Duke University’s attempt to fend off an antitrust lawsuit by hiding under UNC’s cloak of governmental immunity looks like one of the few things that can inspire bipartisanship in Washington these days.
On March 7, lawyers for the U.S. Department of Justice filed a “statement of interest” in radiologist Danielle Seaman’s class-action lawsuit against Duke, which alleges that the university’s and UNC-Chapel Hill’s medical schools colluded to reduce competition for doctors and other key personnel.
While the case hasn’t gone to trial, the Trump administration’s Justice Department said that “if the evidence proves that Duke and [the UNC School of Medicine] entered into a naked no-poach agreement, the court should not hesitate to declare it per se unlawful.”
The filing came little more than a year after the agency affirmed that it would stand behind an Obama-era memo that said even a “gentlemen’s agreement” between rival schools to restrict faculty hiring raids would violate federal antitrust law.
Seaman, formerly an assistant professor in Duke’s School of Medicine, sued in 2015 after she lost out on a comparable position at UNC. Court filings indicate that she wanted to switch jobs not so much for the money but because she thought UNC would be a better fit for her interests and goals.
An administrator at UNC, however, emailed back to say a few-years-old agreement between the deans of the medical schools ruled out “lateral moves” between them. A professor could make the jump if the new job came with a promotion, but a like-for-like switch of, say, an assistant professorship at Duke for an assistant professorship at UNC was out of bounds.
With that email in hand, Seaman sought legal help from a San Francisco law firm that was then in the midst of extracting a $415 million settlement from such Silicon Valley giants as Apple, Google, Adobe, and Intel, which were accused of having similar under-the-table no-poach deals. She sued Duke, then later added UNC to the case. Under questioning, the then dean of UNC’s medical school, Bill Roper—now interim president of the UNC system—admitted to Seaman’s lawyers that he’d warned subordinates about hiring from Duke and that he’d sought a no-raids agreement from Victor Dzau, who was then Duke’s health-affairs chancellor.
UNC settled, agreeing to cooperate with Seaman’s lawyers, to avoid future hiring collusion, and to train its senior staff on antitrust law. Duke, however, has maintained that there was never any agreement. It has pointed to several examples of professors switching jobs.
But Duke’s primary legal argument—offered in hopes of avoiding a trial—has been that UNC’s governmental immunity shields private-sector actors like itself that cooperate with UNC initiatives and policy.
Not so fast, the DOJ says.
“Duke’s expansive arguments on the ‘state action’ doctrine and indulgent treatment of no-poach agreements are not supported by precedent and risk significant harm to competition, consumers, and workers in North Carolina,” its brief said.
UNC isn’t necessarily exempt from antitrust law because it’s participating in the market as an employer, not as a regulator, the department’s lawyers argue.
They added that the U.S. Supreme Court, in a 2015 ruling that roiled North Carolina’s dentistry-regulation system—the court found that, because the state’s licensing board was composed of people active in the profession, it could only claim immunity from antitrust law when it was actively supervised by the state—altered the relevant legal doctrines in ways Duke’s lawyers haven’t grappled with.
Duke’s problem now is that there’s no sign that state legislators, in allowing UNC to manage its affairs, intended to allow it to collude with others to suppress labor-market competition, according to the DOJ brief.
And because of the 2015 Supreme Court case, for any sort of immunity to exist, UNC officials would have to be actively supervising the no-poach deal. But since “Duke denies the agreement occurred, [it] cannot credibly argue that the agreement was actively supervised.”
The Obama-era memo, issued in October 2016, didn’t cite the Duke case but posed a similar hypothetical. A DOJ spokeswoman said in February 2018 that the department still regards that memo as good law.
The head of the DOJ’s antitrust section, Makan Delrahim, has also signaled that his staff will likely file briefs in hiring-collusion cases around the country and perhaps pursue criminal prosecutions.
Duke spokesman Michael Schoenfeld says the university wouldn’t comment on the DOJ’s filing.
Ray Gronberg is a former Durham Herald-Sun reporter who is now managing editor of The Henderson Daily Dispatch. Comment on this story at backtalk@indyweek.com.
These ‘gentleman’s agreements’ are also in place for other Duke/UNC areas, such as the hotels each university owns.