A class-action lawsuit against several railway equipment suppliers has received final court approval. Agreement on a final settlement of the suit between Westinghouse Air Brake Technologies Corp. (Wabtec), Knorr-Bremse AG and subsidiaries and law firms Hartley LLP and Fine Kaplan and Black was achieved in February. U.S. District Court for the Western District of Pennsylvania Judge Joy Flowers Conti signed off on the final settlement on Aug. 26.
Lead class counsel for the $48.9 million case was from the firms Lieff Cabraser and Fine Kaplan Black.
Known as the “no-poach” lawsuit, lead plaintiffs Stephen Baldassano, John Brand, David Escalera, Brian Lara, and Patricia Lonergan alleged that the railway suppliers – which included Westinghouse Air Brake Technologies Corporation (NYSE: WAB) and its subsidiaries including Wabtec Railway Electronics, Inc., Railroad Controls, L.P., and Xorail Inc.; Knorr Brake Company LLC or New York Air Brake LLC; and Faiveley Transport, S.A. or Faiveley Transport North America Inc. – reached an agreement not to hire employees from the other firms without consent in an effort to reduce wages and competition.
Hartley said class members can expect to receive a gross average settlement of $7,100 before fees and expenses.
“The employees working for each of the railway companies were clearly disadvantaged by their employers, whose actions reduced their compensation potential and limited their career opportunities,” said Jason Hartley, managing partner of Hartley LLP, in a statement. “I am proud that each class member will recover some of the money they are rightfully owed.”
More than 8,000 members are eligible for the payments, according to the Pittsburgh Post-Gazette.
A website has been set up for class members at railwaynopoach.com. Some eligible class members will receive payments while others need to register their status to become eligible. The website has details on who is eligible.
The case dates back to 2009 when the companies are alleged to have entered illegal agreements to deny employment to employees of each other without approval. The Department of Justice became aware of the scheme when reviewing Wabtec’s proposed acquisition of Faiveley Transport in 2016. As part of the approval of the deal, DOJ required Wabtec to divest itself of Faiveley’s U.S. freight care brakes business.
In 2018, DOJ reached agreement with Wabtec and Knorr-Bremse AG to resolve a lawsuit alleging the “companies had for years maintained unlawful agreements not to compete for each other’s employees.” The lawsuit said similar “no-poach” agreements were in place with Faiveley.
“The unlawful no-poach agreements challenged today restrained competition for employees and deprived rail industry workers of important opportunities, information, and the ability to obtain better terms of employment,” said Assistant Attorney General Makan Delrahim of the Justice Department’s Antitrust Division, in a statement at the time. “Today’s settlement will restore competition for employees in the U.S. rail industry.”
The DOJ’s investigation turned up documents detailing the practice. According to one document, a director of Knorr Brake Company wrote to a senior executive at Wabtec’s headquarters, stating “[Y]ou and I both agreed that our practice of not targeting each other’s personnel is a prudent cause for both companies. As you so accurately put it, ‘we compete in the market.’”
In 2011, Knorr and Faiveley reached a similar arrangement as that between Knorr and Wabtec, DOJ found. Wabtec Passenger Transit and Faiveley reached the same agreement, with one employee seemingly denied a job at Faiveley.
“[The candidate] “is a good guy, but I don’t want to violate my own agreement with [Faiveley Transport North America],” wrote a Wabtec executive in an email obtained by DOJ.
Click for more FreightWaves articles by Brian Straight.
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