In 2016, the U.S. Department of Justice Antitrust Division (DOJ) announced that it would criminally prosecute no-poach and wage-fixing agreements for the first time. Indeed, the DOJ has backed this up by bringing a number of criminal prosecutions of such agreements since late 2020.1 Late last week, the DOJ lost the first two of its cases to reach a verdict (with the other cases still pending). In both cases, the juries separately acquitted all of the defendants for the alleged conduct around hiring. While the DOJ has reaffirmed its commitment to investigate and prosecute such conduct going forward, these two losses must cause the DOJ to reconsider whether or at least how it prosecutes such cases going forward.
In the first case, United States v. Neeraj Jindal and John Rodgers, the DOJ charged two employees of a Texas-based healthcare staffing company with criminal wage-fixing for conspiring with another staffing company to share non-public pay rates for physical therapists and physical therapist assistants, and agreeing to decrease those rates.2 Both men were also charged with conspiring to obstruct the government's investigation. On April 14, 2022, after less than a day of deliberation, a jury in East Texas found both defendants not guilty on the conspiracy charges.3 The verdict followed a six-day trial, where the pair's alleged co-conspirator testified that she and Rodgers agreed through text messages to lower wages paid to contracting physical therapists and physical therapist assistants.4
In the second case, United States v. DaVita Inc. and Kent Thiry, the DOJ charged DaVita, Inc. and its former CEO, Kent Thiry, with agreeing with three other healthcare companies run by DaVita alumni not to solicit each other's employees.5 During the trial in Colorado, which lasted a little over a week, the defendants conceded that agreements were reached, and several witnesses also testified to the agreements. But the jury concluded that the DOJ failed to prove beyond a reasonable doubt that the defendants' agreements allocated a market for employees that ended meaningful competition. On April 15, 2022, after deliberating for two days, a jury found DaVita and Thiry not guilty on all counts.6
Conclusion
The back-to-back acquittals are a serious setback for the Antitrust Division, which has declared criminal prosecution of no-poach and wage-fixing agreements to be one of its top priorities. Nonetheless, after the Jindal verdict, a DOJ official stated that the verdict should not be taken as a "referendum" on the DOJ's "commitment to prosecuting labor market collusion."7 In fact, the DOJ currently has several other such cases pending, two of which are set to go to trial in July of this year and January 2023.8 It remains to be seen how the jury verdicts in these test cases will affect the DOJ's efforts to criminally prosecute labor market agreements. In the meantime, however, companies and their employees should take steps to avoid even the appearance of entering into no-poach or wage-fixing agreements with other companies.
[1] See Wilson Sonsini Alert, “Update on DOJ ‘No-Poach’ and ‘Wage-Fixing’ Criminal Antitrust Prosecutions” (Dec. 7, 2021), https://www.wsgr.com/en/insights/update-on-doj-no-poach-and-wage-fixing-criminal-antitrust-prosecutions.html; Wilson Sonsini Alert, “DOJ Brings First Criminal ‘No Poach’ and ‘Wage-Fixing’ Antitrust Prosecutions” (Jan. 8, 2021), https://www.wsgr.com/en/insights/doj-brings-first-criminal-no-poach-and-wage-fixing-antitrust-prosecutions.html.
[2] Press Release, U.S. Department of Justice, “Former Owner of Health Care Staffing Company Indicted for Wage Fixing” (Dec. 10, 2020), https://www.justice.gov/usao-edtx/pr/former-owner-health-care-staffing-company-indicted-wage-fixing; Press Release, U.S. Department of Justice, “Second Individual Charged with Fixing Wages for Health Care Workers and Obstructing FTC Investigation” (Apr. 19, 2021), https://www.justice.gov/opa/pr/second-individual-charged-fixing-wages-health-care-workers-and-obstructing-ftc-investigation.
[3] Verdict, United States v. Neeraj Jindal and John Rodgers, No. 4:20-cr-00358-ALM-KPJ (E.D. Tex. Apr. 14, 2022). Neeraj Jindal was found guilty on only one of three charges: obstructing the government’s investigation, but not the conspiracy charges. The jury found his co-defendant and clinical director, John Rodgers, not guilty on all counts.
[4] See Katie Buehler, “DOJ Coached Key Witness in Wage-Fixing Case, Jury Told,” Law360, (Apr. 13, 2022), https://www.law360.com/trials/articles/1483532/doj-coached-key-witness-in-wage-fixing-case-jury-told.
[5] Superseding Indictment, United States v. DaVita Inc. and Kent Thiry, No. 1:21-cr-00229 (D. Colo. Nov. 3, 2021); Press Release, U.S. Department of Justice, “DaVita Inc. and Former CEO Indicted in Ongoing Investigation of Labor Market Collusion in Health Care Industry” (July 15, 2021), https://www.justice.gov/opa/pr/davita-inc-and-former-ceo-indicted-ongoing-investigation-labor-market-collusion-health-care.
[6] Verdict, United States v. DaVita Inc. and Kent Thiry, No. 1:21-cr-00229 (D. Colo. Apr. 15, 2022).
[7] See Ben Penn, “DOJ’s First Criminal Wage-Fixing Case Ends Mostly in Defeat,” Bloomberg Law News (Apr. 14, 2022), https://news.bloomberglaw.com/daily-labor-report/jindal-found-guilty-in-dojs-first-criminal-wage-fixing-case.
[8] Press Release, U.S. Department of Justice, “Four Individuals Indicted on Wage Fixing and Labor Market Allocation Charges” (Jan. 22, 2022) (United States v. Manahe, et al.), https://www.justice.gov/opa/pr/four-individuals-indicted-wage-fixing-and-labor-market-allocation-charges (no trial date set); Press Release, U.S. Department of Justice, “Former Aerospace Outsourcing Executive Charged for Key Role in a Long-Running Antitrust Conspiracy” (Dec. 9, 2021) (United States v. Patel et al.), https://www.justice.gov/usao-ct/pr/former-aerospace-outsourcing-executive-charged-key-role-long-running-antitrust-conspiracy (no trial date set); Press Release, U.S. Department of Justice, “Health Care Staffing Company And Executive Indicted For Colluding To Suppress Wages Of School Nurses” (Mar. 30, 2021) (United States v. Hee et al.), https://www.justice.gov/usao-nv/pr/health-care-staffing-company-and-executive-indicted-colluding-suppress-wages-school (trial date July 11, 2022); Press Release, U.S. Department of Justice, “Health Care Company Indicted for Labor Market Collusion” (Jan. 7, 2021) (United States. v. Surgical Care Affiliates, LLC et al.), https://www.justice.gov/opa/pr/health-care-company-indicted-labor-market-collusion (trial date Jan. 9, 2023).
