Antitrust Law Daily Wrap Up, ANTITRUST—W.D.Va.: Former sales representatives allege anticompetitive no-hire agreement between competing timeshare developers, (Dec 12, 2013)

By Linda O’Brien, J.D., LL.M.

Former timeshare sales representatives have filed a class action complaint in the federal district court of Harrisonburg against three timeshare developers for allegedly suppressing compensation and employment opportunities by entering into a no-solicitation and no-hiring agreement with a competitor (Hanger v. The Berkley Group, Inc., December 11, 2013).

The Berkley Group, Inc., Great Eastern Resort Corporation, Inc., and Williamsburg Plantation, Inc. develop, sell, and market time share properties throughout the U.S. According to the complaint, in 2007, The Berkley Group entered into an agreement with its direct competitor, Bluegreen Corporation, to eliminate competition between them for skilled workers by refraining from hiring each other’s current or former employees without written approval. The agreement was not limited by a time frame or geography.

The plaintiffs allege that the agreement harmed them and other employees by lowering the salaries and benefits they might otherwise have received, limited their ability to secure better compensation, and deprived employees of better job opportunities with the other company. Both Berkley and Bluegreen were involved in the formation, monitoring, and enforcement of the anticompetitive agreement.

The defendants failed to publicly disclose their agreement with Bluegreen and took steps to actively conceal its existence from its employees, according to the complaint. The plaintiffs also allege that the agreement unlawfully restrained trade, commerce, or competition for skilled labor between the defendants and their competitors, and reduced the total compensation the plaintiffs would have received in the absence of the unlawful agreement and conspiratorial acts.

Companies in the same or similar industries often compete to hire and retain employees, particularly in sale industries in which market expertise and specialized skills sought by one company can be found at another company. Solicitation can be an effective recruiting method and increases transparency in the labor market. The plaintiffs allege that, in a properly functioning and lawfully competitive market, Berkley and Bluegreen would compete for employees by hiring skilled timeshare sales personnel formerly employed by the other company.

Additionally, employees would benefit from the increased competition and effects of solicitation by having greater leverage to negotiate better compensation and information of better job opportunities. The practice of solicitation also promotes efficiency in the market and benefits hiring companies that will attract talented employees, save training costs, and reduce the risk of investing in experienced personnel with proven skills, according to the complaint.

The plaintiffs assert that the agreement between Berkley and Bluegreen is a restraint of trade that is per se unlawful under Section 1 of the Sherman Act and the Virginia Antitrust Act. The action seeks a declaratory and injunctive relief, treble damages, costs of suit, attorneys’ fees, and any other just and proper relief.

The case is No. 5:13-cv-00113-MFU.

Attorneys: Timothy Coffield (Coffield PLC) for Abigail Hanger, J.R. Collins, Chris Howard, Jeanette Alexander Collins, Julia Fulwider, and Steven Ferrell.

Companies: The Berkley Group, Inc.; Great Eastern Resort Corporation, Inc.; Williamsburg Plantation, Inc.

Cases: Antitrust VirginiaNews