Thursday, April 9, 2015

Streisand Effect Bedamned: Jimmy John's "Prevails" In Class Action Non-Compete Dispute

Quite possibly because my 3-year old loves Jimmy John's sandwiches, I have a profound affinity for the place. It's a minimum once-per-week destination. Plus, I went to law school in Champaign, Illinois, where Jimmy John's is somewhat of a revered institution.

Even I have to admit that I was a bit discouraged by reading the negative publicity surrounding Jimmy John's standard "Confidentiality and Non-Competition Agreement." It appears to apply to your average sandwich-maker and prevent him from jumping ship to Subway (but not Chipotle!). The mind reels at the thought of a stoned 19-year old testifying on the stand about the proprietary nature of applying roast beef between lettuce and mayo.

But the lawsuit - which sought a declaratory judgment that the non-compete was invalid - seemed doomed from the start. And yesterday, Judge Charles Kocoras dismissed the putative class action in Brunner v. Jimmy John's LLC, 2015 U.S. Dist. LEXIS 46018 (N.D. Ill. Apr. 8, 2015). The rationale was lack of standing, a somewhat formal legalist concept that the plaintiffs did not present enough of a concrete case to have a court decide.

In other words, the mere existence of the agreement was not enough to create a controversy that a court is capable of deciding. The putative class plaintiffs alleged - and I believe them - that they didn't really know what the non-compete meant or how Jimmy John's might apply or enforce it. This, by itself, did not create enough of an apprehension that a lawsuit was imminent. Put another way, the dispute was too hypothetical.

Jimmy John's also offered, sensibly in my view, affidavit testimony that revealed an intent not to enforce the non-compete against the putative class plaintiffs in the future. This, alone, may not be enough to demonstrate the lack of a case or controversy, but it sure helped Jimmy John's here.

(As an aside, the standing rules in federal court are a bit more stringent than in many state courts. Having had first-hand experience dealing with this, it's pretty clear that any type of a non-compete declaratory judgment case in federal court runs the possibility of being dismissed for lack of standing.)

Despite the win, this all feels like somewhat of a loss. The publicity on The Huffington Post and elsewhere surrounding the corporate mandate certainly damaged Jimmy John's and created a storm of negative publicity. just removed its non-compete for hourly workers, a tactic which resembles Jimmy John's representation that it won't enforce the agreement.

This whole affair reminds me of the Streisand Effect, although the analogy is imperfect. The thinking is that the attempt to remove information can have the effect of promoting it. This unintended consequence often appears in defamation cases, where a plaintiff attacks a disparaging comment only to put his reputation on trial.

The lawsuits and publicity surrounding the Jimmy John's and non-compete work a bit in reverse, but the concept is the same. Even a win may be a defeat.

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