Duane Morris Class Action Review - 2023 - Report - Page 46
Plaintiffs in In Re Outpatient alleged that the defendant outpatient medical centers
illegally agreed not to hire or solicit one another’s senior employees in violation of §1 of
the Sherman Act. The plaintiffs’ complaint alleged that the defendants’ agreement
constituted a per se violation of the Sherman Act. The defendants moved to dismiss on
several grounds, including injury-in-fact, proximate cause, and failure to adequately
allege an unreasonable restraint of trade. Id.
Regarding injury, the defendants argued that the plaintiffs did not provide specific facts
showing that the defendants’ conduct actually suppressed wages or deprived the
plaintiffs of job opportunities. In rejecting this argument, the court was convinced by the
plaintiff’s explanations of how the “defendants' conspiracy restrained competition for
employees and disrupted the normal bargaining and price-setting mechanisms that
apply in competitive labor markets," which "suppressed the compensation of all
employees, not just particular individuals who otherwise would have been solicited or
sought to change employers." Id. at 16. The court further concluded that the “plaintiffs
are not required to quantify precisely the impact that the defendants' conduct had on
their compensation, nor is it necessary for them to allege a specific lost job opportunity”
at the pleading stage. Id. at 17.
After briefly concluding that the plaintiffs adequately alleged proximate cause by
showing a link between the agreement and the harm, the court addressed the issue of
whether per se analysis of the non-solicitation agreements was appropriate. Like in
Deslandes, the defendants argued that per se analysis of the restraints at issue was
inappropriate, and that the court should apply the rule of reason test. However, the court
distinguished Deslandes. According to the court, the alleged restraints at issue in
Deslandes were ancillary to pro-competitive franchise agreements, whereas the nonsolicitation agreements at issue in In Re Outpatient were “naked.” Id. at 35-40. This
“ancillary or naked restraint” distinction comes from well-established antitrust precedent.
See, e.g., United States v. Addyston Pipe & Steel Co., 85 F. 271 (6th Cir. 1898). The
doctrine of ancillary restraints essentially excuses what appears at first to be an
anticompetitive restraint, when the restraint is actually “ancillary” to a legitimate, net
socially beneficial, business activity. Id. Thus, the court in In Re Outpatient identified the
nature of the restraint as another critical factor in whether or not labor monopsony
plaintiffs receive per se or rule of reason analysis.
Furthermore, in contrast to the court in Deslandes, the court in In Re Outpatient rejected
the defendants’ claim that courts do not have sufficient experience with no-poach
agreements, such that they cannot be analyzed under per se test and automatically
default to a rule of reason analysis.
The court’s determination of per se analysis for naked restraints is in the context of the
pleadings stage where facts are viewed in the light most favorable to the non-moving
party. In fact, the court noted that development of the record may eventually show the
restraints to be ancillary, but that the plaintiffs have done enough to allege a plausible
per se claim at the pleading stage. In Re Outpatient. at 39.
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Duane Morris Class Action Review – 2023