HII, General Dynamics sued by marine engineers

A group of naval engineers filed a federal class action lawsuit on Oct. 6 against 20 large government contractors and shipbuilders, including Virginia-based General Dynamics and Huntington Ingalls Industries, claiming that the corporations have for decades “maintained an illegal agreement not to actively recruit, or ‘poach,’ each other’s employees,” thus depriving naval engineers of “hundreds of millions of dollars in compensation.”

The lawsuit was filed in the U.S. District Court for the Eastern District of Virginia, and in addition to the parent companies HII and General Dynamics, other Virginia-based corporations and subsidiaries are named as defendants, including HII’s Newport News Shipbuilding division, General Dynamics Information Technology, Serco and CACI International. As of Wednesday, the defendants had not yet been served with the lawsuit, after which their attorneys will have 21 days to respond.

Plaintiffs Susan Scharpf and Anthony D’Armiento, represented by lead attorney Steven Jeffrey Toll of Washington, D.C., law firm Cohen Milstein Sellers & Toll, allege in the suit that executives at the 20 defendant corporations have long held an “unwritten ‘gentleman’s agreement'” in which the companies agreed not to actively recruit each other’s employees, which has led to lower wages for naval engineers. Although the lawsuit covers the period beginning in 2000, the complaint says the “no-poach conspiracy” likely dates back to the 1980s.

“Naked ‘no-poach’ agreements … are unlawful per se under the nation’s antitrust laws,” the complaint says. “The purpose and effect of such agreements is to cheat the highly skilled workers who design the most powerful military fleet in the world out of the competitive wages they deserve.”

The lawsuit notes that General Dynamics and HII “operate the only five shipyards in the country used to build large military vessels,” while engineering consulting firms — among them CACI and Serco — “help design, refit and maintain nearly every ship in the U.S. fleet. Behind closed doors, these consultants refer to themselves as the ‘Beltway Bandits.’ … All have headquarters in Northern Virginia, convenient to each other and the Pentagon.”

According to the suit, 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.

The suit says that some former executives and managers at companies named as defendants provided “direct evidence of the conspiracy,” including a “former insider from Huntington Ingalls [who] said that the company maintained a ‘do-not-hire list’ — a list of companies from which Huntington Ingalls would not poach naval engineers.”

This led to a “persistent shortage of qualified naval engineers,” the lawsuit claims. The 20 defendants employ fewer than 10,000 naval engineers nationwide, many of whom are based in the Washington, D.C./Northern Virginia area and in Norfolk and Newport News.

“Many defendants maintain offices for senior managers practically side-by-side on the same street abutting the Washington Navy Yard,” the complaint reads. “The ‘incestuous’ relationships among industry managers enabled defendants to monitor each other’s hiring practices, reinforce the agreement in direct communications, and punish firms who violated the agreement.” Also, the suit alleges, “defendants entered written agreements to not recruit each other’s naval engineers when working on the same project” as subcontractors or when submitting joint bids for contracts.

Scharpf and D’Armiento, the named plaintiffs, were both employed as naval architects. Scharpf, who, according to her LinkedIn account, is now employed as a patent examiner at the U.S. Patent and Trademark Office, worked for Alion Science & Technology, CSC and Gibbs & Cox between 2007 and 2013, while D’Armiento worked for Northrop Grumman Ship Systems at Ingalls Shipyard in Mississippi from 2002 to 2004. NGSS was spun off from Northrup Grumman to become HII in 2011.

D’Armiento was previously a government whistleblower who, as a civilian Coast Guard worker, disclosed documents in 2007 showing that the U.S. Coast Guard knew about hundreds of defects in a communication system for the $640 million National Security Cutter vessel, part of the $25 billion Integrated Deepwater System program to replace Coast Guard equipment, including aircraft and ships.

According to the class action lawsuit filed last week, the annual median compensation for U.S. naval engineers as of last year was $96,910, an amount the plaintiffs argue “would have been materially higher” if not “for defendants’ conspiracy.” The plaintiffs and other class members seek damages in an amount to be determined, as well as pre- and post-judgment interest and attorneys’ fees. They are seeking a jury trial.

An HII spokesman said Wednesday the company is reviewing the filing and cannot comment at this time. A spokesman for General Dynamics said the company had no comment on the lawsuit, and representatives of Serco and CACI couldn’t immediately be reached for requests for comment Wednesday.