Antitrust Agencies Remain Undeterred Despite Repeated Setbacks in Criminal Prosecutions of Wage-fixing and No-poach Agreements

• Jurisdiction: United States,Federal
• Citation: Vol. 1 No. 2
• Publication year: 2023
• topic: Antitrust and Competition,Labor Law,Federal

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Betty Graumlich, Michelle Mantine, and Danielle Stewart ^*

In this article, the authors advise that, in this era of heightened antitrust scrutiny, it is critical that companies review their antitrust compliance programs to ensure that they are comprehensive, effective, and up-to-date.

In a collaborative effort to further intensify antitrust scrutiny, federal regulators are joining forces to advance their competition-related initiatives with greater efficiency and transparency. On July 19, 2022, Lina M. Kahn, Chair of the Federal Trade Commission (FTC), and Jennifer A Abruzzo, General Counsel of the National Labor Relations Board (NLRB), signed a Memorandum of Understanding that outlines their agencies' intention to collaborate through information sharing, cross-agency training, coordinated outreach, and investigations to further their common regulatory interest—"to protect workers against unfair methods of competition, unfair or deceptive acts or practices, and unfair labor practices." That common interest touches key labor market issues, including the "gig economy," restrictive covenants, such as verbal and written non-compete and nondisclosure agreements, and labor market concentration. ¹ The FTC, which does not ordinarily weigh in on workers' rights issues, has become increasingly active in this area, making one of its key strategic goals in its most recent strategic plan to "protect the public from unfair methods of competition in the marketplace and promoting fair competition." ²

This recent wave of activity is not the first time the federal agencies have joined forces to combat anticompetitive practices in labor markets. On October 20, 2016, the Antitrust Division of the Department of Justice (DOJ) and the FTC issued antitrust guidelines ³ for human resources professionals to educate them on how

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antitrust laws apply to hiring and other human resource decisions. ⁴ The guidelines warn employers that in addition to civil actions, the agencies may bring criminal charges against both individuals and companies relating to wage-fixing and no-poach agreements among competitors. While many criminal prosecutions did not materialize until 2020, they are now on the rise with no end in sight. ⁵

Enforcement of the Antitrust Laws in Labor Markets—An Uphill Battle

The DOJ has, and continues to face, an uphill battle in establishing criminal liability for wage-fixing and no-poach agreements. While the DOJ has gained few footholds during its initial prosecutions, it remains aggressive in pursuing such actions.

DOJ's First Criminal Wage-Fixing and No-Poach Prosecutions

Two DOJ criminal prosecutions for wage-fixing and no-poach agreements went to trial during the same week in April 2022. The first to reach a conclusion was United States v. Jindal in the U.S. District Court for the Eastern District of Texas. ⁶ Neerraj Jindal, owner of a physical therapy staffing company, and his clinical director, John Rodgers, were indicted for price fixing employee wages, conspiring to wage fix, and obstructing proceedings before the FTC. ⁷ After an eight-day trial, the jury acquitted Rodgers of all charges, and acquitted Jindal of the antitrust charges, but found him guilty of obstruction. Shortly thereafter, in United States v. DaVita Inc., the jury reached a verdict in a similar case in the U.S. District Court in Colorado. ⁸ That indictment accused a dialysis company and its former chief executive officer (CEO) of two counts of conspiracy to restrain trade to allocate employees, by allegedly agreeing with rival companies not to poach each other's employees. After two days of deliberation, the jury acquitted both the company and its former CEO.

The press release issued by the DOJ following the Jindal verdict did not focus on the antitrust allegations, but on the obstruction verdict and the court's November 2021 ruling denying Jindal's motion to dismiss the wage-fixing charge. ⁹ The tone of the press release, coupled with comments made by Assistant Attorney

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General Jonathan Kanter in a keynote speech later the same month, ¹⁰ emphasize that the DOJ remains undeterred by those losses. In fact, these case outcomes seem to have further incited the DOJ to pursue per se liability for wage-fixing and no-poach agreements, even when it means intervening in other civil litigation. ¹¹

DOJ Sees Some Forward Progress

The DOJ recently secured a victory of sorts under its new theory of criminal liability for wage-fixing and no-poach agreements. In March 2021, a federal grand jury indicted VDA OC LLC (VDA), formerly Advantage On Call LLC, a healthcare staffing company, and its former manager with one count of conspiracy to allocate nurses and fix their wages in violation of the Sherman Act. ¹² On June 24, 2022, the parties filed a stipulation requesting to continue a scheduled evidentiary hearing in part because they "had reached a preliminary resolution as to both defendants that now needs to be confirmed in writing." ¹³ The parties requested the evidentiary hearing be delayed 30 days, and the court granted that request. ¹⁴ In early August, the parties requested additional time beyond the added 30 days. Again, the court granted the parties'...