Fourth Circuit Revives No-Poach Class Action, Signals Expanded View of Fraudulent Concealment

In Scharpf v. General Dynamics Corp., the Fourth Circuit Court of Appeals has breathed new life into a long-dormant class action alleging a covert, decades-long no-poach conspiracy among major naval defense contractors. According to an article by Steven Hix at Bradley Arant Boult Cummings, the case centers on claims by two former naval engineers who accuse the defendants of suppressing labor mobility and wages through an unwritten agreement not to recruit each other’s employees. Although the district court dismissed the case as time-barred under the Sherman Act’s four-year statute of limitations, the Fourth Circuit reversed, holding that the alleged “non-ink-to-paper” conspiracy was sufficiently concealed to toll the statute under the doctrine of fraudulent concealment.

At the heart of the decision is the court’s pragmatic interpretation of what constitutes an “affirmative act” of concealment. The plaintiffs alleged that the no-poach arrangement was enforced entirely through oral instructions, coded language, and informal communications, deliberately leaving no traceable evidence. 

The Fourth Circuit held that such tactics, if proven, went beyond mere silence and constituted affirmative steps to conceal the conspiracy, thereby satisfying the standard for tolling. In doing so, the court reaffirmed its alignment with an increasingly adopted middle-ground approach to fraudulent concealment among federal circuits.

This ruling has clear implications for antitrust and employment litigation. It underscores that the lack of a written agreement will not insulate defendants from scrutiny if concealment is deliberate and calculated. 

For employers, particularly those in specialized or high-security sectors, covert hiring arrangements may leave them exposed to litigation long after the conduct occurs. The court’s acceptance of insider testimony and relaxed pleading requirements also signals greater latitude for plaintiffs seeking to challenge unwritten conspiracies that operate in the shadows.