In re Railway Industry Employee No-Poach Antitrust Litigation

$49M Settlement

Date of Settlement: Feb. 24.

Court and Case No.: U.S. Dist. Court, W.D. Pa. No. 2:18-MC-00798-JFC.

Judge: Joy Flowers Conti.

Type of Action: Antitrust.

Injuries: Competition blocked.

Plaintiffs Counsel: Roberta Liebenberg, Fine, Kaplan, Philadelphia; Dean M. Harvey, Lieff Cabraser Heimann & Bernstein, San Fransisco.

Defense Counsel: Mark Hamer, Baker McKenzie, Washington, D.C.; Melissa Tea of K&L Gates, Pittsburgh.

Comment:

Two companies that make railroad equipment have agreed to pay nearly $49 million to resolve a class action lawsuit alleging that their so-called "no-poach" agreements violated antitrust law.

On Monday, attorneys from Lieff Cabraser Heimann & Bernstein and Fine, Kaplan and Black filed a motion for preliminary approval to settle the case In re Railway Industry Employee No-Poach Antitrust Litigation for $48.95 million. The settlement includes $12 million from equipment maker Knorr and $36.95 million from Wabtec, which develops electronic products for rail operations.

"These settlements were the product of extensive, hard-fought negotiations, provide significant payments to class members, and avoid the considerable risks, delays and expense of further litigation," Fine Kaplan attorney Roberta Liebenberg said in a press release announcing the settlement. Liebenberg is serving as interim co-lead counsel in the litigation.

The brief outlining the settlement to the U.S. District Court for the Western District of Pennsylvania said the accord should provide an average recovery of $5,830 for each class member before attorney fees. The brief, however, did not include a specific request for fees, but said the court will determine the fee awards after co-lead counsels submit fee applications. The brief did request a reimbursement of about $715,000 in out-of-pocket expenses.

The class action stems from allegations that Knorr, Wabtec and a company that was later purchased by Wabtec entered into agreements where they would not poach each other's workers. According to the plaintiffs' allegations, the labor market for rail industry employees is very competitive, as there is high demand and limited supply of skilled and experienced workers. The plaintiffs contended that lateral hiring is a key component of the market, and typically companies will directly solicit the employees of competitor companies.

However, according to the plaintiffs' allegations, around 2009 the companies agreed to not hire each other's employees without first getting consent from the other company. The plaintiffs argued that this kept their compensation rates at artificially low levels, and substantially hindered competition between the companies for workers, resulting in fewer job opportunities, suppressed wages and restricted job mobility.

The plaintiffs further said defendants kept the agreements secret, until the U.S. Department of Justice in April 2018 announced a settlement with the companies that barred them from continuing the no-poach practices.

According to the brief to the court, Knorr agreed to its portion of the settlement in August 2019, and that accord acted as an "icebreaker" for Wabtec to settle. The memo said recently retired Judge Thomas Vanaskie of the U.S. Court of Appeals for the Third Circuit oversaw the mediation sessions.

Baker McKenzie attorney Mark Hamer, who is representing Knorr, declined to comment on the proposed settlement. Melissa Tea of K&L Gates, who represented Wabtec, did not return a call seeking comment.

—Max Mitchell, of the Law Weekly