Antitrust lawsuit against General Dynamics, HII revived in appeals court

Two former naval engineers who claimed that General Dynamics, Huntington Ingalls Industries and more than a dozen other government contractors and shipbuilders illegally agreed to not poach each other’s employees will receive a rehearing, a federal appeals court panel ruled this month.

A two-judge majority reversed the federal judge’s 2024 dismissal and remanded the case for rehearing in the U.S. District Court for the Eastern District of Virginia.

The plaintiffs said in the lawsuit, filed in October 2023, that executives at 20 defendant corporations had an “unwritten gentleman’s agreement” to not actively recruit other companies’ employees, and that this led to lower wages for naval engineers. Although the lawsuit covered the period beginning in 2000, the complaint said the “no-poach conspiracy” likely dated back to the 1980s.

Among the defendants are Virginia-based Newport News Shipbuilding, General Dynamics Information Technology, Serco and CACI International, as well as parent companies HII and General Dynamics.

The class action lawsuit was dismissed by a federal judge last year, but it was revived by a split appeals court panel May 9, according to court documents.

In the ruling, the two-judge majority wrote that the defendants “allegedly covered up their no-poach conspiracy by, among other things, ‘carefully avoiding putting anything in writing’ and using coded language to refer to it. That meets the affirmative-acts standard.”

However, the chief judge wrote in a dissenting opinion that the plaintiffs, Susan Scharpf and Anthony D’Armiento, did not meet the statute of limitations on their antitrust claims.

In his dissent, Judge Albert Diaz, chief circuit judge of the U.S. Court of Appeals for the Fourth Circuit, noted that Scharpf and D’Armiento worked in the naval shipbuilding industry “from 2007 to 2013 and 2002 to 2004, respectively. In 2023, they sued 17 defendants on behalf of themselves and a putative class consisting of ‘all persons employed as naval architects and/or marine engineers.”

He adds, “The majority doesn’t simply accept the plaintiffs’ allegations as true; it does the plaintiffs’ work for them… Plaintiffs alleging a conspiracy don’t get a free pass on time-barred claims.”

General Dynamics said Thursday it had no comment on the decision, and HII issued the following statement: “As set forth in our filing last week, we continue to believe the district court’s decision to dismiss was legally accurate, and we will continue to vigorously defend this position. HII is committed to compliance in all aspects of its business — its robust compliance program and maintaining an ethical culture at all levels of the company is critical to the long-term success of our company.”

According to the 2023 lawsuit, five consulting firms named as defendants were purchased by larger businesses with Virginia ties: Gibbs & Cox, now owned by Leidos; John J. McMullin Associates, owned by Serco; CSC’s naval engineering unit, now owned by CACI; and AMSEC, now owned by HII.