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DOJ says No-Poach Agreements Illegal

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Competing employers’ no-poach agreements are inherently illegal, the Justice Department said in California federal court.

Los Angeles, CAWeighing in on a California labor lawsuit filed by truckers against trucking companies, the U.S. Department of Justice (DOJ) said that competing employers’ no-poach agreements are inherently illegal.

"No hire" agreements among employers should be treated as "per se," or automatically, illegal, said the DOJ, regarding a workers’ antitrust lawsuit against CRST International and other trucking companies. The lawsuit, Curtis Markson et al. v. CRST International Inc. et al, was filed in 2017 by a group of current and former truckers in the US District Court for the Central District of California. The plaintiffs argued that transportation and logistics companies conspired to suppress wages by agreeing not to hire each others’ workers.

According to Law360, the trucking companies unsuccessfully tried to get the suit dismissed several times. Regarding the no-poach allegations, some companies argued that not hiring each other's drivers was something done in the industry— not to avoid competition but to avoid litigation from the rival whose employee was hired away. But responding to the defendants’ motions for summary judgment, DOJ’s Antitrust Division wrote in a statement of interest that, “Defendants’ argument that courts ‘routinely apply the rule of reason to hiring restrictions’ is wrong and the cases they cite are inapposite…Accordingly, the Court should reject Defendants’ attempt to justify the alleged no-hire agreements as deserving anything less than per se treatment.”

Rather than take a position on the facts of the case, the DOJ asked the court to analyze the alleged agreements under the per se rule if they are found to exist, instead of weighing whether they also had pro-competitive effects, reported Bloomberg Law, and the DOJ’s statement of interest is the antitrust department’s “most recent move in a wave of recent enforcement actions related to no-hire or no-poach agreements”.

About one year before Markson’s complaint was filed, the DOJ’s Antitrust Division and the Federal Trade Commission no-poach agreements are prosecutable under criminal law. They argue that employers who agree not to hire their respective workers violates the Sherman Act and the California Cartwright Act by colluding to quash competition and cutting deals not to poach one another's employees. Further, this argument is part of a wider move to increase enforcers’ scrutiny of antitrust violations in labor markets — a historically under-examined area in comparison to product markets, wrote Bloomberg Law.

The Defendants

Over the years, the truck drivers amended their lawsuits, along with their growing list of trucking company defendants. Several of the companies, including Paschall Truck Lines Inc., Schneider National Carriers Inc., Covenant Transport Inc., Southern Refrigerated Transport Inc. and Western Express Inc., settled with the drivers. Three companies --CRST International, CRST Expedited and C.R. England Inc. – have not yet cut deals with the drivers. Currently there are six proposed settlements totaling about $9.75 million in the litigation.

Per Se Rule

The per se rule is a type of antitrust analysis used to determine the legality of agreements (written or oral) between competitors. Under the per se rule, certain categories of agreements are presumed to violate antitrust laws, regardless of other factors such as business purpose or competitive benefits. Examples of categories held to be per se illegal are agreements to fix prices or output and agreements to divide territories or customers, according to Thomson Reuters.

The case is Curtis Markson et al. v. CRST International Inc. et al., case number 5:17-cv-01261, in the U.S. District Court for the Central District of California.


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