Antitrust Law Daily Duke University’s $54.5M settlement in alleged no-hire pact suit approved
Thursday, September 26, 2019

Duke University’s $54.5M settlement in alleged no-hire pact suit approved

By Stephanie K. Mann, J.D.

As part of the settlement, the court awarded $18.167 million in attorney fees, a $3.3 million reimbursement for expenses, and a $125,000 service award for the class representative.

The federal district court in Greensboro, North Caorlina, approved a settlement resolving a class action lawsuit accusing Duke University’s medical school and several related entities of violating federal antitrust law through a mutual no-hire agreement with the University of North Carolina School of Medicine. As a result of the settlement, Duke has agreed to pay $54.5 million and face additional injunctive relief. Additionally, the court has awarded $18.167 million in attorney fees, $3.3 million for expenses, and a $125,000 service award for the class representative (Seaman v. Duke University, September 25, 2019, Eagles, C.).

Background. A radiology professor at Duke University School of Medicine filed the lawsuit against both universities and various affiliated entities and individuals in 2015, alleging 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 per se 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 defendants moved to dismiss the claim under the state action doctrine, but the court denied the motions. The court then 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. In February 2018, the court certified a plaintiff class composed of faculty members.

Attorney fees. The class counsel filed a motion requesting one-third of the common fund, which would result in a $18.167 million payout. The court notes that contingent fees of one-third are common, particularly in cases of similar complexity. Ultimately, the court determined that a one-third payout of the common fund was reasonable based on the resources that counsel employed, the quality of their work, the results obtained, the risks and obstacles that they faced, and fees awarded in similar antitrust cases.

Additionally, the court employed the lodestar method to cross-check the reasonableness of the percent fee by multiplying the reasonable hourly rate for each attorney by the number of hours reasonably expended. According to the court, lodestar multipliers ranging from 2 to 4.5 demonstrate a reasonable percentage fee. After its own analysis, the court found that a $18.167 million award represents a multiplier of just under 2.9, which should be considered reasonable.

Expenses. In addition to its attorney fees, class counsel also filed a motion for reimbursement of over $3.3 million in expenses, with the most significant expense being expert witness fees. The court determined that these were reasonable considering the complexity of the case and the necessity since the employees would not have had a basis to estimate damage or prove class wide antitrust impact without the testimony. Therefore, the court determined that the reimbursement request is fair and reasonable.

Class representative. Finally, the court awarded Dr. Seaman, as class representative, a service award of $125,000 due to the many hours of her time that she spent advancing the litigation by participating in litigation strategy, discovery, settlement negotiations, and mediation. Additionally, the court put great weight into the fact that Dr. Seaman put her professional career on the line when she came forward. The doctor testified that her relationship with Duke administrators has been affected by her role in the case.

This case is No. 1:15-cv-00462-CCE-JLW.

Attorneys: Robert M. Elliot (Elliot Morgan Parsonage, P.A.) and Anne B. Shaver (Lieff Cabraser Heimann & Bernstein, LLP) for Danielle Seaman. Brent F. Powell (Womble Bond Dickinson US LLP) and Derek Ludwin (Covington & Burling, LLP) for Duke University and Duke University Health System, Inc. Cary B. Davis (Robinson Bradshaw & Hinson, P.A.) for University of North Carolina at Chapel Hill, University of North Carolina School of Medicine and University of North Carolina Health Care System.

Companies: Duke University; Duke University Health System, Inc.; University of North Carolina at Chapel Hill; University of North Carolina School of Medicine; University of North Carolina Health Care System

MainStory: TopStory Antitrust NorthCarolinaNews

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