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Biden DOJ’s First Criminal Labor Antitrust Trials to Start

April 4, 2022, 9:00 AM

The Department of Justice’s first-ever criminal trials over companies’ alleged violations of labor-related antitrust laws are set to kick off.

The pair of trials, which start Monday, will try federal antitrust regulators’ previously untested guidance that could prove a watershed moment for their prosecution of wage-fixing and no-poach agreements.

In its first criminal indictment for wage-fixing violations, the DOJ’s 2020 complaint in USA v. Jindal, filed in the U.S. District Court for the Eastern District of Texas, alleged that the owner of a therapy staffing company conspired with competitors to lower pay and recruit others to the scheme.

Neeraj Jindal, owner of Fit for Life Therapy LLC, has argued that the DOJ failed to state a per se offense, which are offenses that are inherently anticompetitive conduct that need no further evidence.

The Justice Department will target Monday employers’ no-poach deals in USA v. DaVita in the U.S. District Court for the District of Colorado. In the complaint, the DOJ alleged that DaVita Inc., a kidney dialysis service provider, formed no-poach contracts with competitors to refrain from hiring each other’s workers.

A conviction in either trial could strengthen the government’s hand on similar cases in the future. The trials will set the tenor for the DOJ’s future prosecutions over labor antitrust, particularly the four other indictments the department issued that have yet to go to trial, said Eleanor Tyler, a Bloomberg Law legal analyst.

“DaVita in particular will be hard-fought,” Tyler said. “There’s a lot of talent lined up, and it’s a big company. The outcome will set the stage for what the government does going forward. If this fails spectacularly, this might be all we hear about no-poach, at least in the criminal context.”

The trials also will render hints for other indicted companies on their own defense strategies if, and when, they come to trial, Tyler said.

A conviction may even make some likely to pursue a plea agreement, rather than risk a full trial, she said.

A government win will almost certainly result in an appeal that could make it as far as the U.S. Supreme Court, Tyler said.

Previously, the DOJ has pursued such allegations in civil actions. But in 2016 the DOJ and Federal Trade Commission updated guidance to indicate that certain wage-fixing and no-poach agreements will be treated as criminal offenses under the Sherman Act.

Criminal offenses carry serious penalties and possible jail time for executives. If found guilty by a jury, defendants could face up to 10 years in prison and a $1 million fine under the statute.

The cases are United States v. Jindal, E.D. Tex., No. 4:20-cr-00358, trial 4/4/22 and United States v. DaVita Inc., D. Colo., No. 21-cr-229, trial 4/4/22.

To contact the reporter on this story: Dan Papscun in Washington at dpapscun@bloombergindustry.com

To contact the editor responsible for this story: Roger Yu at ryu@bloomberglaw.com