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Duke Settles Class Action Alleging “No-Poach” Conspiracy with UNC

Posted  April 11, 2019
By J. Wyatt Fore

While Duke University and the University of North Carolina (“UNC”) may be fierce sporting rivals on “Tobacco Road,” their alleged agreement not to compete for medical school faculty demonstrates how easily competing employers can find themselves ensnared in an antirust briar patch.

It is now being reported that Duke has settled Seaman v. Duke University, a class action in the U.S. District Court for the Middle District of North Carolina alleging Duke and UNC violated the antitrust laws by agreeing not to permit lateral moves of faculty—a “no-poach” agreement.   Danielle Seaman, an assistant professor of radiology at Duke, accused senior administrators and deans at the two universities’ medical schools of agreeing not to hire each other’s employees for positions of the same rank.[1]  Seaman claimed that she was passed over for a similar job at UNC because of this alleged agreement.

Seaman’s pleadings quoted extensively from correspondence with UNC’s Chief of Cardiothoracic Imaging, who admitted that he was unable to hire Seaman because he had “received confirmation today from the Dean’s office that lateral moves of faculty between Duke and UNC are not permitted. There is reasoning for this ‘guideline’ which was agreed upon between the deans of UNC and Duke a few years back.”  In later correspondence, UNC’s Chief of Cardiothoracic Imaging admitted that “the ‘guideline’ was generated in response to an attempted recruitment by Duke a couple of years ago of the entire UNC bone marrow transplant team; UNC had to generate a large retention package to keep the team intact.”  He further explained that “the only way [Duke and UNC] can hire each other’s faculty is if there is an upward move, i.e. a promotion.”

Last year, following UNC’s settlement of the case, Judge Catharine C. Eagles certified a class of medical school faculty.  Although Duke continued to fight on, the parties informed the court earlier this week that Duke was settling as well.

An Expansive Damages Theory

Although the terms of the settlement agreement are not yet public, the plaintiff’s damages theory—if accepted—would have significantly increased the economic exposure resulting from illegal no-poach agreements.  Although the no-poach agreement between Duke and UNC directly impacted only faculty seeking employment at the other school (likely a small number of employees), plaintiff’s class included all 5,400 members of the two schools’ medical faculty,[2] based on the theory that the schools’ compensation structures “spread the individual harm of decreased lateral offers and corresponding lack of retention offers to all faculty, thus suppressing compensation faculty-wide.”[3]

Similar damages theories led to the $435 million settlement in In re: High-Tech Employee Antitrust Litig., a case in the U.S. District Court for the Northern District of California in which Judge Lucy H. Koh certified a broad class based on the theory that defendants’ “no cold-call” agreements affected not only “those individuals who receive” them, but rather suppress the compensation of all technical, creative, and/or research and development employees.[4]

More No-Poach Lawsuits to Come?

No-poach lawsuits have led to multimillion-dollar settlements and government enforcement actions in a variety of sectors: universities, fast food restaurants, manufacturers, and high-tech employees.   And the federal antitrust agencies have signaled that more civil and criminal prosecutions are on the way.

Given plaintiffs’ recent successes in extracting major settlements, employers should revisit their employment policies with counsel to determine just how liable they could be.

Edited by Gary J. Malone

 

[1] See First Amended Complaint, Seaman v. Duke Univ., et al., No. 1:15-cv-00462 (M.D.N.C. Aug. 12, 2015).

[2] See Opinion and Order Certifying Class at 8-14, Seaman v. Duke Univ., et al., No. 1:15-cv-00462 (M.D.N.C. Feb. 1, 2018).

[3] Id. at 9 (emphasis added).

[4] Order Granting Plaintiffs’ Supplemental Motion for Class Certification at 3, In re: High-Tech Employee Antitrust Litig., No. 5:11-cv-02509 (N.D. Cal. Oct. 24, 2013).

Tagged in: Antitrust Enforcement,

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