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DOJ Notches First No-Poach Win With Staffing Firm’s Sentencing (1)

Oct. 27, 2022, 6:23 PMUpdated: Oct. 27, 2022, 7:53 PM

A Nevada staffing company was sentenced to pay $134,000 for engaging in illegal “no-poach” hiring agreements with a competitor, delivering the Justice Department’s first-ever win in criminal enforcement of labor antitrust violations.

VDA OC LLC was ordered by the US District Court for the District of Nevada to pay a criminal fine of $62,000 and restitution of $72,000 to nurses impacted by the agreement with its competitor to not hire the other’s workers, the DOJ’s antitrust division said in a statement Thursday.

“Today’s guilty plea demonstrates our commitment to ensuring that workers receive competitive wages and a fair chance to pursue better work and that criminals who conspire to deprive them of those rights are held accountable,” Assistant Attorney General Jonathan Kanter, head of the antitrust division, said in the statement.

Ohio-based VDA filed Sept. 1 a notice of its intent to change its plea to guilty. But a disagreement between prosecutors and defense counsel over the scope of its plea delayed the company’s sentencing.

“As was made clear in the uncontested factual basis in the public plea agreement, the agreement at issue in this matter was extremely limited,” VDA said in a statement.

The $62,000 fine was based on a volume of commerce of $218,000, VDA said. Volume of commerce is the amount of business affected by the violation.

While the fine may seem small, its ratio to the total effected commerce is notable, said Brent Snyder, a Wilson Sonsini partner and former DOJ deputy assistant attorney general for criminal enforcement. Federal guidelines recommend fines of 20% of total effected commerce, modified by a company’s culpability, he said.

“People may say that’s chump change, and it may be, but it’s a significant amount for a company that size,” Snyder said. “If you extrapolate it out to a company with a large payroll over a long period of violations, it could get very large.”

The agreement in question involved nurses assigned to one school district and lasted for less than nine months from October 2016 to July 1, 2017, when VDA was sold, the company said.

In 2016, the FTC and DOJ said they’d begin targeting companies’ labor market agreements with competitors to fix wages and not hire each others’ workers as criminally liable, rather than just a violation of civil law.

The Justice Department failed to land a criminal antitrust conviction at its first two trials targeting that conduct earlier this year.

Anti-monopoly advocates said the outcome is a major step in government protection of labor markets.

“The criminal penalty levied today by the District of Nevada on VDA is a key victory in the fight to promote economic liberty for all,” said Katherine Van Dyck, senior legal counsel at the American Economic Liberties Project, a nonprofit focused on antitrust policy and corporate accountability.

VDA said its no-poach agreement “involved a single telephone conversation and one email” between one of its employees and an employee of a competitor.

“That conversation and email, both occurred on the same day six years ago, October 21, 2016, exactly one day after the DOJ issued its Antitrust Guidance for HR Professionals,” VDA said.

The Justice Department’s antitrust division in 2021 charged VDA and its-then regional manager Ryan Hee with one count each of violating Section 1 of the Sherman Act, which prohibits agreements in restraint of trade.

“Given the extremely limited nature of the agreement, the substantial passage of time, and the novel application of the Sherman Act to pursue a criminal prosecution under these facts, today’s resolution was the most effective way for VDA OC to resolve this matter,” VDA said.

Three other criminal labor-market antitrust cases brought by the DOJ are pending.

The case is USA v. Hee et al, D. Nev., no. 2:21-cr-00098, 10/27/22.

(Updated with additional reporting starting in the fifth graf.)

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