Antitrust Lawsuit Alleges nCino, Live Oak Bank Agreed Not to Hire Each Other’s Employees

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A proposed antitrust class action alleges there has existed for years between nCino, Live Oak Bank and non-party Apiture LLC an illegal agreement not to hire, or “poach,” each other’s employees as a means of staving off the pressure to pay competitive wages. 

The 19-page lawsuit, filed in North Carolina federal court by a former Apiture vice president, claims the apparent no-hire agreement among the parties pertains to all Wilmington-area employees of nCino, a provider of cloud-based operating systems, and Apiture, in addition to workers in Live Oak Bank’s software engineering department, and exists solely for the companies to avoid paying competitive wages to attract and retain talent.

The plaintiff claims to have participated in at least one discussion with Apiture managers in which the alleged no-hire agreement came up, and expressed his opposition to the arrangement before being told by a superior that it was not up for discussion. The plaintiff says he was fired by Apiture not long after he vocally objected to the no-hire agreement, and was rejected for a job at nCino despite his extensive skillset and resumé. 

“As Plaintiff’s experience illustrates, Defendants reduced competition among themselves for employees by entering into the No-Hire Agreement alleged herein. Defendants and their co-conspirator entered into, implemented, and policed the No-Hire agreement with the intent and effect of suppressing the compensation of their employees at artificially low levels.”

According to the complaint, the no-hire agreement, which has been in place since nCino’s founding in 2011 and expanded to include Apiture around 2017, amounts to a violation of the federal Sherman Act. Apiture, which is not named as a defendant, is described in the complaint as a joint venture between Live Oak Bank and non-party First Data Corporation, and offers digital banking technology in the same arena as that provided by fellow publicly owned fintech firm nCino, according to the case. 

Live Oak Bank, nCino and Apiture are the leading fintech employers in Wilmington, North Carolina, the suit begins. Per the case, all three develop digital banking technology, and there are no peer financial technology companies in the area. 

In a “properly functioning and lawfully competitive labor market,” the lawsuit says, nCino, Live Oak Bank and Apiture would compete for employees by recruiting and hiring from each other, a process that would thereby raise workers’ pay in that the employers would be incentivized to keep employees from pursuing outside opportunities. Moreover, in the Wilmington area, given the “profound” geographic proximity each company has to one another, an individual looking to work for any other employer in the same industry would have to move, at minimum, 130 miles away to another city, an endeavor that might include uprooting family and rearranging daily life, the suit relays. If employees were able to move between nCino, Live Oak Bank and Apiture, however, things may be far less hectic, and potentially more profitable, for those looking for a new employer, the complaint stresses.

“As a result,” the lawsuit claims, “but for the No-Hire Agreement, Live Oak Bank, Apiture, and nCino would have been each other’s competitor for employees, and their competition would have driven up employee pay.” 

As the lawsuit tells it, tensions grew between Apiture and nCino as the companies evolved and began to compete more and more with each other in the digital banking market. Even with this apparent rivalry and fierce competition in the product market, the entities continued to maintain their no-hire agreement, the suit alleges, claiming such was the case because it “continued to benefit the companies by eliminating competitive wage pressure.”

The lawsuit looks to represent all persons employed by nCino or Apiture in Wilmington, North Carolina and/or employed by Live Oak Bank’s financial technology division, also in Wilmington, at any time from March 22, 2018 through the present. Excluded from the proposed class are members of the companies’ boards of directors, C-suite or executive-level management and judicial staff assigned to the litigation. 

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