court applied the full rule of reason. NCAA Athletic Grant-inAid Cap, 375 F. Supp. 3d at 1061 (citing O’Bannon v. NCAA, 802 F.3d 

1049, 1069 (9th Cir. 2015)). Because the district court’s finding of 

“severe anticompetitive effects,” id. at 1070, was never challenged on

appeal, the student-athletes—having won under full rule-of-reason 

analysis—had no need to seek examination under the per se rule or 

quick-look analysis in either the Ninth Circuit or the Supreme Court. 

See Alston, 141 S. Ct. at 2154 (“No one questions . . . that price and 

quantity are both suppressed.”). 

32 
 

competition” are not “essential” for restaurants to employ workers or for 

labor markets to function. See Alston, 141 S. Ct. at 2157; see also 

United States v. Manahe, No. 2:22-cr-00013-JAW, 2022 WL 3161781, at 

*7 (D. Me. Aug. 8, 2022) (“The Court interprets Alston . . . in the context 

of the unique line of athletic league-related antitrust caselaw.”). 

Moreover, to the extent the District Court understood Alston to 

support the view that the District Court lacked enough experience with 

the challenged restraint to apply the per se rule, that conclusion was 

erroneous. Alston did not change the longstanding principle that 

judicial experience with a restraint is relevant only when courts 

consider whether to apply “a new per se rule”; judicial experience with a 

restraint is not relevant, however, when courts apply an existing per se 

rule. Maricopa Cnty., 457 U.S. at 349 & n.19. This case either involves 

a horizontal, naked employee-allocation agreement, in which case a 

well-established per se rule applies, see supra Part I.A, or not, in which 

case some form of the rule of reason applies. In either case, there will 

33 
be no new per se rule, and judicial experience with the restraint is thus 

irrelevant.10 

2. Nor did Alston change the standards governing quick-look 

condemnation. While the District Court thought that Alston “clarified 

when quick-look analysis applies” (July 28, 2021 Order, Dkt. 372 at 10), 

Alston never departed from the principle, articulated in California 

Dental Ass’n v. FTC, 526 U.S. at 770, that “‘quick-look’ analysis” 

governs when “an observer with even a rudimentary understanding of 

economics could conclude that the arrangements in question would have 

an anticompetitive effect.” Alston favorably cited California Dental 

multiple times, including the portion of California Dental that contains 

the above language. 141 S. Ct. at 2156, 2160, 2163. Alston also 

favorably cited part of another opinion stating that “we have applied 

the quick look doctrine to business activities that are so plainly 

anticompetitive that courts need undertake only a cursory examination 

before imposing anti-trust liability.” Id. at 2156 (citing Dagher, 547 

10 The District Court also erred by focusing on its experience with the

challenged restraint. The relevant reference point when applying a new 

per se rule is the judiciary’s experience as a whole, Maricopa Cnty., 457 

U.S. at 349 n.19, not the judge’s individual experience. 

34 
U.S. at 7 n.3, in turn citing Cal. Dental, 526 U.S. at 770); Agnew v. 

NCAA, 683 F.3d 328, 336 (7th Cir. 2012) (“quick-look” version of the 

rule of reason applies when “the per se framework is inappropriate,” but 

“‘no elaborate industry analysis is required to demonstrate’” an 

agreement’s “anticompetitive character”). 

3. Ultimately, Alston has no bearing on which legal standard 

applies here: If the alleged employee-allocation agreement is horizontal 

and the defendant fails to establish that it is ancillary, the per se rule 

applies. See supra Part I.A. If the alleged employee-allocation 

agreement is horizontal and the defendant establishes that it is 

ancillary, some version of the rule of reason applies. See Polk Bros., 

776 F.2d at 189; cf. Dagher, 547 U.S. at 7 (citing Board of Regents as 

case that applied ancillary-restraints doctrine). And if the alleged 

employee-allocation agreement is vertical, the rule of reason applies. 

See Am. Express, 138 S. Ct. at 2284. Alston says nothing to the 

contrary. If anything, Alston’s affirmance of an injunction against 

labor-market restraints confirms what was already evident: The 

Sherman Act protects workers to the same extent it protects other 

economic actors. See 141 S. Ct. at 2167-68 (Kavanaugh, J., concurring) 

35 
(“Price-fixing labor is price-fixing labor. And price-fixing labor is 

ordinarily a textbook antitrust problem . . . .”). 

CONCLUSION 

This Court should hold that the District Court erred in two ways: 

First, by failing to assess, as part of the ancillary-restraints analysis, 

whether Defendants established that the challenged restraint was 

reasonably necessary to a procompetitive objective of a separate, 

legitimate collaboration and, second, by holding that Alston changed 

the legal standards governing the per se rule and quick-look 

condemnation. 

36 
ANISHA S. DASGUPTA 

General Counsel 

J OEL MARCUS 

Deputy Gen eral Counsel 

MATTHEW M. H OFFMAN 

Counsel 

Feder al Trade Commission 

600 Pennsylvan ia Ave., NW 

Washington , D.C. 20580 

Respectfully submitted, 

IslPeter M Bozzo 

J ONATHAN S. KANTER 

AssistantAttorney General 

DoHA MEKKI 

Principal DeputyAssistant 

Attorney General 

MAGGIE GOODLANDER 

DeputyAssistan t Attorney 

General 

D AVID B. LAWREN CE 

Policy Director 

J ACOBUS VAN DER VEN 

AttorneyAdvisor 

D ANIELE. HAAR 

NICKOLAI G. LEVIN 

P ETER M. Bozzo 

Attorneys 

U.S. DEPARTMENT OF J USTICE 

ANTITRUST D IVISION 

950 Pennsylvania Ave., N.W. 

Room 3224 

Washington , D.C. 20530-0001 

(202) 803-1196 

peter.bozzo@u sdoj.gov 

Counsel for the United States and the Federal Trade Commission 

November 9, 2022 

37 
CERTIFICATE OF COMPLIANCE 

1. This amicus curiae brief complies with th e type-volume limit 

of Circuit Rule 29 becau se, excluding the parts exempted by Fed. R. App. 

P. 32(f), the brief contains 6,925 words. 

2. This brief complies with th e typeface requirements of Fed. R. 

App. P . 32(a)(5) an d th e type-style r equirements of Fed. R. App. 

P. 32(a)(6) becau se th e brief h as been pr epar ed in Microsoft Word 2019, 

using 14-point New Century Sch oolbook font, a proportion ally spaced 

typeface. 

Isl Peter M Bozzo 

Peter M. Bozzo 

Counsel for the United States 

38 
 

CERTIFICATE OF SERVICE 

I certify that on November 9, 2022, I caused the foregoing to be filed 

through this Court’s CM/ECF system, which will serve a notice of 

electronic filing on all registered users. 

/s/ Peter M. Bozzo

Peter M. Bozzo 

Counsel for the United States 

39