Another loss for McDonalds.
Another loss for McDonald’s. VYTAUTAS KIELAITIS/Shutterstock

The Ninth Circuit Court of Appeals ruled today that Seattle’s minimum wage law can go forward, agreeing with a judge’s decision from back in March that denied the International Franchise Association‘s request to stop the law from taking effect.

The IFA has argued that Seattle’s minimum wage discriminates against franchise businesses because they must start paying a higher minimum wage more quickly than non-franchise small businesses. Their claim argued that the city was taking two business models that are effectively the same—a locally owned franchise like a Subway restaurant and a locally owned non-franchise sandwich place—and treating them differently. Since franchises are often based out of state, the IFA claimed that distinction violated the Commerce Clause. More about those arguments right here.

Here’s today’s full court decision.

Worker advocates are declaring victory:

And the IFA “expressed disappointment” in a statement today.

While it’s not yet clear whether the IFA will appeal to the Supreme Court, there was this cryptic line in the group’s statement, courtesy of Executive Vice President of Government Relations and Public Policy Robert Cresanti: “The absence of controlling Supreme Court precedent, and the conflict among the decisions of the federal circuit courts, suggests that Supreme Court review of the Ninth Circuit’s decision may be appropriate.”

Here’s the IFA’s full statement:

The International Franchise Association, the world’s largest organization representing franchise owners, expressed disappointment following the decision by the Ninth Circuit Court of Appeals today to uphold the city of Seattle’s 2014 minimum wage law which purposefully discriminates against small franchised businesses.

IFA and five Seattle franchisees sued Seattle in June 2014, seeking to block portions of the city’s new law to increase the city’s minimum wage to $15 an hour. The plaintiffs asked the court to enjoin the city from treating franchisees as large, national companies rather than the small, locally-owned businesses that they are.

“Today’s decision is clearly a disappointment as the ordinance is blatantly discriminatory and affirmatively harms Seattle hard-working franchise small business owners every day since it has gone into effect,” stated IFA’s Executive Vice President of Government Relations & Public Policy Robert Cresanti. Cresanti added that in its decision, the Ninth Circuit Court acknowledged that a different federal circuit court, the Eleventh Circuit Court of Appeals, has struck down restrictions on franchises as unconstitutional under the Commerce Clause. “The absence of controlling Supreme Court precedent, and the conflict among the decisions of the federal circuit courts, suggests that Supreme Court review of the Ninth Circuit’s decision may be appropriate.”

Seattle’s new law, which went into effect April 1, requires large businesses; defined as those with more than 500 employees, to raise the minimum wage they pay their employees to $15 an hour over three years starting in April 2015. Smaller businesses will have seven years to phase in the wage increase.

The IFA lawsuit argued that the Seattle ordinance defied years of legal precedent clearly defining a franchisee as an independent local business owner who operates separately from its franchisor, which provides brand and marketing materials. IFA also contended that this categorization violated the Equal Protection Clause of the U.S. Constitution, as well as Washington State’s Constitution.

Cresanti said IFA is still reviewing the opinion to evaluate the next steps in the appeal. To view the full opinion, click here.

UPDATE: The mayor and city attorney just sent out this statement:

The International Franchise Association’s second bid for a preliminary injunction to halt implementation of Seattle’s graduated $15-an-hour minimum wage has failed.

In a unanimous decision issued today, a three-judge panel of the 9th U.S. Circuit Court of Appeals reasoned that U.S. District Judge Richard A. Jones was correct in denying the injunction.

The opinion, authored by Judge Michael Daly Hawkins, stated that the International Franchise Association “did not raise serious questions going to the merits on any of its claims, nor did it show that an injunction is in the public interest.”

Further, Judge Hawkins wrote: “While the record contains some evidence that City officials and advocates questioned the merits of the franchise business model, the district court did not clearly err in determining that the City Council was not motivated by an intent to discriminate against out-of-state firms or interstate commerce. The text shows the City had a legitimate, non-discriminatory purpose.”

“The City is heartened by the thorough and swift ruling upholding Judge Jones,” City Attorney Pete Holmes said.

“Today’s unanimous decision is a victory for Seattle’s workers,” Mayor Ed Murray said. “This year, we’ve shown that higher wages benefit workers, their families and the local economy. This decision clears the way for Seattle’s next raise to go into effect on Jan. 1.”

Heidi Groover is a staff writer at The Stranger.