Despite Two Closely Watched Trial Losses, DOJ Pressing on with Controversial Criminal No-Poaching, Price-Fixing Antitrust Enforcement

Is the DOJ going too far by aggressively pursuing criminal no-poach and price-fixing charges as per se violations of the Sherman Antitrust Act? In two recent trials testing these enforcement theories for the first time, jurors thought the government’s cases were a stretch. 

In United States v. Jindal et al., a federal jury in Texas acquitted former executives of a healthcare staffing company of all substantive criminal charges for conspiring to hold down wages. A day later in Denver in United States v. DaVita, national healthcare provider DaVita and its CEO Kent Thiry were acquitted on criminal charges that their use of no-poach agreements stymied competition and hindered employees’ ability to progress their careers.  

Law360 described the DOJ’s strategy as “advancing bold theories that could reshape federal competition regulation.” NYMag described them as a component of the “Biden administration’s ambitious, all-purpose antitrust-enforcement agenda. “ 

At issue in DaVita is the government’s theory that – regardless of their impact – no-poaching agreements can be a “per se” violation of the Sherman Act. Despite the two closely watched acquittals, DOJ Antitrust Division head Jonathan Kanter put on a game face and vowed to press on with dozens of similar enforcement actions in the queue.

“Both of those cases — which were extremely important cases establishing that harm to workers is an antitrust harm — survived motions to dismiss,” Kanter noted, as reported by Law360. “The courts said, ‘These are legally sound cases.’ We want those decisions. … Just because a jury or two decided not to convict on a specific case doesn’t mean the public isn’t demanding more. We’re hearing from the public on a regular basis, and they want more enforcement.” 

While juries and the public often take a dim view of anticompetitive schemes, criminal prosecution should be reserved for exceptional cases, rather than a per se rule. It’s one thing for an individual to bring a case and lay out how they were specifically harmed. The commitment alone that it takes for an individual to take a complaint all the way to trial is an indicator of their conviction. It’s a much greater challenge for government lawyers to convince a jury of a per se violation, regardless of the effects of the action.

Some no-poach agreements should not even be civil violations, much less criminal ones, and the line between an appropriate no-poach and an illegal one is not clear at times even among expert lawyers. In some situations, a no-poach agreement may be a valid exception to an unreasonable restraint of trade – for example, as part of a resolution of past trade secret violations regarding confidential employee or compensation information, or to address violations of a non-solicit by an employee who has left.

Nonetheless, the trend has been more and more to restrict no-poach agreements, and now the government is taking a very aggressive approach against them.  Businesses should be mindful that the DOJ’s commitment to follow through with its controversial position is not going anywhere despite these early losses. Lawyers should advise their clients accordingly to be very wary of them. 

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