Todd v. Exxon Corp.
275 F. 3d 191, 2001 WL 1635496 (2001)
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Rule of Law:
An agreement among competing employers to exchange detailed, current, and future non-public salary information in a concentrated market may constitute an unreasonable restraint of trade in violation of § 1 of the Sherman Act when analyzed under the rule of reason.
Facts:
- Fourteen major oil and petrochemical companies, representing 80-90% of the industry, regularly shared detailed compensation data for their non-union managerial, professional, and technical (MPT) employees.
- The companies used a 'Job Match Survey' to compare salaries, using jobs at defendant Chevron as benchmarks and creating percentage 'offsets' to standardize dissimilar roles for comparison.
- The companies also conducted a 'Job Family Survey,' coordinated by defendant Exxon, which provided current salary data for 30 different job categories, updated and distributed several times per year.
- A third-party consultant, Towers Perrin, compiled the survey data, but participating companies could receive specific subsets of salary information from as few as three competitors at a time.
- The companies conducted additional surveys covering bonuses, starting salaries for new college graduates, and the value of non-cash benefits.
- Human resource personnel from the defendant companies held regular meetings at least three times per year to discuss current and future salary budgets.
- The exchange of information was accompanied by assurances among the defendants that the data would be used in setting MPT employee salaries.
- The salary data was kept confidential and was not made available to the employees whose salaries were being discussed or to the public.
Procedural Posture:
- Roberta Todd, on behalf of a putative class, sued Exxon Corporation and thirteen other oil and petrochemical companies in the U.S. District Court for the Southern District of New York.
- The complaint alleged that the defendants' exchange of salary information violated § 1 of the Sherman Act.
- The defendants filed a motion to dismiss the complaint for failure to state a claim pursuant to Fed. R. Civ. P. 12(b)(6).
- The district court granted the defendants' motion to dismiss.
- Plaintiff-appellant Roberta Todd appealed the dismissal to the U.S. Court of Appeals for the Second Circuit.
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Issue:
Does an alleged agreement among competing oil and petrochemical companies to systematically share detailed current and future salary information for non-union employees state a plausible claim for an unreasonable restraint of trade under Section 1 of the Sherman Act?
Opinions:
Majority - Sotomayor
Yes. A complaint alleging that competing employers exchanged detailed, current, non-public salary information states a plausible claim for an unreasonable restraint of trade under Section 1 of the Sherman Act. The district court erred in dismissing the complaint. First, the plaintiff plausibly defined the relevant market as the labor market for MPT employees in the oil and petrochemical industry. In a buyer-side (oligopsony) conspiracy, the proper focus is on the interchangeability of employers from the employee's perspective, not the interchangeability of different types of employees. Plaintiff plausibly alleged that MPT employees possess industry-specific skills that limit their mobility and make them dependent on employers within that industry. Second, the alleged market structure is susceptible to collusion; it is highly concentrated, the defendants created fungibility among jobs through sophisticated surveys, and the supply of labor is inherently inelastic. Third, the nature of the information exchanged had significant anticompetitive potential because it was current, forward-looking, specific rather than aggregated, and not available to the public or the employees. Finally, the plaintiff adequately alleged an actual adverse effect on competition, namely the artificial depression of MPT salaries. Therefore, the complaint is sufficient to survive a motion to dismiss.
Analysis:
This case is a leading modern example of applying Section 1 of the Sherman Act to a labor market and an alleged buyer-side (oligopsony) conspiracy. It clarifies that the rule of reason analysis for information exchanges applies to salary data among competing employers. The decision provides a crucial framework for defining a relevant labor market by focusing on the interchangeability of employers from the employees' viewpoint, especially where industry-specific skills are a factor. By reversing the district court's dismissal, the opinion reinforces the principle that antitrust claims involving complex, fact-intensive inquiries like market definition and competitive effects should not be dismissed at the pleading stage without allowing for discovery.
