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Robinson v. Jackson Hewitt, Inc.

United States District Court for the District of New Jersey

October 31, 2019, Decided; October 31, 2019, Filed

Case No: 19-9066 (SDW) (LDW)

Opinion

WIGENTON, District Judge.

Before this Court are Defendants Jackson Hewitt, Inc. ("JHI") and Tax Services of America, Inc.'s ("TSA") (collectively, "Defendants") Motion to Dismiss Plaintiffs Jessica Robinson ("Robinson"), Stacey Jennings ("Jennings"), and Nicole Gibson's ("Gibson") (collectively, "Plaintiffs") Second Consolidated Class Action Complaint ("SAC") pursuant to Federal Rule of Civil Procedure ("Rule") 12(b)(6). Jurisdiction is proper pursuant to 28 U.S.C. §§ 1331 and 1337. Venue is proper pursuant to 28 U.S.C. § 1391(b). This opinion is issued without oral argument pursuant to Rule 78. For the reasons stated below, Defendants' motion is GRANTED in part, and DENIED in part.

I. BACKGROUND AND PROCEDURAL HISTORY

Defendants JHI and TSA, doing business as "Jackson Hewitt," comprise "the second largest full-service tax preparation business in the United States with franchised and company-owned office locations through the country." (SAC ¶ 29, ECF [*2]  No. 61.) TSA is Jackson Hewitt's largest franchisee, running "approximately 20% of the locations operating under the name 'Jackson Hewitt,' while the rest of the locations are run by non-owned franchisees." (Id. ¶ 32.) Franchisees "operate on standardized terms pursuant to a common franchise license agreement" ("Franchise Agreement"). (Id. ¶ 42.) According to the Franchise Agreement, franchisees "acknowledge that [they] are . . . independent contractor[s] and that no principal-agent, partnership, employment, joint venture or fiduciary relation exists" between them and Jackson Hewitt. (Id. ¶ 45; see also id. ¶ 49) Furthermore, franchisees are required to "hold themselves out as 'independently owned and operated[,]'" and they are expressly notified that they "may face competition from other franchisees, from outlets that [Jackson Hewitt] own[s], or from other channels of distribution or competitive brands that [Jackson Hewitt] controls." (Id. ¶¶ 45, 47.)

Plaintiffs bring this putative class action on behalf of themselves and "individuals who work or have worked for Jackson Hewitt" and its franchise locations.1 (Id. ¶ 1.) They allege that from at least September 1, 2011 to at least December [*3]  20, 2018, Defendants "engaged in a conspiracy to not compete for employees" by expressly agreeing "not to solicit, recruit, or hire" each other's personnel without prior approval. (Id. ¶ 4; see also id. ¶¶ 52-55.) During the relevant time period, the Franchise Agreement included a "Covenant Against Recruiting or Hiring Our Employees," referred to as the so-called "No-Poach Clause" (or "Hiring Limitation"), which states:

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2019 U.S. Dist. LEXIS 188962 *; 2019-2 Trade Cas. (CCH) P80,987; 2019 WL 5617512

JESSICA ROBINSON, STACEY JENNINGS, and NICOLE GIBSON, individually and on behalf of all others similarly situated, Plaintiffs, v. JACKSON HEWITT, INC., and TAX SERVICES OF AMERICA, INC., Defendants.

Notice: NOT FOR PUBLICATION

Prior History: Robinson v. Jackson Hewitt, Inc., 2019 U.S. Dist. LEXIS 27304 (E.D. Va., Feb. 20, 2019)

CORE TERMS

franchisees, conspiracy, concealment, fraudulent, Franchise, injunctive, hiring, Antitrust