The DOJ has said that similar allegations can be found among roughly 140 pending grand jury probes.
In the past week, the U.S. Department of Justice suffered back-to-back trial defeats in its push for more aggressive criminal antitrust enforcement. On April 14, 2022, a jury in the Eastern District of Texas acquitted both the former owner and former clinical director of a physical therapist staffing company in the DOJ’s first-ever prosecution of a criminal wage-fixing antitrust case. The next day, a jury in the District of Colorado acquitted DaVita Inc. and its former CEO of conspiring with other businesses to suppress competition for senior-level employees. The consecutive failures to achieve labor market collusion convictions come in the wake of a federal judge requesting that DOJ Antitrust Division chief Jonathan Kanter appear in court to explain why a third price-fixing trial—after two earlier mistrials—would be consistent with DOJ policy. While these results may incentivize defendants to roll the dice when fighting future criminal antitrust investigations, based on the recent announcements of Kanter and others, these setbacks are unlikely to deter DOJ from continuing its aggressive posture toward criminal enforcement.
Two Hung Juries on Chicken Price-Fixing Charges, Followed by Back-to-Back Labor Market Prosecution Losses
The two hung juries came in a Denver courtroom in December and late March. After two consecutive multiple-week trials, the juries were deadlocked on price-fixing charges as to 10 individual defendants in the broiler chicken industry. After the second hung jury, the DOJ dismissed the charges against five of the 10 defendants and announced its intention to retry the remaining individuals. This prompted the judge to order Kanter to explain why the DOJ thinks that a third trial on the same set of facts would lead to a conviction, and whether going forward a third time is consistent with DOJ policy set forth in its Justice Manual. Kanter responded that the DOJ had carefully considered those questions and decided that it was obliged to move forward with another retrial, which is scheduled to start on June 6.
In U.S. v. Jindal, the DOJ’s first-ever prosecution of a criminal wage-fixing antitrust case, the government argued that the former owner and former clinical director of a physical therapist staffing company conspired with other staffing businesses to suppress competition by agreeing to lower the pay rates of physical therapists and assistants. In pretrial proceedings, the court held that such an agreement could be considered a per se violation of the Sherman Act—a key ruling for the DOJ since, as a matter of policy, the DOJ only brings criminal charges in cases where the conduct is a per se violation of the antitrust laws. Nonetheless, while the former owner was convicted of obstructing an investigation by the U.S. Federal Trade Commission, the defendants were acquitted of all the antitrust charges.
On April 15, the very next day, a jury in the District of Colorado acquitted DaVita, Inc., the kidney dialysis company, and its former CEO on all counts related to an alleged conspiracy to suppress competition in the market for senior-level employees. DaVita was accused of conspiring with its rivals to allocate the market for employees by not actively recruiting senior-level employees of rival firms and requiring employees to alert their employer prior to seeking employment at a rival. The DOJ argued that the conspiracy constituted a per se violation of the Sherman Act, and in pretrial proceedings, the district court agreed with DOJ and denied the defendants’ motion to dismiss on grounds that the alleged scheme constituted a horizontal market allocation agreement that could be a per se criminal antitrust violation. After several days of trial and deliberation, however, the jury returned a complete defense verdict, concluding that DaVita and its former CEO did not coerce other competing businesses to stay away from its workforce.
Effect on Other Labor Market Cases and DOJ Prosecutions
These setbacks in court come while the DOJ is actively pursuing nearly 20 criminal antitrust cases, including two wage-fixing cases pending in Maine and Nevada federal courts. The DOJ has said that similar allegations can be found among roughly 140 pending grand jury probes. Despite the demands these cases and investigations place on limited resources, the DOJ has claimed that it remains committed to enforcing the antitrust laws in the labor markets. Following the acquittals, Kanter stated that the DOJ “will use all the tools available to prosecute all of these crimes to the full extent of the law.” And although a jury has not yet convicted a defendant for a labor market antitrust violation, the DOJ is hopeful that its significant pretrial victories in those cases will lead to convictions in the future. These statements are consistent with the Biden administration’s desire to increase Antitrust Division funding by $88 million in the coming fiscal year, as well as its recently announced heightened reporting requirements for leniency applicants under the division’s cartel amnesty program and recent emphasis placed by FTC and DOJ leaders in public statements on expanding and focusing antitrust enforcement generally in the context of labor markets.
It is rare for the DOJ to suffer back-to-back acquittals, particularly after two consecutive hung juries. Such results may tend to embolden defendants to take their chances at trial rather than plead guilty. While the Antitrust Division may make adjustments to prevent such results going forward, we should not expect these setbacks to deter the DOJ from pursuing its mission of aggressive antitrust enforcement—particularly in labor markets—a key priority of the Biden administration.
The consequences for a company or individual facing an indictment for antitrust violations are severe—criminal violations of the Sherman Act are punishable by up to $100 million in fines for companies and $1 million in fines for individuals, or twice the gross gain or loss from the offense, whichever is greater. Individuals can also be sentenced to up to 10 years of imprisonment. Despite the fact that the DOJ has not yet secured a jury conviction in a labor market prosecution, companies should continue to tread carefully when considering entering into agreements that restrict labor mobility and seek experienced antitrust counsel before doing so.
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