March 16, 2026|Franchise Frontlines
March 16, 2026 | U.S. District Court, N.D. Illinois | Unpublished Order
Executive Summary
In an unpublished decision, the U.S. District Court for the Northern District of Illinois granted a protective order and quashed third-party subpoenas in an FMLA action against JSN Network, Inc. and a related franchise entity, rejecting an expansive discovery effort aimed at proving a “single employer” theory across multiple Dunkin’ franchise locations. The plaintiff argued that the defendants structured dozens of franchise entities to evade federal employment law thresholds. Defendants countered that the requested discovery was irrelevant and unduly burdensome. The court agreed with defendants, concluding that the plaintiff failed to demonstrate that the subpoenas would yield evidence supporting intentional corporate structuring to avoid liability. The decision underscores the limits of discovery in joint employer and aggregation theories, particularly in franchise systems involving multiple independently organized entities.
Relevant Background
The plaintiff brought claims under the Family and Medical Leave Act, alleging interference and retaliation. A central issue in the case was whether the defendants met the statutory employee threshold required for FMLA coverage. The plaintiff sought to aggregate employees across more than 50 Dunkin’ franchise locations allegedly “controlled” by JSN Network, asserting that the entities functioned as a single employer.
To support this theory, the plaintiff pursued broad third-party discovery through subpoenas directed to non-parties, including a franchisor-affiliated field representative, a human-resources vendor, an accounting firm, and a university. The subpoenas sought documents and testimony concerning operational relationships, hiring practices, financial arrangements, and corporate structure.
Defendants moved to quash the subpoenas or, alternatively, for a protective order, arguing that the discovery was not relevant to the plaintiff’s theory and imposed undue burden on third parties. They also emphasized that the plaintiff had not exhausted discovery directed to the defendants themselves before seeking information from non-parties.
Decision
The court granted the protective order and quashed the subpoenas, finding that the plaintiff failed to establish that the requested discovery was relevant to proving a single employer theory.
The court relied on Seventh Circuit authority recognizing that corporate entities may be aggregated in limited circumstances, such as when an enterprise deliberately divides itself into smaller entities to evade federal employment laws. However, the court emphasized that this theory requires evidence of purposeful structuring designed to avoid statutory obligations—not merely operational overlap or coordination.
Applying that standard, the court concluded that the plaintiff’s discovery requests did not target evidence capable of proving intentional fragmentation. The subpoenas sought information about routine operational matters, such as hiring practices, vendor relationships, and financial interactions among entities. The court found that such evidence—even if it showed coordination or shared services—would not establish that the entities were created or maintained for the purpose of evading employment law requirements .
The court also noted that evidence of centralized services, shared vendors, or operational control does not, standing alone, demonstrate improper corporate structuring. Instead, the relevant inquiry focuses on the purpose behind the organizational structure. Without a showing that the entities were intentionally divided to avoid liability, the discovery sought by the plaintiff amounted to an impermissible fishing expedition.
In addition, the court found that the plaintiff failed to pursue available discovery directly from the defendants before issuing subpoenas to third parties. The record reflected that the plaintiff had served overlapping requests on the defendants but had not meaningfully challenged the defendants’ responses or engaged in a good-faith effort to resolve those disputes before seeking non-party discovery.
Finally, the court expressed concern with the plaintiff’s counsel’s conduct in issuing the subpoenas without adequate meet-and-confer efforts, particularly after receiving detailed objections from defense counsel. The court ordered counsel to show cause why fees and costs should not be awarded in connection with the motion.
Looking Forward
This decision highlights the evidentiary limits of single employer and aggregation theories in multi-entity business structures. Courts continue to require a specific showing that separate entities were deliberately structured to evade statutory obligations, rather than inferring such intent from routine operational coordination or shared services.
The ruling is particularly relevant to franchise systems and other multi-unit operations, where separate entities may share vendors, policies, or administrative functions. The presence of centralized support or oversight does not, by itself, establish that multiple entities should be treated as a single employer for purposes of federal employment statutes.
The decision also underscores the importance of disciplined discovery practice. Courts are likely to scrutinize efforts to obtain broad third-party discovery where a party has not first pursued targeted discovery from the opposing party or established a factual basis for its theory. Absent such a foundation, discovery requests may be viewed as disproportionate and unduly burdensome.
At the same time, the opinion reflects a fact-specific application of existing principles rather than a categorical limitation on aggregation theories. Where a plaintiff can present evidence suggesting intentional structuring to avoid liability, broader discovery may be warranted. But without that threshold showing, courts may limit discovery to prevent unnecessary burden on parties and non-parties alike.
This article is based solely on the opinion of the Court in this matter. The author has not conducted any independent investigation into the facts. For the avoidance of doubt, each statement related to the law and facts in this article is drawn from the Court’s opinion in this case.
Thomas O’Connell is a Partner at Buchalter LLP and Chair of the firm’s Franchise Practice Group. For questions about this article or media inquiries, you can contact Tom at toconnell@buchalter.com.
This communication is not intended to create, and does not create, an attorney-client relationship or any other legal relationship. No statement herein constitutes legal advice, nor should it be relied upon or interpreted as such. This communication is for general informational purposes only and is not a substitute for legal counsel. Readers should not act or refrain from acting based on any information provided without seeking appropriate legal advice specific to their situation. For more information, visit www.buchalter.com.
