Summary

Following a string of unsuccessful prosecutions in the labor space, the DOJ Antitrust Division moved this week to dismiss its last indicted criminal no-poach case, which had been pending against Surgical Care Affiliates, LLC, and SCAI Holdings, LLC, in the Northern District of Texas.

The Upshot

• DOJ did not elaborate on the reason for seeking dismissal of the case, other than to say the dismissal, which the court subsequently granted, would not be contrary to manifest public interest.
• While DOJ’s efforts to criminally prosecute alleged no-poach agreements under the Sherman Antitrust Act have not been met with success at trial, it remains to be seen what impact those failed efforts will have on any future criminal prosecutions and on civil actions under the Sherman Act by the antitrust agencies and private parties.

The Bottom Line

Businesses should be aware of the risks if entities enter into so-called no-poach or wage-fixing agreements with other businesses and consult counsel if there is any question whether certain conduct in the labor markets could potentially raise a concern under the antitrust laws.

On November 13, 2023, DOJ moved to dismiss with prejudice its last criminal no-poach case, which has been pending in the U.S. Court for the Northern District of Texas since January 2021, when the defendants – Surgical Care Affiliates, LLC, and SCAI Holdings, LLC – were indicted with two counts of conspiracy to restrain trade under the Sherman Act. DOJ’s motion to dismiss the case stated simply, “[t]he United States requests that this court dismiss the pending charges against the defendants. Dismissal of this case is not contrary to manifest public interest, and it will allow the conservation of this court’s time and resources.” On November 15, 2023, the Court ordered dismissal of the case, with prejudice.

The dismissal follows a string of losses DOJ has experienced since starting its criminal prosecution of no-poach and wage-fixing agreements in 2020. Most recently, a Connecticut federal judge acquitted aerospace and staffing company executives after the government’s case at trial, ruling that no reasonable juror could convict based on the evidence presented by prosecutors. Prior to that, DOJ lost a criminal no-poach case against Davita, Inc., and its former CEO, in which DOJ asserted they agreed with competitors not to poach each other’s employees. Likewise, in USA v. Jindal, a jury in the U.S. District Court for the Eastern District of Texas, found the two individual defendants not guilty of charges of violating antitrust laws for conspiring with competitors to fix employee wages, while convicting one of the defendants of obstructing the investigation into the alleged antitrust violations.

While time will tell whether DOJ’s dismissal of the action against Surgical Care Affiliates, LLC and SCAI Holdings, LLC signals a reluctance to further criminally prosecute no poach agreements, the Antitrust Division has consistently vowed to put a greater focus on competition in labor markets, and can reasonably be expected to continue pursuing civil enforcement actions in the labor space. Private civil actions seeking damages for alleged no-poach arrangements can also be brought under the Sherman Act, and indeed a number of no poach class actions have been filed in the past several years alleging that these arrangements are illegal per se.

Regardless of whether DOJ continues to prosecute these matters criminally, businesses should be aware of the risks if entities enter into so-called no-poach or wage-fixing agreements with other businesses. Businesses should also ensure they have appropriate compliance training and reporting structures in place to both mitigate any such risks and be prepared to deal with them quickly should they nevertheless arise. To that end, if there is any question whether certain conduct in the labor market potentially could raise a concern under the antitrust laws, businesses should seek advice and counsel.

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