Antitrust Law Daily Duke, UNC medical faculty certified as class to sue Duke over schools’ alleged no-hire pact
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Friday, February 2, 2018

Duke, UNC medical faculty certified as class to sue Duke over schools’ alleged no-hire pact

By E. Darius Sturmer, J.D.

A radiology professor at Duke University School of Medicine was entitled to certification of a class consisting of all faculty members at the Duke and University of North Carolina Schools of Medicine, for purposes of her claims that the schools violated federal antitrust law through a mutual no-hire agreement. The federal district court in Charlotte ruled that the plaintiff met each of the class certification standards enumerated in Federal Rule of Civil Procedure 23(a) and Rule 23(b)(3) for faculty members. However, as inclusion of non-faculty in the class "would inject issues that [could] not be resolved based on the proof for the faculty case" and other significant problems in adjudication, the radiologist’s motion for certification of a class of "faculty, physicians, nurses, and skilled medical staff" was granted in part and denied in part (Seaman v. Duke University, February 1, 2018, Eagles, C.).

The plaintiff initially filed the lawsuit against both universities and various affiliated entities and individuals in 2015, centered upon allegations that executives of Duke University Health Systems (DUHS) had entered into an express agreement with the University of North Carolina Health Care System (UNC Health) to not permit lateral movement of certain skilled medical employees between the schools. The only exception the pact allowed was for faculty who received a promotion as part of their hiring, according to the radiologist’s complaint. She further asserted that the defendants entered into the express agreement with the knowledge and intent of reducing employee compensation and mobility by eliminating competition for skilled labor.

The radiologist brought claims for violation of the Sherman Act and the North Carolina Unfair and Deceptive Trade Practices Act. She sought injunctive relief from the UNC defendants and injunctive relief and monetary damages from the Duke defendants. The court approved a settlement between the radiologist and the UNC defendants in January 2018, leaving as defendants only Duke University, DUHS, and various named and unnamed individuals associated with the medical school.

Common questions. The court found that the issue of whether the defendants entered into a no-hire agreement amounting to an antitrust violation was a common question that would be addressed with common proof for all proposed class members. Additionally, common evidence could be used by the plaintiff to demonstrate that the pact had an antitrust impact on faculty compensation, namely by preventing preemptive compensation increases that would otherwise have been needed to ensure employee retention and through individual faculty compensation suppression that spread to all faculty by means of the defendants’ internal equity structures of salary ceilings and department-wide compensation adjustment. The plaintiffs’ proposed method for calculating faculty damages also presented common questions for faculty and would be based on proof common to the faculty.

The plaintiffs’ theories of antitrust impact and damages for non-faculty, however, did not revolve around a common question or common proof. The complaint did not seriously contend that the no-hire agreement applied to non-faculty, the court noted. While the plaintiff presented a common question in her assertion that the agreement resulted in a suppression of faculty compensation that spread to all non-faculty through the defendants’ internal equity structures, and her evidence of antitrust impact for non-faculty based on the generalized compensation suppression theory was common to all non-faculty and could be addressed with common proof, she offered no expert analysis specific to the theory that would indicate class-wide impact. Thus the theory of impact did not present a common question or common proof for non-faculty. She also offered no damages evidence in support of her "lateral move with a team" theory for non-faculty.

Predominance, superiority. Whereas common questions would predominate with individualized issues with respect to faculty, the same was not true for non-faculty, the court explained. There was no indication that the plaintiff’s proof for a faculty class was susceptible to individualized inquiry, the court observed. Class action was the superior method of adjudicating the faculty class member claims because the individual damages were insufficient to warrant individual litigation, there were no related cases pending, the forum was convenient, and a unitary adjudication would be more efficient than individual adjudications, the court stated.

However, the inclusion of non-faculty members in the class was "likely to cause significant confusion," the court said, observing that disputes had already arisen over whether certain witness testimony was referencing faculty, non-faculty, or both. Moreover, numerous other problems—different evidence, the potential for unfairness at trial, and the possibility of individual issues—would make it very difficult to manage such a class.

The case is No. 1-15-CV-462.

Attorneys: Robert M. Elliot (Elliot Morgan Parsonage, PA) for Danielle Seaman. Derek Ludwin (Covington & Burling, LLP) and Kelly Margolis Dagger (Ellis & Winters, LLP) for Duke University and Duke University Health System, Inc.

Companies: Duke University; Duke University Health System, Inc.

MainStory: TopStory Antitrust NorthCarolinaNews

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