Two labor-market criminal antitrust trials recently ended in acquittals, further demonstrating the challenges the United States has faced in this area (See our previous coverage of this prosecution trend, reported on: Feb. 9th, 2022; May 2nd, 2022; Sept. 22nd, 2022; Nov. 29th, 2022, and Feb. 14th, 2023). In United States v. Patel, a district judge granted the defendants’ motion for judgment of acquittal on charges of a no-poach agreement before the case went to the jury. And, in United States v. Manahe, a federal jury in Maine acquitted four healthcare agency managers of no-poach and wage-fixing charges. All four of the DOJ’s labor-market criminal antitrust trials have now ended in acquittals, and only one such case has ended in a guilty plea.
United States v. Patel: Motion for Acquittal Granted
Recall that, in Patel, the DOJ brought no-poach criminal charges against executives from a jet-engine manufacturer and several of its outsourced engineering providers over an alleged agreement not to solicit each other’s engineers, who worked on the jet-engine manufacturer’s projects for a nine-year period. The DOJ alleged that the executives had conspired to allocate a horizontal labor market and thereby committed a per se Sherman Act Section 1 violation (As a reminder, the DOJ’s longstanding policy is to file criminal antitrust charges only when there is an alleged per se violation of Section 1 of the Sherman Act, and not when the violation of Section 1 requires a rule of reason analysis). The district court previously denied the defendants' pre-trial motion to dismiss.
Following the denial of that motion, the district court made several pre-trial rulings in the defendants' favor. The court allowed the defendants to introduce evidence showing that their no-poach deal did not suppress wages or materially restrain employee mobility, and that the agreement had procompetitive benefits. In the court’s view, regardless of the United States’ per se theory, this evidence would be relevant to the defendants’ intent and whether the alleged agreement is ancillary to a legitimate collaboration. The court also ruled that it would instruct the jury that it was the government’s burden to prove the alleged deal was a “naked” restraint, i.e., one that is not ancillary to lawful collaboration, because only naked restraints are per se Section 1 violations. In reaching these decisions, the court relied in part on the pre-trial decisions in United States v. DaVita, a previous no-poach case that ended in an acquittal.
At trial, the government presented evidence for nearly a month. After the government rested, and before the defendants presented evidence, the court granted the defendants’ motion for judgment of acquittal on April 28.
The court held that, based on the evidence the government presented, “[a]s a matter of law, this case does not involve a market allocation under the per se rule,” which was the only theory on which the government indicted the defendants. In the court’s view, “the alleged agreement itself had so many exceptions that it could not be said to meaningfully allocate” the relevant labor market. The “restrictions shifted constantly throughout the course of the conspiracy,” such that “often hiring was permitted, sometimes on a broad scale.” Thus, no reasonable juror could conclude that there was a “cessation of ‘meaningful competition’ in the allocated market,” which Judge Bolden (relying on the DaVita decision) held was required to show a market allocation.
This appears to be the first time in decades that a court has thrown out criminal antitrust charges under Federal Rule of Criminal Procedure 29. While the DOJ has had no official comment on the acquittal thus far, one of the defendants’ attorneys told Law360 that the recent labor-market criminal prosecutions are a “misguided policy experiment” and that the DOJ is “[t]rying to criminalize HR issues.” We’ll be watching to see whether the DOJ appeals the district court’s decision.
United States v. Manahe: Another Jury Acquittal
In Manahe, the DOJ indicted four managers of home healthcare agencies in Maine who allegedly conspired to (1) fix the rates their agencies paid personal support specialist (“PSS”) workers, and (2) not solicit each other’s PSS workers from April–May 2020. As in several other no-poach and wage-fixing cases, the district court denied the defendants’ motion to dismiss, but the defendants won an acquittal at trial in March. The DOJ has not commented on this result either. An attorney for the defendants told Reuters, “It is difficult to understand why the DOJ felt the need to bring the weight of a federal government down on Iraqi immigrants who were doing the best they could in running a health care business in Portland during a global pandemic.”
In the wake of previous acquittals, Assistant United States Attorney General Jonathan Kanter has stated that that these labor-market prosecutions will remain a high priority for the DOJ’s Antitrust Division, and he has touted the DOJ’s victories on pre-trial motions to dismiss as important precedents. But, in two of these cases (Patel and DaVita), pre-trial rulings on evidentiary and jury-instruction issues have hindered the DOJ’s prosecution efforts.
