Today, Murphy Falcon & Murphy and Robbins Geller sent a powerful message to the business community when it sued railroad equipment suppliers Knorr-Bremse AG, Westinghouse Air Brake Technologies Corporation (Wabtec) and other rail industry conspirators for entering into agreements “not to solicit, recruit or hire without prior approval, or otherwise compete for employees.” The complaint alleges that these so-called “naked no-poaching agreements” “denied American rail industry workers access to better job opportunities, restricted their mobility and deprived them of competitively significant information they could have used to negotiate for better terms of employment.” These agreements are per se illegal and violate Antitrust laws of the United States.
As is often the case with civil antitrust cases, the United States Department of Justice, Antitrust Division had previously negotiated a settlement with the two companies before going public and filed that settlement as a consent decree simultaneously with filing its April 3, 2018 complaint in court. The DOJ signaled in its action that criminal prosecutions might still be forthcoming and in the consent decree settling yesterday’s lawsuit, Knorr and Wabtec agreed to cooperate with the DOJ in “any investigation or litigation examining whether or alleging that” either party entered into further no-poaching agreements with other parties.
DOJ had given the business community plenty of warning that it would target these kinds of practices. In October 2016, at the tail end of the Obama Administration, the DOJ’s Antitrust Division and the Federal Trade Commission issued joint “Antitrust Guidance for Human Resource Professionals,” in which the antitrust agencies confirmed the seriousness with which they viewed unjustified agreements between competitors not to hire away each other’s employees. The DOJ had previously pursued a number of enforcement actions in the tech industry challenging “naked” agreements not to “poach” employees from other companies. In those cases, the DOJ distinguished “naked” no-poaching or no-hiring agreements from non-solicitation agreements “reasonably necessary to a larger legitimate collaboration between the employers.” In the October 2016 guidance, the DOJ reaffirmed this distinction and announced that, with respect to naked employment-related agreements, it intended to take things a step further and to consider criminal prosecutions of companies and executives responsible for those unjustified agreements.
Earlier this year, Makan Delrahim, current head of the DOJ’s Antitrust Division, revealed in a speech that the DOJ had not abandoned the prior administration’s guidance, that the DOJ had several no-poaching agreements under investigation and that the DOJ would soon be making “some announcements” relating to these efforts.
Murphy Falcon & Murphy stands ready to fight for workers whose careers and earning power are derailed by illegal arrangements like the Knorr/Wabtec agreements which are per se illegal, civil antitrust violations.
Hassan Murphy | Managing Partner
Murphy, Falcon & Murphy