Nearly six years after the U.S. Department of Justice (DOJ) and the Federal Trade Commission (FTC) put human resource executives and their companies on notice that no-poach and wage-fixing agreements would be subject to criminal prosecution, the DOJ has secured its first guilty plea in a no-poach case.1 On October 27, 2022, a healthcare staffing agency, VDA OC LLC (VDA), formerly Advantage On Call LLC, pled guilty to engaging in a conspiracy to allocate school nurses and to not raise nurse’s wages.2 At the same time, a U.S. District Court judge in Nevada sentenced VDA to pay a $62,000 criminal fine and $72,000 in restitution.3
VDA’s plea agreement was the first successful criminal prosecution for the DOJ in a labor market case involving a no-poach or wage-fixing agreement. The DOJ had previously failed to secure convictions in either of the two labor cases it had brought with criminal charges. In April 2022, a Texas jury acquitted two individuals accused of wage fixing for physical therapists and physical therapist assistants.4 In the same month, a jury in Denver acquitted kidney dialysis company DaVita and its former CEO of charges that they entered into no-poach agreements with other companies.5
Despite the prior losses, the DOJ has not been deterred in investigating and prosecuting conduct in labor markets. The DOJ’s success in securing its first criminal plea with VDA is likely to embolden the DOJ to continue making these cases an enforcement priority. The VDA plea is also notable because it is one of the first instances of the DOJ securing restitution for victims in a criminal prosecution. The DOJ has remarked recently that it will be seeking to ensure victims are compensated for harm caused by collusive conduct,6 and this is an example of the DOJ following through on this enforcement priority as well.7
Summary of VDA Case
A grand jury indicted VDA and its former regional director, Ryan Hee, in March 2021 for participating in a conspiracy to allocate nurses and to fix the wages of nurses working for the Clark County School District.8 The agreement charged in the indictment lasted for less than a year, from October 2016 until July 2017, when VDA was purchased by another company.9 During that time, VDA and another company agreed to not recruit or hire each other’s nurses and to fix the nurse’s wages by refusing to raise their wages. According to the indictment, the nurses provided care to students in the Clark County School District who either had complex medical needs or were medically fragile.10
After being indicted, VDA and Hee attempted to argue in a motion to dismiss that the government could not prosecute no-poach and wage-fixing cases criminally as per se violations of the Sherman Act, while also arguing that their due process rights were violated because the DOJ guidance on criminal prosecutions for no-poach and wage fixing agreements was issued only one day prior to the start of the conspiracy.11 However, the U.S. district court judge indicated that he was unlikely to dismiss the charges.12 Soon thereafter, both VDA and Hee signaled that they intended to plead guilty. Although the company has pled guilty, Hee has not and is scheduled to go to trial in April 2023.
Assistant Attorney General Jonathan Kanter, head of the DOJ’s antitrust division, praised the VDA plea deal, calling free and open labor markets the “cornerstone of the American dream.”13 He stated that the guilty plea demonstrates the DOJ’s commitment to “ensuring that workers receive competitive wages and a fair chance to pursue better work and that criminals who conspire to deprive them of those rights are held accountable.”14
Comment on VDA Fine
While fines for criminal antitrust violations can go as high as $100 million or more depending on the gain or loss, VDA’s fine of $62,000 reflects the amount of nurses’ wages affected by this conspiracy. In this case, the conspiracy lasted for less than one year and affected a relatively small number of nurses. Although the company was ordered to pay what may appear to be a relatively modest fine, the methodology used to calculate the fine in this case could result in a much higher fine for a company with a greater volume of commerce.
VDA also agreed to pay restitution of $72,000 as part of its plea deal, which is not typically required in a criminal antitrust case.15 According to the DOJ, VDA’s payment of restitution to its employee nurses “would potentially obviate the need for them to undertake the trouble and expense of bringing parallel civil suits to recover damages.”16 The operative word is “potentially.” In certain limited circumstances this might be true, and if the DOJ continues to pursue restitution in these criminal cases, time will certainly tell what (if any) effect restitution payments will have on civil follow-on suits. For now, it is important to know the DOJ might be requiring restitution of companies that enter a criminal guilty plea.
Conclusion
The DOJ’s first victory in its mission to criminally prosecute no-poach and wage-fixing agreements is sure to motivate the DOJ to continue this enforcement priority.17 Although VDA’s fine may seem relatively modest, the amount is attributable to VDA’s low volume of commerce. The DOJ’s approach to the VDA fine could lead to significantly higher fines in future cases with higher volumes of commerce. Given the DOJ’s and the FTC’s continued aggressive stance on agreements that affect labor markets, companies should familiarize themselves with the Antitrust Guidance for Human Resource Professionals published jointly by the DOJ and the FTC in October 2016 and ensure their compliance programs prevent no-poach or wage-fixing conspiracies from arising.
[1]U.S. Dep’t of Just. & Fed. Trade Comm’n, Antitrust Guidance for Human Resource Professionals (Oct. 2016), https://www.justice.gov/atr/file/903511/download; see Wilson Sonsini Alert, “DOJ and FTC Put HR Executives on Notice That Anticompetitive Hiring and Compensation Practices May Be Subject to Criminal Prosecution” (Oct 24, 2016), https://www.wsgr.com/en/insights/doj-and-ftc-put-hr-executives-on-notice-that-anticompetitive-hiring-and-compensation-practices-may-be-subject-to-criminal-prosecution.html.
[2]Press Release, U.S. Dep’t of Just., “Health Care Company Pleads Guilty and is Sentenced for Conspiring to Suppress Wages of School Nurses” (Oct. 27, 2022), https://www.justice.gov/opa/pr/health-care-company-pleads-guilty-and-sentenced-conspiring-suppress-wages-school-nurses.
[3]Id.
[4]Verdict, United States v. Neeraj Jindal and John Rodgers, No. 4:20-cr-00358-ALM-KPJ (E.D. Tex. Apr. 14, 2022). One of the defendants in Jindal was convicted of obstructing the government’s investigation. See also Wilson Sonsini Alert, “First DOJ Criminal Wage-Fixing and No-Poach Trials End in Acquittals” (Apr. 18, 2022), https://www.wsgr.com/en/insights/first-doj-criminal-wage-fixing-and-no-poach-trials-end-in-acquittals.html.
[5]Verdict, United States v. DaVita Inc. and Kent Thiry, No. 1:21-cr-00229 (D. Colo. Apr. 15, 2022); see also Wilson Sonsini Alert, “First DOJ Criminal Wage-Fixing and No-Poach Trials End in Acquittals” (Apr. 18, 2022), https://www.wsgr.com/en/insights/first-doj-criminal-wage-fixing-and-no-poach-trials-end-in-acquittals.html.
[6] Matthew Perlman, DOJ Gets 1st 'No Poach' Guilty Plea With School Nurse Case (Oct. 27, 2022), https://www.law360.com/articles/1544215/doj-gets-1st-no-poach-guilty-plea-with-school-nurse-case.
[7] The DOJ’s Antitrust Division recently revised its corporate leniency policy to place an emphasis on remediation. See Wilson Sonsini Alert, “DOJ Antitrust Division Updates Corporate Leniency Policy” (April 12, 2022), https://www.wsgr.com/en/insights/doj-antitrust-division-updates-corporate-leniency-policy.html.
[8] Press Release, U.S. Dep’t of Just., “Health Care Staffing Company and Executive Indicted for Colluding to Suppress Wages of School Nurses” (Oct. 27, 2022), https://www.justice.gov/opa/pr/health-care-staffing-company-and-executive-indicted-colluding-suppress-wages-school-nurses.
[9]Id.; see Indictment, U.S. v. VDA OC, LLC, No. 2:21-cr-00098-RFB-BNW (D. Nev. Oct 27, 2022).
[10]Indictment at 2.
[11]Max Fillion, VDA motion to dismiss US DOJ no-poach case met with skepticism from federal judge, mlex (Nov. 2. 2021), https://content.mlex.com/#/content/1334095.
[12] Id.
[13]Press Release, U.S. Dep’t of Just., “Health Care Company Pleads Guilty and is Sentenced for Conspiring to Suppress Wages of School Nurses” (Oct. 27, 2022), https://www.justice.gov/opa/pr/health-care-company-pleads-guilty-and-sentenced-conspiring-suppress-wages-school-nurses.
[14]Id.
[15] In July 2022, the DOJ entered into proposed civil consent decrees with poultry processors for participating in a conspiracy to fix wages of poultry processing plant workers that required the companies to pay $84.8 million in restitution for workers that were harmed by the conspiracy. Press Release, U.S. Dep’t of Just., “Justice Department Files Lawsuit and Proposed Consent Decrees to End Long-Running Conspiracy to Suppress Worker Pay at Poultry Processing Plants and Address Deceptive Abuses Against Poultry Growers” (Jul. 25, 2022), https://www.justice.gov/opa/pr/justice-department-files-lawsuit-and-proposed-consent-decrees-end-long-running-conspiracy.
[16] United States’ Sentencing Memorandum at 6, U.S. v. VDA OC, LLC, No. 2:21-cr-00098-RFB-BNW (D. Nev. Oct 27, 2022).
[17] The DOJ currently has criminal labor market cases pending against UnitedHealth Group’s Surgical Care Affiliates (SCA), executives from Raytheon and other aerospace engineering companies, and managers of home healthcare agencies in Maine.
