Labor & Employment Law Daily Wrap Up, CLASS ACTIONS—E.D. Va.: Naval-engineer no-poach class action will proceed against all remaining defendants, (Dec 5, 2025)

By Martin A. Steinberg, J.D.

Twenty major shipbuilding, engineering, and recruiting firms allegedly entered into an industry-wide “gentlemen’s agreement” not to recruit or hire one another’s naval architects and marine engineers, and unlawfully suppressed wages.

The federal court in Alexandria, Virginia, denied all remaining joint and individual motions to dismiss a putative class action alleging that twenty shipbuilding, engineering, and recruiting firms conspired for decades to suppress wages for naval architects and marine engineers through an unwritten “gentlemen’s agreement” not to recruit one another’s employees. After the Fourth Circuit reversed the district court’s earlier dismissal on statute-of-limitations grounds, the court held that the complaint plausibly alleges a Section 1 Sherman Act conspiracy supported by sufficient “plus factors,” and that factual disputes regarding whether the alleged no-poach agreement constitutes an unreasonable restraint of trade cannot be resolved at the Rule 12(b)(6) stage. The court further found that the complaint adequately pleads each moving defendant’s participation, whether directly or through corporate predecessors or subsidiaries, and therefore allowed the claims to proceed to discovery (Scharpf v. General Dynamics Corp., No. 1:23-cv-01372-AJT-WEF (E.D. Va. Nov. 26, 2025)).

Background. This putative antitrust class action, brought by former naval architect and marine engineer Susan Scharpf, alleges that twenty major shipbuilding, marine-engineering, and recruiting firms conspired to suppress wages through an unwritten, industry-wide “gentlemen’s agreement” not to recruit or hire one another’s naval engineers. The defendants—among them General Dynamics, Huntington Ingalls, their subsidiaries, leading engineering consultancies such as Gibbs & Cox, Serco, CACI, BMT, Thor Solutions, and Tridentis, and recruiting firm Faststream—allegedly control about 75% of the national market for naval design and engineering work.

Scharpf asserts a single claim under Section 1 of the Sherman Act on behalf of a proposed class of all naval architects and marine engineers employed by the defendants since January 1, 2000 (excluding Faststream), seeking damages and injunctive relief. She alleges that the roughly 10,000-person labor market is highly specialized and constrained by training, security-clearance, and technical requirements, and that despite industry-wide shortages, defendants agreed not to “affirmatively recruit” one another’s engineers, sometimes maintaining “do-not-hire” lists and permitting hiring only when candidates applied on their own.

According to the complaint, each defendant is linked to the no-poach scheme through at least one confidential witness—typically a former manager, recruiter, or executive, who described an established industry norm of avoiding competitive hiring. Witness accounts from multiple firms recount internal directives or common practices reflecting a shared understanding not to recruit rival engineers. The complaint characterizes shipbuilders and engineering consultancies as horizontal competitors for the same talent and alleges that their agreement constitutes a per se unlawful restraint under § 1. It further asserts that decades of industry consolidation (including acquisitions by General Dynamics, Huntington Ingalls, Serco, and CACI) made coordination easier and enabled successors to continue preexisting no-poach practices.

Procedurally, the district court initially dismissed the case as time-barred under the Sherman Act’s four-year statute of limitations. Still, the Fourth Circuit reversed in May 2025, holding that the plaintiff sufficiently pleaded fraudulent concealment under a relaxed Rule 9(b) standard. On remand, the district court considered the defendants’ remaining Rule 12(b)(6) arguments that the complaint fails to allege either an agreement or antitrust injury plausibly.

Burden. To withstand dismissal, the complaint must plausibly allege facts showing a “conscious commitment to a common scheme” to achieve the alleged unlawful objective. In their Joint Motion, defendants contended that the complaint failed to plausibly plead either the existence of a conspiracy or any resulting antitrust injury under a per se or rule-of-reason analysis. In separate Individual Motions, seven defendants further argued that, even if a conspiracy is adequately alleged, the complaint did not sufficiently link them to it.

Joint motion to dismiss. Taking the complaint as a whole, the court concluded that the plaintiff alleged sufficient circumstantial facts to infer a conspiracy plausibly. The defendants argued that the complaint rested on vague, conclusory assertions and that the alleged “gentlemen’s agreement” amounted to nothing more than lawful conscious parallelism. But under Section 1, a plaintiff may prove a conspiracy through direct or circumstantial evidence, and because direct evidence must be explicit and inference-free, a rarity in antitrust cases, the plaintiff’s theory properly turns on circumstantial allegations supported by “plus factors” that distinguish an agreement from independent decision-making.

Plus factors. The court held that the confidential-witness statements, while not direct evidence, contribute to a plausible inference when viewed in context. Statements that firms “did not recruit” from competitors or adhered to an informal norm against poaching could reflect unilateral choices. Still, they also fit within a broader pattern of industry behavior described in the complaint. Thus, the question is whether additional allegations make an agreement plausible rather than merely possible under Twombly.

Evaluating the alleged “plus factors,” the court rejected the defendants’ insistence that motive, opportunity, industry structure, and repeated inter-firm contacts were too generic to support an inference of collusion. Although they argued that factors such as teaming arrangements, geographic dispersion, and government contracting pressures offered independent explanations for their hiring practices, the court emphasized that it may not weigh competing inferences or resolve factual disputes at the Rule 12(b)(6) stage.

When read together, the allegations portray a small, concentrated industry marked by frequent executive interaction, shared economic incentives to restrain wages, repeat-player relationships, high barriers to entry, and a culture of secrecy—all conditions that can facilitate collusion. Numerous insider accounts reinforce the industry-wide understanding that engineers should not be poached. The court also noted that the Fourth Circuit had already found these witness statements probative in assessing fraudulent concealment, further supporting that they plausibly indicate motive, opportunity, and communication sufficient to constitute “plus factors.”

Restraint of trade. Turning to whether the complaint plausibly alleged an unreasonable restraint of trade, the court declined to classify the alleged conduct as either per se unlawful or subject to the rule of reason at this stage. The defendants argued that teaming arrangements and other cooperative relationships provide pro-competitive justifications, but the court found that factual disputes prevent resolution of the issue on the pleadings. Because the plaintiff plausibly alleged both an agreement and potential anticompetitive effects, the Section 1 claim may proceed.

Individual motions. Finally, the court addressed whether the plaintiff plausibly alleged that each of the seven defendants filing Individual Motions, Thor Solutions, Marinette Marine, Bollinger, Tridentis, Serco, CACI, and General Dynamics Corporation, participated in the no-poaching conspiracy. The court reiterated that, in multi-defendant antitrust cases, plaintiffs may not rely on collective allegations; they must plead particularized facts showing how each defendant joined the agreement, consistent with Fourth Circuit precedent requiring that the complaint “forecast” evidence of each defendant’s role rather than lumping them together. See SD3, LLC v. Black & Decker (U.S.) Inc., 801 F.3d 412, 423—24 (4th Cir. 2015), and Langford v. Joyner, 62 F.4th 122 (4th Cir. 2023).

The court found that the complaint adequately tied four defendants, Thor Solutions, Marinette Marine, Bollinger, and Tridentis, to the alleged conspiracy through confidential-witness statements describing their direct adherence to the no-poach arrangement. Witnesses recounted, among other things, a Thor Solutions manager acknowledging a “non-ink-to-paper” agreement not to poach engineers from firms like Alion; Marinette Marine employees confirming participation in the gentlemen’s agreement; a recruiter describing Bollinger’s refusal to hire an otherwise qualified Alion engineer due to the no-poach rules; and an executive familiar with the “Beltway Bandits,” including Tridentis, explaining that these consultancies shared an understanding not to recruit one another’s employees. Taken together, these individualized allegations were sufficient at the pleading stage.

The allegations against Serco, CACI, and General Dynamics presented closer questions. For Serco and CACI, the plaintiff tied their participation to conduct by their predecessor entities, JJMA and CSRA, before the acquisitions. While the complaint identified no specific post-acquisition conduct, it alleged continuity in personnel, practices, and culture, including the preservation of no-poach norms. Though sparse, the court held these allegations, viewed alongside witness statements implicating engineering consultancies more broadly, plausibly supported successor liability at this stage.

As to General Dynamics Corporation, the defendants argued that the plaintiff sought to impose liability solely based on parent-company status. The court agreed that ownership alone is insufficient but found that the complaint alleged more: that General Dynamics operated centralized HR and recruiting functions for subsidiaries such as Bath Iron Works and Electric Boat and assisted those subsidiaries in adhering to the no-poach practice by refraining from active recruitment. Relying on Copperweld Corp. v. Indep. Tube Corp., 467 U.S. 752 (1984), the court concluded that a parent may be liable where it directs or encourages anticompetitive conduct by its subsidiaries. Given the Fourth Circuit’s prior recognition of the plausibility of the overall scheme, the allegations against General Dynamics were sufficient to proceed.

Accordingly, the court held that the complaint plausibly alleges each moving defendant’s participation in the alleged conspiracy, and none of the Individual Motions justified dismissal at this early stage.

The Case is No. 1:23-cv-01372-AJT-WEF.

Judge: Trenga, A.

Attorneys: Rio Pierce (Hagens Berman Sobol Shapiro) for Susan Scharpf. David Glenn Barger (Greenberg Traurig) for General Dynamics Corp.

Companies: General Dynamics Corp.

Cases: ClassActions TortClaims Procedure CoverageLiability VirginiaNews