Labaton Sucharow Files Complaint Alleging Rail Equipment Suppliers Maintained Anti-Competitive No-Poaching Agreements for Nine Years
New York, NY (May 16, 2018) -- Labaton Sucharow announced it has filed a class action lawsuit today against Knorr-Bremse AG (Knorr), Westinghouse Air Brake Technologies Corp. (Wabtec) and their wholly owned subsidiaries alleging that the companies entered a series of unlawful agreements to restrain competition in the rail industry labor market. Knorr and Wabtec are competitors and two of the world’s largest suppliers of rail equipment.
Labaton Sucharow’s in-house investigative team, led by a former FBI agent, independently interviewed several former employees of the companies. The lawsuit includes statements from three such former employees, “confidential witnesses” with knowledge of the unlawful conduct; the companies maintained an unwritten “gentlemen’s agreement” that included promises and commitments not to solicit, recruit, hire without prior approval or otherwise compete for each other’s employees. The lawsuit thus provides critical details that go beyond what was released to the public by the Department of Justice’s Antitrust Division (“DOJ”) earlier this year, when it filed court documents concerning its own investigation of the companies. Labaton’s investigation is ongoing.
Knorr and Wabtec first entered into a no-poach agreement with one another in 2009. Agreements between senior executives at certain U.S. subsidiaries of Knorr and Faiveley Corp, which was acquired by Wabtec in 2016, and senior executives at Wabtec and Faiveley, followed in 2011 and 2014, respectively. Through these agreements, which spanned several years and were monitored and enforced by high-level company executives, the defendants effectively chilled the labor market, suppressing compensation and job opportunities for skilled labor in the U.S. rail industry.
DOJ first uncovered the defendant’s use of these agreements, which they found “facially anticompetitive” and illegal under Section 1 of the Sherman Act. DOJ’s proposed final judgment would enjoin the defendants from entering into any no-poach agreement or provision. However, DOJ did not seek monetary penalties of any kind to compensate the employees of the defendants who were harmed by the anticompetitive conduct.
This action seeks to recover damages for the victims of the conspiracy, i.e., the difference between the compensation that these employees were paid and what they would have been paid absent the defendants’ no-poach agreements. Any skilled employee, including project managers, engineers, and directors/officers–who worked at Knorr, Wabtec, Faiveley, or any of the companies’ related subsidiaries or business units, including Knorr Brake Company, New York Air Brake Corp., Wabtec Passenger Transit, or Faiveley Transport North America, Inc., between January 2009 and April 2018 may have been adversely impacted by these companies’ illegal conduct.