Antitrust Law Daily Wrap Up, ANTITRUST—S.D. N.Y.: Ex-employee lacked standing to sue Moody’s for anti-solicitation pact, (Oct 2, 2014)

By Linda O’Brien, J.D., LL.M.

A former employee of Moody’s Investors Service lacked standing to bring antitrust claims against the company for allegedly entering into an anti-solicitation agreement with competitor Standard & Poor’s, the federal district court in New York City has ruled (Ulrich v. Moody’s Corporation, September 30, 2014, Broderick, V.).

Moody’s Investors Service is a provider of credit ratings, research, and risk analysis. In 2008, Paul Ulrich began work as a research writer at Moody’s in Hong Kong. During the course of his employment, Ulrich expressed concerns regarding potential securities law violations and filed complaints of age discrimination, harassment, and retaliation. In May 2012, Ulrich was issued a performance improvement plan for alleged refusal to work and insubordination and, in October 2012, Moody terminated Ulrich’s employment.

Ulrich filed suit against Moody’s, alleging violations of the Sherman Act, among other claims. Ulrich asserted that Moody’s and its main competitor, Standard & Poor’s, violated the Sherman Act by agreeing not to recruit or hire each other’s analytical staff and to suppress wages paid to analysts. The matter was transferred to a magistrate judge for pretrial purposes. In his report and recommendation, the magistrate judge recommended granting Moody’s motion to dismiss all claims. Ulrich filed objections to the magistrate judge’s report and recommendation.

Antitrust standing. The court determined that the allegations of Ulrich’s complaint demonstrated that he lacked standing to bring Sherman Act claims. Ulrich described the alleged conspiracy as affecting “analytical positions” at Moody’s and Standard & Poor’s; however, by his own admission, he was a research writer and not treated as an analyst. After effectively excluding his position from the scope of the conspiracy, Ulrich’s conclusory allegation that he should be considered an analyst anyway was insufficient to justify his inclusion as a victim in the alleged conspiracy. Moreover, the injury Ulrich alleges—the pay discrepancy he suffered as a result of the conspiracy—was not intended for his position and was too speculative, the court noted.

Antitrust claim. The magistrate judge correctly concluded that the plaintiff’s complaint failed to state a valid antitrust claim. The complaint alleged in only conclusory terms that there was an ongoing, global conspiracy between Moody’s and Standard & Poor’s. Ulrich alleged no facts demonstrating that the two companies reached an agreement not to recruit or hire employees of the other company. Futhermore, the complaint offers a logical reason why the companies would have engaged in parallel conduct and provides a rational explanation for why the companies would not want to hire each other’s analysts. Thus, the plaintiff alleged no factual basis for inferring that the two companies entered into an agreement to restrain trade—only that they engaged in parallel conduct, the court concluded.

The case is No. 13-CV-00008.

Attorneys: Paul C. Ulrich, pro se. Joseph Alan Nuccio (Morgan, Lewis & Bockius LLP) for Moody's Corporation and Moody's Investors Service, Inc.

Companies: Moody’s Corporation

Cases: Antitrust NewYorkNews