`
`UNITED STATES DISTRICT COURT FOR
`THE WESTERN DISTRICT OF MICHIGAN
`Southern Division
`
`
`JOSH SCHEXNAILDRE, individually and on behalf
`of all others similarly situated,
`
`
`
`v.
`
`MUNSON HEALTHCARE and TRAVERSE
`ANESTHESIA ASSOCIATES, P.C.,
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`Plaintiff,
`
`Defendants.
`
`
`Civil Action No. __________
`
`CLASS ACTION COMPLAINT
`
`
`JURY TRIAL DEMANDED
`
`
`
`
`
`Plaintiff Josh Schexnaildre (“Plaintiff”), on his behalf and on behalf of a proposed class of
`
`similarly situated individuals, hereby alleges as follows against defendants Munson Healthcare
`
`(“Munson”) and Traverse Anesthesia Associates, P.C. (“TAA”).
`
`INTRODUCTION
`
`1.
`
`This action addresses an agreement between Munson, which bills itself as “northern
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`Michigan’s largest and leading healthcare system” and TAA, which is a “medical professional
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`corporation that provides anesthesia and pain management services at several general hospitals
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`and outpatient sites in the Grand Traverse region,” to restrain competition and reduce
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`compensation for providers of anesthesia services. Plaintiff is a Certified Registered Nurse
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`Anesthetist (“CRNA”) who brings this suit individually and on behalf of the Proposed Class to
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`enjoin Defendants from maintaining and enforcing their unlawful “no poach” agreement, and to
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`recover damages.
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`2.
`
`Defendants Munson and TAA (collectively “Defendants”) compete with one
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`another to hire and retain qualified providers of anesthesia services, including CRNAs. Beginning
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`on a date currently unknown to Plaintiff, Munson agreed that it would not solicit or hire TAA’s
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`anesthesia service providers while they were employed by TAA and for at least one year after the
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`person had left TAA’s employment. This agreement is still in effect and is being enforced by
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`Munson.
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`3.
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`The agreement between Munson and TAA was not ancillary to any legitimate
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`business transaction or lawful collaboration between Defendants. Defendants’ arrangement was a
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`naked agreement to unlawfully eliminate competition for, suppress the compensation paid to, and
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`otherwise reduce the expense of obtaining the services of qualified providers of anesthesia
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`services.
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`4.
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`Defendants’ agreement accomplished its purpose. It eliminated competition for
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`anesthesia service providers in northern Michigan and suppressed the compensation and benefits
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`that otherwise would have flowed to anesthesia service providers had there been an open and
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`competitive market for these services.
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`5.
`
`Defendants’ agreement not only denied job opportunities that were otherwise
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`available from Munson, but also prevented providers of anesthesia services employed by TAA and
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`Munson from negotiating for better terms and conditions of employment.
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`6.
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`The existence of this agreement was only revealed to the Plaintiff when he recently
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`inquired about a CRNA position at a hospital operated by Munson. Plaintiff, who was employed
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`by TAA, was told by the recruiter at the hospital that while there was an opening for a CRNA,
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`which he was qualified to fill, the Plaintiff could not be considered for a position at any Munson
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`facility during and for one year after his employment with TAA because of the agreement Munson
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`has with TAA.
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`2
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`JURISDICTION AND VENUE
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`7.
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`This action arises under Section 1 of the Sherman Act (15 U.S.C. § 1), Sections 4
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`and 16 of the Clayton Act (15 U.S.C. §§ 15(a) and 26), and Sections 445.772 and 445.778, Section
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`8(2) of the Michigan Antitrust Reform Act (“MARA”). Plaintiff seeks the recovery of treble
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`damages, costs of suit, and reasonable attorneys’ fees for the injuries that Plaintiff and members
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`of the Proposed Class sustained as a result of Defendants’ anticompetitive conduct, as well as a
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`declaration that the no-poach agreement is illegal and an injunction against its enforcement. The
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`Court has subject matter jurisdiction pursuant to 28 U.S.C. §§ 1331, 1337(a), 1367, 1407, and 15
`
`U.S.C. § 15.
`
`8.
`
`Venue is proper in this District pursuant to 15 U.S.C. §§ 15(a), 22 and 28 U.S.C.
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`§§ 1391(b), (c), and (d) because during the Proposed Class Period, Defendants resided, transacted
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`business, were found, or had agents in this District, and a substantial portion of Defendants’
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`activity discussed below has been carried out in this District.
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`9.
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`During the Proposed Class Period, Defendants assessed, hired, and retained
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`employees and obtained goods and services in a continuous and uninterrupted flow of interstate
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`commerce, including in this District. Defendants’ conduct had close and substantial effect on
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`interstate commerce in the United States, including in this District.
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`10.
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`This Court has in personam jurisdiction over Defendants because they, either
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`directly or through the ownership or control of their subsidiaries, inter alia: (a) transacted business
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`in this District; (b) participated in the assessment, hiring, and retention of employees in this
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`District; (c) maintained substantial aggregate contacts with this District; or (d) entered into an
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`illegal agreement that was directed at, and had a direct, substantial, reasonably foreseeable, and
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`3
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`Case 1:21-cv-00660-RJJ-RSK ECF No. 1, PageID.4 Filed 08/02/21 Page 4 of 14
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`intended effect of causing injury to the business or property of persons residing in, located in, or
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`doing business in this District
`
`PARTIES
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`11.
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`Plaintiff Josh Schexnaildre was employed by TAA as a CRNA during the Proposed
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`Class Period.
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`12.
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`Defendant Munson Healthcare is a not-for-profit health care system serving
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`northern Michigan with its headquarters located at 1105 Sixth Street, Traverse City, Michigan. It
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`is the largest health care system in northern Michigan, serving people in 30 counties, and owns or
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`operates nine hospitals. It is estimated to have an 89% market share in Traverse County. Munson
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`had revenue from charges for services of over $80.9 million in 2018.
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`13.
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`Defendant Traverse Anesthesia Associates, P.C. is located at 1221 6th Street,
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`Traverse City, Michigan. TAA provides anesthesia and pain management services at hospitals
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`and outpatient sites in northern Michigan.
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`FACTUAL ALLEGATIONS
`
`Defendants’ No-Poach Agreement
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`14. Munson and TAA are competitors in the recruitment, hiring, and retention of
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`anesthesia service providers. At a time as yet unknown to Plaintiff, Munson and TAA entered into
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`an agreement to eliminate competition between themselves for anesthesia service providers.
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`15.
`
`In 2021, Plaintiff learned that a hospital operated by Munson had an opening for an
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`anesthesia service provider. Plaintiff contacted an employee of the hospital, who confirmed that
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`the hospital was actively looking to fill such a position. Plaintiff expressed interest in the position.
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`16.
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`The hospital employee, however, told Plaintiff that he could not be considered for
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`the position because of an agreement between Munson and TAA that prohibited Munson from
`
`4
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`hiring any TAA employees to work for any Munson facility while employed by TAA or for a
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`period of one year after leaving TAA.
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`17.
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`The hospital employee explained that the CEO of the hospital had directly provided
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`the details of the agreement to Munson recruiters.
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`18.
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`Plaintiff spoke to other Munson human resources employees, who affirmed the
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`existence of the agreement.
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`Effects of No-Poach Agreements
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`19.
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`Competition in labor markets is hindered by imperfect information about supply
`
`and demand. Unlike commodity markets where the near instantaneous reporting of market-wide
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`demand and supply determines a single market price, participants in the labor market must
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`individually seek out job opportunities and make difficult judgments about their ability to negotiate
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`terms and conditions of employment with no, limited, or opaque information about employer
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`demand and competition from other job seekers. This is particularly true for positions like those
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`for anesthesia service providers in medical care facilities, that require specialized education,
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`professional certification, and skill and experience, because there are few openings and infrequent
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`turnover. As a result, any limitation that prevents qualified applicants from seeking a job opening
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`will not only give the employer the upper hand in any negotiation with prospective applicants but
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`also force existing employees to remain employed for less compensation and benefits because
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`there are no alternative positions available to counterbalance the employers’ asymmetric
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`knowledge of the market.
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`20.
`
` “Price discovery” refers to the process by which a market searches for prices when
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`information about supply and demand is imperfect. The speed at which price discovery operates
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`depends on the manner in which, and how rapidly, information is disseminated among employers
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`5
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`and employees. Both Plaintiff and the Proposed Class work in a price discovery environment.
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`Imperfect information about supply and demand characterizes the job market for anesthesia service
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`providers.
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`21.
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`The specialized field of anesthesia service providers in the medical care industry is
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`also subject to high supply-demand pressures. There is high demand for and limited supply of
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`anesthesia service providers. Qualified individuals, like those working for the Defendants, are
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`essential employees. However, if the hiring process is encumbered with prohibitions against the
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`solicitation and hiring of this small talent pool, the price discovery environment will create market
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`friction that will mask the supply-demand dynamic and suppress wages and benefits.
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`22.
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`Soliciting and hiring employees from other employers is a particularly efficient and
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`effective method of competing for qualified employees. Soliciting involves communicating
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`directly—by phone, email, social and electronic networking, or in person—with competitors’
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`employees who have not applied for a job opening. Such direct solicitation can be done by the
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`soliciting firm’s personnel or by outside recruiters. Firms rely on direct solicitation of employees
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`of other companies because those individuals have specialized experience and may be less likely
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`to respond to other methods of recruiting.
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`23.
`
`In a competitive labor market, Defendants would compete with one another to
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`attract and retain anesthesia service providers for their needs. It is this competition among
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`employers for those employees that determines the level of compensation. While employers would
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`like to pay low wages for high-quality anesthesia service providers, competition increases the
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`available job opportunities and requires employers to make the best possible offers to prospective
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`anesthesia service providers. It also improves anesthesia service providers’ ability to negotiate for
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`better salaries and other terms of employment.
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`6
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`24.
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`Competition for workers via lateral hiring has a significant impact on compensation
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`in a number of ways. First, competition facilitates the flow of information about opportunities and
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`compensation. For example, employees who are solicited, interviewed, or offered a job by a
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`competitor gain insight into how other companies value their work and experience, and what
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`compensation and benefits their employers competitors typically pay or are willing to pay to get
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`them to leave their current employer. This information is not readily available to anesthesia service
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`providers, who are generally able to rely only on these encounters and word-of-mouth from peers
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`and colleagues for such information. Employers, on the other hand, often have resources available
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`to them that their employees lack to gather information regarding market compensation rates. No-
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`poach agreements further restrain employees’ access to this information by eliminating or reducing
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`the communications that encourage the flow of information.
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`25.
`
`Defendants’ agreement precluded this information about opportunities and
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`compensation from reaching anesthesia service providers at TAA, and perhaps other anesthesia
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`service providers, including those at Munson. Those employees could have used that information
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`to negotiate higher pay at their existing jobs or accept superior offers from their employers’
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`competitors. Employees who change jobs voluntarily typically have faster wage growth than those
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`who remain in the same job. Anesthesia service providers could also share this information with
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`their co-workers, multiplying the impact of each offer as the job information spread through social
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`channels.
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`26.
`
`The threat of losing employees to competitors also encourages employers to
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`increase and maintain compensation to ensure high morale, productivity, and retention. Absent
`
`competitive compensation, employees are more likely to seek such compensation elsewhere, be
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`receptive to recruiting by competitors, limit their productivity, and undermine morale. After
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`7
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`Case 1:21-cv-00660-RJJ-RSK ECF No. 1, PageID.8 Filed 08/02/21 Page 8 of 14
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`employees receive offers from competitors, retaining those employees may require raising their
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`compensation and pressure employers to raise the compensation of other employees. Employers
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`therefore have an incentive to prevent lateral departures by paying employees competitive salaries.
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`In competitive industries, preventive retention measures thus lead to increased compensation for
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`employees. But Defendants’ unlawful agreement enabled them to avoid such measures at the
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`expense of their anesthesia service providers.
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`27.
`
`Because of their specialized education, training, knowledge, and skills, anesthesia
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`service providers are very valuable employees in the healthcare industry. Anesthesia service
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`providers would not view employment in other professions or fields to be an adequate economic
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`substitute for their employment as anesthesia service providers. Because of their investment in
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`education, certification, licensing and other professional requirements, and experience, anesthesia
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`service providers cannot capitalize on their investment to become anesthesia service providers in
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`any other market.
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`28.
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`Further, healthcare employers cannot use employees from other industries or even
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`disciplines within the medical field as substitutes for anesthesia service providers.
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`29.
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`Because Plaintiff and the Proposed Class members possess skills and experience
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`that cannot be found in other employees, employers like Defendants want to retain them, but to do
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`so they would have to increase financial incentives in a competitive market. On the other hand,
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`limiting a primary source of competition for anesthesia service providers using a no-poach
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`agreement allowed Defendants to pay lower wages to anesthesia service providers than they would
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`have paid in the absence of the no-poach agreement.
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`30.
`
`Defendants’ anticompetitive agreement restrained competition for anesthesia
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`service providers and disrupted the normal bargaining and price-setting mechanisms that apply in
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`8
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`competitive labor markets. This disruption and suppression of compensation was not limited to
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`particular individuals who would otherwise have been solicited or sought to change employers.
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`The effects of the no-poach agreement caused widespread impact on Defendants’ anesthesia
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`service providers by eliminating or reducing job opportunities, the flow of information, and the
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`need for preventive and reactive increases to compensation for the entire Proposed Class.
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`Relevant Markets
`
`31.
`
`The relevant markets are for anesthesia service providers in northern Michigan.
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`Tolling of the Statute of Limitations
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`32.
`
`During the Proposed Class Period, Defendants concealed their conspiracy, such that
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`Plaintiff and Proposed Class members could not have discovered it through the exercise of
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`reasonable diligence. Plaintiff and members of the Proposed Class did not and could not have
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`discovered through the exercise of reasonable diligence that Defendants had entered into a secret
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`no-poach agreement. Plaintiff and Proposed Class members did not know of any facts that would
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`have caused a reasonable person to suspect that Defendants had agreed to restrain competition for
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`the services of anesthesia service providers. For these reasons, all applicable statutes of limitation
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`have been tolled based on the discovery rule, the doctrine of equitable tolling, or Defendants’
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`fraudulent concealment. Defendants are thus estopped from relying on any statutes of limitations
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`in defense of this action.
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`CLASS ACTION ALLEGATIONS
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`33.
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`Plaintiff brings this action individually and on behalf all those similarly situated as
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`a proposed class action under Rules 23(a) and (b)(1)(A), (b)(2), and (b)(3) of the Federal Rules of
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`Civil Procedure, seeking monetary damages and injunctive and declaratory relief on behalf of the
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`following Proposed Class (the “Proposed Class”):
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`9
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`All natural persons who were or are employed by Defendants as anesthesia service
`providers. Excluded from the Proposed Class are Defendants’ directors, officers, or
`employees who entered into the no-poach agreement.
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`34.
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`Plaintiff believes that the Proposed Class members are so numerous and
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`
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`geographically dispersed that joinder of all members is impracticable.
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`35.
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`Plaintiff’s claims are typical of the claims of the Proposed Class as they arise out
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`of the same course of Defendants’ conduct and the same legal theories.
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`36.
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`Plaintiff will fairly and adequately represent the interests of the Proposed Class and
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`has no conflict with the interests of the Proposed Class.
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`37.
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`Prosecuting separate actions by Proposed Class members would create a risk of
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`inconsistent adjudications with respect to individual Proposed Class members that would establish
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`incompatible standards of conduct for the Defendants.
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`38.
`
`Defendants have acted or refused to act on grounds that apply generally to the
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`Proposed Class, so that final injunctive or corresponding declaratory relief is appropriate
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`respecting the Proposed Class as a whole.
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`39.
`
`There are numerous questions of law and fact common to the Proposed Class,
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`including, but not limited to, whether:
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`a. Defendants agreed that Munson would not solicit or hire TAA’s anesthesia service
`providers;
`
`b. such agreement was a per se violation of the Sherman Act;
`
`c. such agreement was a violation or flagrant violation of the Michigan Antitrust
`Reform Act;
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`d. Defendants have fraudulently concealed their agreement;
`
`e. Defendants’ conduct suppressed compensation below competitive levels for
`anesthesia service providers;
`
`
`
`
`10
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`Case 1:21-cv-00660-RJJ-RSK ECF No. 1, PageID.11 Filed 08/02/21 Page 11 of 14
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`f. Plaintiff and the Proposed Class suffered antitrust injury as a result of Defendants’
`agreement; and
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`g. Defendants’ agreement should be declared unlawful and Defendants enjoined from
`abiding by its terms.
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`During the Proposed Class Period, Plaintiff was employed by TAA as an anesthesia
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`40.
`
`service provider. Plaintiff’s interests are coincident with and not antagonistic to those of the other
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`members of the Proposed Class.
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`41.
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`Plaintiff is a member of the Proposed Class, has claims that are typical of the claims
`
`of the Proposed Class members, and will fairly and adequately protect the interests of the members
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`of the Proposed Class. In addition, Plaintiff is represented by counsel who are competent and
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`experienced in the prosecution of antitrust and class action litigation.
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`42.
`
`The above-referenced common questions of law and fact predominate over any
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`questions affecting only individual members of the Proposed Class.
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`43.
`
`A class action is superior to any other means of resolving this litigation. Separate
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`actions by individual Proposed Class members would be inefficient and would create the risk of
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`inconsistent or varying adjudications. There will be no material difficulty in the management of
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`this action as a class action.
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`FIRST CLAIM FOR RELIEF
`(Violation of the Sherman Act, Section 1)
`
`Plaintiff realleges and incorporates by reference each of the allegations contained
`
`44.
`
`in the preceding paragraphs as if fully set forth herein.
`
`45.
`
`Defendants, by and through their officers, directors, employees, agents, or other
`
`representatives, entered into and engaged in an unlawful agreement in restraint of trade and
`
`commerce in violation of Section 1 of the Sherman Act, 15 U.S.C. § 1. Specifically, Defendants
`
`agreed to restrict competition for Proposed Class members’ services through Munson refraining
`
`11
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`Case 1:21-cv-00660-RJJ-RSK ECF No. 1, PageID.12 Filed 08/02/21 Page 12 of 14
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`from soliciting or hiring TAA’s anesthesia service providers, thereby fixing and suppressing
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`Proposed Class members’ compensation.
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`46.
`
`Defendants’ agreement has included concerted action and undertakings with the
`
`purpose and effect of: (a) fixing Plaintiff’s and the Proposed Class’s compensation at artificially
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`low levels; and (b) eliminating, to a substantial degree, competition between Defendants for
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`anesthesia service providers.
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`47.
`
`Defendants’ agreement injured Plaintiff and the members of the Proposed Class by
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`suppressing their compensation and depriving them of free and fair competition in the market for
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`their services.
`
`
`SECOND CLAIM FOR RELIEF
`(Violation of Section 445.772 of the Michigan Antitrust Reform Act)
`
`Plaintiff realleges and incorporates by reference each of the allegations contained
`
`48.
`
`in the preceding paragraphs as if fully set forth herein.
`
`49.
`
`Defendants, by and through their officers, directors, employees, agents, or other
`
`representatives, entered into and engaged in an unlawful agreement in restraint of trade and
`
`commerce in violation of section 445.772 of the MARA. Specifically, Defendants agreed to restrict
`
`competition for Proposed Class members’ services through Munson refraining from soliciting or
`
`hiring TAA’s anesthesia service providers, thereby fixing and suppressing Proposed Class
`
`members’ compensation.
`
`50.
`
`Defendants’ agreement has included concerted action and undertakings with the
`
`purpose and effect of: (a) fixing Plaintiff’s and the Proposed Class’s compensation at artificially
`
`low levels; and (b) eliminating, to a substantial degree, competition between Defendants for
`
`anesthesia service providers.
`
`12
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`Case 1:21-cv-00660-RJJ-RSK ECF No. 1, PageID.13 Filed 08/02/21 Page 13 of 14
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`51.
`
`Defendants’ contract or conspiracy was flagrant and injured Plaintiff and the
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`members of the Proposed Class by suppressing their compensation and depriving them of free and
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`fair competition in the market for their services.
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`52.
`
`Plaintiff and the Proposed Class members seek injunctive and other equitable relief,
`
`treble actual damages sustained by reason of Defendants’ flagrant violation of the MARA, taxable
`
`costs and reasonable attorneys’ fees.
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`PRAYER FOR RELIEF
`
`WHEREFORE, Plaintiff, individually and on behalf the Proposed Class of similarly
`
`situated persons, respectfully requests the following:
`
`a.
`
`That the Court certify this lawsuit as a class action under Rules 23(a), (b)(1)(A),
`
`(b)(2), and (b)(3) of the Federal Rules of Civil Procedure, that Plaintiff be
`
`designated as the Class representative, and that Plaintiff’s counsel be appointed as
`
`counsel for the Class;
`
`b.
`
`That the conduct alleged herein be declared, adjudged, or decreed to be per se
`
`unlawful under Section 1 of the Sherman Act, 15 U.S.C. § 1, and a flagrant violation
`
`of Section 445.772 of the MARA;
`
`c.
`
`d.
`
`e.
`
`That the Court declare that Defendants’ agreement is illegal and that Defendants be
`
`enjoined from abiding by the terms of their illegal agreement;
`
`That Plaintiff and the Proposed Class recover their damages, trebled, and the costs
`
`of the suit, including reasonable attorneys’ fees as provided by law; and
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`That the Court provide for such other and further relief as it deems just and proper.
`
`13
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`JURY DEMAND
`
`Pursuant to Federal Rule of Civil Procedure 38, Plaintiff, individually and on behalf of the
`
`Proposed Class, demands a trial by jury on all issues so triable.
`
`
`
`
`
`
`
`/s/ David H. Fink
`David H. Fink (P28235)
`Nathan J. Fink (P75185)
`FINK BRESSACK
`38500 Woodward Avenue, Suite 350
`Bloomfield Hills, MI 48304
`Telephone: (248) 971-2500
`dfink@finkbressack.com
`nfink@finkbressack.com
`
`Joseph C. Kohn*
`William E. Hoese*
`Aarthi Manohar*
`KOHN, SWIFT f& GRAF, P.C.
`1600 Market Street, Suite 2500
`Philadelphia, PA 19103
`(215) 238-1700
`jkohn@kohnswift.com
`whoese@kohnswift.com
`amanohar@kohnswift.com
`
`Gregory P. Hansel*
`Randall B. Weill*
`Michael S. Smith*
`PRETI, FLAHERTY, BELIVEAU
` & PACHIOS LLP
`One City Center, P.O. Box 9546
`Portland, ME 04112-9546
`Telephone: (207) 791-3000
`ghansel@preti.com
`rweill@preti.com
`msmith@preti.com
`
`Attorneys for Plaintiff and the Proposed Class
`
` Application for admission to be submitted
`
`14
`
` *
`
`
`
`
`Dated: August 2, 2021
`
`
`
`
`
`