General Dynamics, other shipbuilders must face lawsuit over pay, US appeals court rules

By Mike Scarcella

May 9 (Reuters) - A U.S. appeals court on Friday revived a proposed class action accusing shipbuilding giants General Dynamics GD.N, Huntington Ingalls HII.N and others of conspiring for years to suppress compensation for naval architects and marine engineers.

The Richmond-based 4th U.S. Circuit Court of Appeals ruled 2-1 for the workers, reversing a lower court judge who said the claims were filed too late.

The plaintiffs, a pair of naval architects, had alleged that a group of shipbuilders and nearly a dozen engineering consultancies violated federal antitrust law by agreeing not to compete with each other in the hiring of key employees.

Circuit Judges James Wynn and DeAndrea Gist Benjamin said the plaintiffs had adequately alleged the shipbuilders created “an illicit no-poach agreement” that they deliberately tried to cover up, delaying when the plaintiffs learned about it.

Huntington had no immediate comment, and General Dynamics did not immediately respond to a request for one. The defendants have denied wrongdoing.

Attorneys for the plaintiffs declined to comment.

The plaintiffs in their lawsuit said the alleged “no poach” recruitment conspiracy cost workers hundreds of millions of dollars in lost compensation. The would-be class of engineers and architects was estimated in the "tens of thousands."

The companies had urged the appeals court to reject the lawsuit for being filed outside the four-year statute of limitations for antitrust claims.

The plaintiffs countered that the companies “fraudulently concealed” the hiring and recruitment conspiracy, including avoiding any documentation of it.

The 4th Circuit’s majority said the complaint “quotes multiple industry insiders who acknowledge the existence of the no-poach agreement.”

In a dissent, Chief U.S. Circuit Judge Albert Diaz said the trial judge correctly ruled that the alleged “unwritten” hiring conspiracy was not an “affirmative” act of concealment that can overcome the four-year time bar for antitrust claims.

The case is Susan Scharpf et al v. General Dynamics et al, 4th U.S. Circuit Court of Appeals, No. 24-1465.

For plaintiffs: Robert Cobbs of Cohen Milstein Sellers & Toll

For defendants: Matthew Hellman of Jenner & Block

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