By James J. Kovacs

In the course of 24 hours, the U.S. Department of Justice (“DOJ”) suffered two significant losses when juries returned non-guilty verdicts for defendants in criminal wage fixing and market allocation cases.

Despite these setbacks, the DOJ shows no signs of slowing down its antitrust investigations and enforcement efforts in labor markets.

In United States v. Jindal et al., the DOJ alleged that the former owner of a therapist staffing company conspired with other market participants to coordinate the rates paid to physical therapists and physical therapist assistants in the Dallas-Fort Worth metropolitan area.  In addition to the charges under the Sherman Act, the defendants were charged with conspiring to obstruct proceedings before the Federal Trade Commission (“FTC”).

Notwithstanding DOJ’s evidence of text messages between the defendants concerning the pricing for physical therapists’ services, on April 14, 2022, a jury in the U.S. District Court for the Eastern District of Texas found both defendants not guilty on the Sherman Act conspiracy claims.  But the jury did find Mr. Jindal guilty of obstructing the FTC proceedings.

On the very next day (April 15), a jury in the U.S. District Court for the District of Colorado acquitted DaVita Inc. and its former chief executive officer, Kent Thirty, of conspiring with their competitors to suppress competition for the services of senior-level of employees through non-solicitation agreements.  In its indictment in United States v. DaVita Inc., et al., DOJ alleged that DaVita and Mr. Thirty carried out the conspiracy by “participating in meetings, conversations, and communications” with their co-conspirators, including email communications among the competitors wherein DaVita and co-conspirators allegedly agreed not to pursue each other’s “senior” business executives.  Nonetheless, that evidence did not sway the jury to find that the defendants had reached an anticompetitive agreement.

The two losses have in no way stymied the DOJ’s interest in prosecuting antitrust labor cases.  In fact, after the jury verdict in the Jindal case, a DOJ official was stated that the jury verdicts were “in no way” a “referendum on [DOJ’s] commitment to prosecuting labor market collusion, or on our ability to prove these crimes at trial.”

In fact, there are currently numerous open antitrust labor matters, including an indictment in the District Court of Maine against home health care agencies for allegedly suppressing the wages of “essential workers” and a criminal complaint in the District Court of Connecticut charging an antitrust conspiracy to restrict hiring and recruiting of aerospace engineers.  On March 10, 2022, the DOJ and Labor Department entered into a memorandum of understanding to coordinate and share information in order to “promot[e] competitive labor markets”, including allowing the agencies to refer “cases of potentially illegal activity to each other.”

Moreover, in its Jindal jury verdict press release, the DOJ largely ignored the jury verdict on the Sherman Act collusion claims, and instead focused on the lone guilty verdict for the obstruction of the FTC proceedings, and touted the court’s denial of defendants’ motion to dismiss, which held that “price-fixing agreements-even among buyers in the labor market-have been per se illegal for years.”  Of course, the district court’s holding that collusive agreements between employers should be treated as per se illegal gives the government additional ammunition to try future cases.

And while the antitrust labor investigations and cases are here to stay, there remains open questions on the ability of DOJ to prosecute these cases before a jury.  In both Jindal and DaVita, the juries were unpersuaded by the government’s evidence of collusion between competitors, including direct communications between the defendants and their co-conspirators.

It remains to be seen whether DOJ will adjust its trial strategies to account for these losses, including ensuring that there is sufficient evidence to prove its cases at trial.

Written by James J. Kovacs

Edited by Gary J. Malone

Read Despite Setbacks, Department of Justice Charges Full Speed Ahead in Litigating Labor Antitrust Cases at constantinecannon.com