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Yi v. SK Bakeries, LLC

United States District Court for the Western District of Washington

November 13, 2018, Decided; November 13, 2018, Filed

CASE NO. 18-5627 RJB

Opinion

ORDER DENYING DEFENDANTS' MOTION TO DISMISS

This matter comes before the Court on Defendant Cinnabon Franchisor SPV LLC's ("Cinnabon" or "franchisor") Motion to Dismiss Pursuant to Rule 12 (b)(6) (Dkt. 25) and Defendant SK Bakeries, LLC's ("SK" [*2]  or "franchisee") Notice of Joinder in Cinnabon's Motion to Dismiss (Dkt. 26). The Court has considered the pleadings filed in support of and in opposition to the motion and the file herein.

The Plaintiff, a former SK employee, brings this putative class action, alleging that the Defendants violated the Sherman Act, 15 U.S.C. § 1, et. seq., and the Washington state law analog, The Unfair Business Practices Act, RCW 19.86, et. seq., by entering into an "unlawful agreement, combination and conspiracy" in an unreasonable restraint of trade by agreeing "to restrict competition for [Plaintiff's] services through a non-solicitation . . . and no-hire agreement." Dkt. 1.

The Defendants now move to dismiss the complaint, alleging that Plaintiff has failed to plead sufficient facts which would entitle her to the relief she seeks. Dkts. 25 and 26. For the reasons provided below, Defendants' motion to dismiss (Dkts. 25 and 26) should be denied.

I. BACKGROUND FACTS

The Complaint alleges that Defendant Cinnabon uses franchise agreements to sell franchise licenses to other companies which allow those other companies to own and operate Cinnabon bakeries. Dkt. 1, at 4. Cinnabon bakeries sell cinnamon rolls and pastries which are handmade by employees [*3]  at the individual stores. Id., at 7. The franchise agreements permit the use of Cinnabon trademarks, signage, and proprietary ingredients and products. There are around 24 Cinnabon bakeries in Washington state. Id.

The Complaint asserts that until 12 July 2018, Defendant Cinnabon's franchise agreement included a provision that the franchisee agreed that it would "not employ or seek to employ an employee of [Cinnabon], of another franchisee, or attempt to induce such employee to cease his/her employment without prior written consent of such employee's employer." Dkt. 1, at 4-5. (After 12 July 2018, Cinnabon no longer included this provision in its franchise agreements. The damages in this case arise from the time this provision was in place.) This no-hire and non-solicitation provision is alleged to be in Defendant Cinnabon's agreement with Defendant SK and in Cinnabon's agreements with the Doe Defendants. Id.

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2018 U.S. Dist. LEXIS 220966 *; 2018 WL 8918587

KYLA YI, individually and on behalf of all others similarly situated, Plaintiff, v. SK BAKERIES, LLC, a Washington Limited Liability Company, CINNABON FRANCHISOR SPV, LLC, a Delaware Limited Liability Company, and DOES 1 through 10, inclusive, Defendants.

CORE TERMS

franchisee, entities, anticompetitive, conspiracy, quotation, franchisor, franchise, hire, non-solicitation, horizontal