A former Hewlett Packard employee filed a proposed class action alleging HP and rival 3D Systems hatched a “no-poach” deal that reduced employees’ wages but judges want more evidence.
San Diego, CATwo Ninth Circuit judges have asked former Hewlett Packard employee Bryant Fonseca to show more evidence in his allegation that HP and 3D Systems Inc., had cut a “no-poach” deal that resulted in diminished wages. The judges questioned why this third amended complaint should be revived – plaintiff’s attorney answered that Fonseca’s California labor lawsuit identifies which executives were allegedly involved in the deal when it went into effect and the actions each company took to maintain the anti-competitive agreement.
Judges Skeptical of Revival
The Judges are skeptical of Fonseca’s proposed class action revival. As reported by Law360, Judge Graber said "It just seems like guesswork," adding that the state and federal antitrust claims thrown out by a California federal court need to be more than just speculation. U.S. District Judge Jack Zouhary asked plaintiff’s attorney Martin N. Buchanan what motivated 3D System to enter into a no-poach agreement and why that would have affected Fonseca, who was not a high level executive.
Buchanan countered that the judges didn’t need to know 3D Systems' motivation at this point, but only to allege plausible facts in order to get to the discovery phase of the case. Buchannan went on: it was obvious there was some kind of agreement because one moment 3D Systems was "very aggressively" poaching HP employees, followed by a series of phone calls between executives at the two companies and suddenly the poaching stopped – which meant that “that the speed at which the poaching stopped points to an explicit agreement between the two companies.” But Judge Graber interpreted those circumstances as sounding “like market conditions.”
After being laid off in late 2015, Fonseca filed a discrimination lawsuit in state court. He claimed that HP discriminated against older workers during a round of lay-offs. He claimed in his November 2017 state court complaint that he was laid off after working for 36 years on research and development for the tech giant, and that when he applied to 3D, he didn't get an interview. He claimed that HP management had warned him of repercussions if he reached out to 3D too soon after being laid off.
According to his proposed class action lawsuit, which was brought on behalf of all individuals employed by HP from January 1, 2016 to present and all current, former, or prospective employees who were at least 40 years old at the time that HP terminated them under HP’s 2012 U.S. Workforce Reduction Plan (WFR)—Fonseca (who was 55 years old at the time) alleged that HP eliminated the jobs of older, age-protected employees in November 2015 in order to begin replacing them with younger employees; and that, due to HP’s “no-poach” agreement with 3D Systems, Plaintiff and other HP employees were unable to obtain employment at 3D Systems.
Around the same time, HP and 3D Systems Inc., reached an informal “cease-fire” to stop soliciting each other’s workers. The deal was allegedly struck by HP president Stephen Nigro and 3D Systems CEO Vyomesh Joshi, a former HP executive, according to Bloomberg Law (Feb 2020). HP fired at least one person for interviewing with 3D Systems, according to the suit. It allegedly enforced the agreement internally by cutting off severance payments and job search help to laid-off employees who applied to work there. The companies also stopped recruiting each other’s workers through headhunters and shared pay scales “to avoid entering a bidding war,” the lawsuit says.
But Judge Gonzalo P. Curiel “tossed the no-poach allegations from the case in a ruling that didn’t tackle the age bias claims,” noting that Fonseca’s lawsuit doesn’t “allege any specific communications, meetings, or interactions” or state “where, when, or how the alleged agreement was reached…Plaintiff’s allegations are either insufficient or otherwise can be independently explained by rational business decisions.”
Reuters (Oct. 7, 2021) said the 9th Circuit would hear an appeal from Judge Curiel’s dismissal. “A former San Diego-based procurement associate claimed HP entered a no-poach deal with a rival to ‘avoid a bidding war so that it would not incur additional labor costs’, and HP's lawyers dispute the claims. The plaintiff has ‘repeatedly attempted to bootstrap antitrust claims to his currently-stayed age discrimination lawsuit,’ lawyers for HP told the appeals court.
The case is Bryant Fonseca v. Hewlett-Packard Co, 9th U.S. Circuit Court of Appeals, No. 20-56161.
Hewlett-Packard Discrimination Complaints
Hewlett-Packard is used to age-discrimination complaints, having received at least 32 (three of which were attributed to its San Diego location) since July 2012, according to a U-T Watchdog review of state records. In 2016, USA Today reported that “Hewlett-Packard is most likely to spend the most time in court” defending age-related complaints –it was ranked first after reviewing complaints to California state officials about age discrimination at 12 leading tech companies since 2012.
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