Labor & Employment Law Daily Proposed $48.95M deal would end railway industry employee no-poach suit
Friday, February 28, 2020

Proposed $48.95M deal would end railway industry employee no-poach suit

By Pamela Wolf, J.D.

Purportedly, the settlement represents about 2.5 percent of total class compensation—the second-highest proportion of any no-poach case.

Under a proposed settlement, $48.95 million would resolve the antitrust claims of a class of about 8,396 employees of Westinghouse Air Brake Technologies Corporation and certain subsidiaries (Wabtec) and Knorr-Bremse AG, and certain subsidiaries (Knorr): Wabtec would pay $36.95 million and Knorr would put up $12 million.

Employee no-poaching agreement. The plaintiffs in the class action, initiated in April 2018 in the Western District of Pennsylvania, alleged that Knorr, Wabtec, and Faiveley Transport North America, Inc. (later acquired by Wabtec) improperly agreed not to compete for, hire, recruit, or poach each other’s employees. The challenged agreements purportedly restrained competition, restricted employee mobility, and suppressed employee wages.

DOJ case resolved. In April 2018, Knorr and Wabtec reached a settlement with the Department of Justice Antitrust Division over a civil challenge to their purported agreements not to poach employees. According to the government’s complaint, since at least 2009, Knorr and Wabtec had in place agreements not to solicit, recruit, hire without prior approval, or otherwise compete with one another for employees. The federal district court in Washington, D.C., approved the consent decree prohibiting the rail equipment suppliers from agreeing not to compete for employees.

The private lawsuits were then centralized for pretrial proceedings in the federal district court in Pittsburgh.

Overarching “no-poach conspiracy.” In June 2019, the Pennsylvania district court granted in part a motion to dismiss the plaintiffs’ claims that the rail equipment suppliers were engaged in an overarching “no-poach” conspiracy. The employers were allegedly engaged in three separate bilateral no-poach agreements—and “something more” from which a reasonable inference could be drawn that an overarching conspiracy existed. The plaintiffs demonstrated that entry into the bilateral agreements was contrary to the employers’ competitive interests and showed similarities between the agreements from which a reasonable inference could be drawn that the agreements evolved into an overarching agreement. The court also held that the no-poach agreements were per se violations of antitrust law.

However, the plaintiffs failed to set forth any factual allegations about the defendants’ compensation structures to make a showing that the antitrust impact would be capable of proof on a class wide basis.

Notable settlement. The plaintiffs’ Unopposed Motion for Preliminary Approval of Proposed Class Settlements and to Direct Notice to the Proposed Settlement Class, filed on February 24, asks the court to grant preliminary approval of the settlements, direct notice to the settlement class, determine a schedule for final approval, and conditionally certify the settlement class.

The plaintiffs’ attorneys, Lieff Cabraser Heimann & Bernstein, LLP, and Fine, Kaplan and Black, R.P.C., called the proposed settlements an “excellent result for the proposed class.” They said that the total settlements of $48.95 million represent an average gross recovery of approximately $5,830 per class member (before taking into consideration costs and attorneys’ fees) “among the best recoveries ever achieved for employees asserting antitrust claims.”

According to the memorandum of law supporting the proposed settlement, the settlement represents about 2.5 percent of total class compensation, the second-highest proportion of any no-poach case.

Attorneys’ fees under the deal may be up to one-third of the common settlement fund, or $14.685 million. An additional $75,000 is carved out for service awards to the named plaintiffs in the case.

The proposed settlements also include a notice plan that would establish a case-specific website with relevant court documents and contact information, and a case-specific toll-free phone number that settlement class members may call to pose questions, the plaintiffs’ attorneys noted.

The case, In Re: Railway Industry Employee No-Poach Antitrust Litigation, is MDL No. 2850.

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