Antitrust Law Daily Wrap Up, ANTITRUST—WDPA: Improper Market Definition Dooms Claim of Conspiracy in Labor Market, (Nov 28, 2012)

By Jeffrey May, J.D.

After initially rejecting a per se claim, alleging a conspiracy to suppress competition in the labor market involving contractors serving energy company Consol Energy, Inc., the federal district court in Pittsburgh has now dismissed with prejudice a terminated employee's rule of reason claim based on the same conduct (Molinari v. Consol Energy, Inc., November 27, 2012, Schwab, A.).

In October, the court dismissed without prejudice the employee's antitrust claim, alleging a per se illegal conspiracy (2012-2 Trade Cases ¶78,087). The claim was based on an alleged agreement between the Consol and one of the plaintiff's past employers.

To determine whether a defendant’s conduct unreasonably restrains trade in violation of the antitrust laws, federal courts apply per se analysis or a more detailed, rule of reason analysis. Per se analysis is reserved for agreements that are so plainly anti-competitive that no elaborate study of the industry is needed to establish their illegality. The court declined to find that a non-compete agreement of the type alleged was a per se violation of the Sherman Act.

The employee filed an amended complaint, alleging an unreasonable restraint of trade under rule of reason analysis. Under rule of reason analysis, the employee had the burden to demonstrate, among other things, that the challenged agreement produced adverse anticompetitive effects within properly defined relevant product and geographic markets.

The plaintiff defined the product market as “labor and services for sale to any employer who provides, or who may provide, services to Consol, directly or indirectly.” In rejecting the market, the court explained that motions to dismiss had been frequently granted when the relevant market was improperly limited to a single entity.

The court decided that the plaintiff failed to define the relevant market with reference to the rule of reasonable interchangeability and cross-elasticity of demand. Consol was not so unique as an employer, either direct or indirect, as to constitute its own market. There were no factual averments in the amended complaint that Consol was able to impact salaries paid by other coal companies.

Furthermore, the plaintiff did not establish that he gained such unique skills while working for Consol that he could not obtain similar employment with similar remuneration with another company in the same line of business as Consol. Thus, the proposed market was not supported by unique skills in either the industry or with Consol in particular.

The case is 12cv1085.

Matthew C. Cairone (The Cairone Law Firm PLLC) for Darrell Molinari. David A. Strassburger (Strassburger, McKenna, Gutnick & Gefsky) for Consol Energy, Inc.

Cases: Antitrust PennsylvaniaNews