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DaVita, Ex-CEO Found Not Guilty in DOJ’s No-Poaching Case (2)

April 15, 2022, 10:19 PMUpdated: April 16, 2022, 12:09 AM

A jury found DaVita Inc. not guilty of claims that the kidney dialysis provider violated federal antitrust law by engaging in “no-poach” agreements with competitors, delivering another blow for regulators looking to boost enforcement on anti-competitive hiring practices.

The company’s former CEO, Kent Thiry, also was not found guilty Friday of the same charges by the jury in the criminal trial in the U.S. District Court for the District of Colorado. The government alleged during the trial that he was the force behind the agreements and saw the company as a “village.”

DaVita and Thiry were indicted by the Justice Department in July 2021 on three counts each of violating the Sherman Act by illegally forging agreements with competitors to refrain from hiring each other’s workers. The Sherman Act imposes penalties of up to $100 million for corporations and $1 million for individuals, plus up to a decade in prison, per count.

The trial, which began April 4, is one of the first criminal trials over the Justice Department’s antitrust violation claims tied to companies’ hiring practices. It follows the DOJ’s 2016 guidance that federal antitrust regulators could look to bring criminal charges against companies engaging in certain anti-competitive labor deals.

DaVita is accused of striking agreements with a trio of companies to allocate the market for employees by not actively recruiting their executives and other high-level staff. The companies also required employees who wished to jump to a competitor to first alert their bosses before starting the application process, the DOJ said during the trial in the Colorado court.

“We appreciate the jury’s decision and are grateful to put this matter behind us,” according to a statement released Friday by DaVita. “We remain committed to operating with integrity and upholding the highest standards of law.”

The trial’s outcome could have a major impact on several other labor-related criminal indictments the DOJ has leveled that have yet to go to trial.

The Justice Department already faced something of a defeat in another similar case against a therapy staffing company owner in Texas, who allegedly fixed wages through anticompetitive hiring practices.

In U.S. v. Jindal, a jury Thursday found two defendants not guilty of violating the Sherman Act, while finding one defendant guilty on a single count of obstruction of Federal Trade Commission proceedings. It was the Justice Department’s first criminal wage-fixing case.

“While we are disappointed in the outcome, we respect the jury’s decision and remain committed to enforcing the antitrust laws in the labor markets,” a DOJ spokesperson said in a statement Friday.

The defendants in the cases that have yet to go to trial are looking closely at the strategies used in DaVita to prepare their own defenses, said Ann O’Brien, a partner at Baker & Hostetler LLP and former DOJ antitrust division manager and prosecutor.

“I have other clients who are facing these no-poach investigations, and so this is all very relevant,” O’Brien said on the first day of the trial. “What one judge decides is evidence that’s gonna come in or not come in, and what a judge decides the jury instructions are going to be, that’s at least a precedent that we didn’t have before.”

The defense called only one witness before the trial proceeded to closing arguments Wednesday.

Thiry didn’t testify, after leaving the possibility open as the trial began.

(Updated with the Justice Department's response in tenth paragraph. )

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

To contact the editor on this story: Roger Yu in Washington at ryu@bloomberglaw.com