Investigation Alert: Rail Industry Employees Potentially Impacted by No-Poach Agreements

NEW YORK (April 17, 2018) – Labaton Sucharow is investigating allegations that Knorr-Bremse AG (Knorr), Westinghouse Air Brake Technologies Corp. (Wabtec), Faiveley Transport S.A. (Faiveley)[1] and their related subsidiaries have entered into unlawful “no-poach” agreements for a period of at least seven years. Pursuant to these no-poach agreements, Knorr, Wabtec, and Faiveley agreed not to solicit, recruit, hire without prior approval, or otherwise compete for each other’s skilled employees, including project managers, engineers, and directors/officers. These companies agreed to restrict competition for employees’ services through no-poach agreements with the purpose and effect of suppressing employees’ compensation and potential job opportunities and restraining competition in the market for employees’ services. On April 3, 2018, the U.S. Department of Justice’s Antitrust Division (DOJ) filed a civil antitrust complaint against Knorr and Wabtec as well as a stipulated proposed final judgment (settlement).[2] The final judgment did not impose any monetary penalties. Thus employees who may have been injured by the unlawful conduct have not been compensated. At least one class action has been filed–and we expect others will be as well–which seeks to represent a class of injured employees and monetary damages for their losses.

If you worked for Knorr, Wabtec, Faiveley, or a subsidiary of these companies between January 1, 2009 and April 3, 2018, you may have been injured by this unlawful conduct.

Background and Anticompetitive Conduct

Knorr and Wabtec are two of world’s largest suppliers of rail equipment and each other’s top rival in the development, manufacture, and sale of equipment used in freight and passenger rail applications. Beginning in 2009, senior executives at both the companies and at their respective U.S. passenger and freight rail businesses entered into no-poach agreements that involved promises and commitments not to solicit or hire one another’s employees. No later than 2011 and 2014 respectively, Knorr and Wabtec entered into similar no-poach agreements with their other main competitor, Faiveley.

Following the agreements, qualified candidates were shut-out from consideration of job opportunities at the competing companies on numerous occasions. The no-poach agreements also suppressed compensation for employees of the companies.

Department of Justice Investigation

DOJ’s Antitrust Division has been investigating the companies’ no-poach agreements since at least 2016. The investigation stemmed from DOJ’s review of Wabtec’s acquisition of Faiveley, which uncovered the illegal no-poach agreements at issue. DOJ found that the no-poach agreements were per se illegal under the antitrust laws. As DOJ explained, the agreements “eliminated a significant form of competition to attract skilled labor in the U.S. rail industry” and “denied employees access to better job opportunities, restricted their mobility, and deprived them of competitively significant information that they could have used to negotiate for better terms of employment.” DOJ determined that these agreements “disrupted the typical bargaining and negotiation between employees and employers that ordinarily would take place in these labor markets.”

On April 3, 2018, DOJ filed a complaint in federal court against Knorr and Wabtec. DOJ also filed a stipulated proposed judgment. In this stipulated proposed final judgment, Knorr and Wabtec agreed to stop “attempting to enter into, entering into, maintaining, or enforcing any No-Poach Agreement or No-Poach Provision.”

May Have Been Injured by the Anticompetitive Conduct?

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.

[1] Faively was acquired by Wabtec in November 2016.
[2] D.O.J.’s complaint against Knorr and Wabtec, available at,
https://www.justice.gov/opa/press-release/file/1048491/download


Labaton Sucharow Can Help

If you may have been affected by these no-poach agreements, please contact the following attorneys:

Gregory Asciolla
T: (212).907.0827
gasciolla@labaton.com

Karin E. Garvey
T: (212).907.0844
kgarvey@labaton.com