Aerospace, Outsourcing Companies No-Poach Agreements Class Action

In the past, certain fast-food franchising companies have been charged with anticompetitive behavior when they have formed agreements not to hire each other’s employees. In this class action, the no-poach accusations are aimed at aerospace and outsource engineering supply companies. The complaint for this class action alleges these companies suppressed competition and therefore held down their employees’ pay.

The class for this action is all natural persons who worked as engineers and other skilled workers in the US, between January 1, 2011 and September 30, 2019, for one or more of the defendants in this case.

The defendants include QuEST Global Services-NA, Inc., Belcan Engineering Group, LLC, Cyient, Inc., Agilis Engineering, Inc. Parametric Solutions, Inc. (the “Supplier Defendants”) and Raytheon Technologies Corporation, Pratt & Whitney Division. The complaint makes extensive reference to an affidavit filed in the Department of Justice criminal case against them, the Mehring Affidavit.

The complaint quotes the Mehring Affidavit as saying that Pratt & Whitney is “one of the largest aerospace engine design, manufacture, and service companies in the United States.” According to the complaint, Pratt & Whitney normally formed agreements in which an outsourcing company assigned its own engineering or other skilled workers to a Pratt & Whitney project. Originally, the complaint says, these outsourcing companies competed with each other to hire engineers and skilled workers for these Pratt & Whitney projects.

However, the complaint alleges that by 2011, the companies had “joined a conspiracy to reduce and limit compensation and mobility of their engineers and other skilled workers.” The conspiracies included “the companies’ most senior executives and managers…” the complaint alleges.

The complaint quotes extensively from the Mehring Affidavit to report meetings and communications between the conspirators, particularly Mahesh Patel, a Pratt & Whitney executive.

For example, the quotes the Mehring Affidavit as saying, “PATEL justified the no-hire/no-recruit agreement by appealing to the wage suppression benefits that it provided to the conspirators, either by referring specifically to wages or salaries, or more broadly, to shared costs or prices.”

Another quotation from the complaint reads, “At times, when infractions of the agreement occurred, a Supplier alerted PATEL to the violation and requested that he assist in preventing or deterring such conduct. PATEL often responded to these requests by reprimanding the noncompliant Supplier.”

At times, the complaint alleges, managers or executives at the companies raised concerns that the no-poach activities were illegal, but the companies continued them anyway.

According to the complaint, the “conspiracy injured employees with experience or skills in the aerospace industry in part because [the companies] are market leaders in their fields.” Also, the complaint claims, “There is high demand for a limited supply of engineers and other skilled workers in the aerospace industry. Employees within the industry are key sources of potential talent to fill these openings.”

The complaint alleges that the conspiracy was successful in reducing competition and limiting employee pay.

Article Type: Lawsuit
Topic: Antitrust
Tags: Aerospace, Anticompetitive Actions, Antitrust, No-Poach Agreements