No-Poach Agreements Are Per Se Illegal, DOJ Says in Trucker Case (1)

Competing employers’ no-poach agreements are inherently illegal, the Justice Department said in a statement of interest filed in a workers’ antitrust lawsuit against CRST International Inc. and other trucking companies.

The lawsuit, brought by a group of current and former truckers in 2017 in the US District Court for the Central District of California, alleged that transportation and logistics companies conspired to suppress wages by agreeing not to hire each others’ workers.

These no-hire agreements are per se illegal, the DOJ’s Antitrust Division wrote in its July 15 statement in response to the defendants’ motions for summary judgment.

“Defendants’ argument that courts ‘routinely apply the rule of reason to hiring restrictions’ is wrong and the cases they cite are inapposite,” the DOJ wrote. “Accordingly, the Court should reject Defendants’ attempt to justify the alleged no-hire agreements as deserving anything less than per se treatment.”

The statement of interest is the department’s most recent move in a wave of recent enforcement actions related to no-hire or no-poach agreements.

The DOJ didn’t take a position on the facts of the case. But it asked the court to analyze the alleged agreements under the per se rule if they are found to exist, instead of weighing whether they also had pro-competitive effects.

CRST International didn’t reply to a request for comment.

Federal antitrust regulators—the DOJ’s Antitrust Division and the Federal Trade Commission—have assailed no-poach agreements as illegal in recent years. Since 2016, they’ve said the agreements are prosecutable under criminal law.

The DOJ brought its first criminal trials on alleged labor market violations earlier this year. Its first two criminal trials ended mostly in defeat in April. Four more similar cases are still pending and the department has kept up a steady level of involvement in civil action as well.

The antitrust regulators argue that agreements between employers not to hire each others’ workers violate the Sherman Act’s provisions against market allocations. That argument is part of a wider move to increase enforcers’ scrutiny of antitrust violations in labor markets — a historically under-examined area in comparison to product markets.

DOJ Antitrust Division chief Jonathan Kanter has expressed his goal of using courts to expand antitrust law, and statements of interest have become an increasingly central part of its policy push, said Steven Salop, professor emeritus at Georgetown University Law Center.

Labor shortage in the trucking industry has received significant scrutiny, particularly amid the global supply chain crisis. The Biden administration has sought to increase driver recruitment through apprenticeships, training and outreach. The industry was on track to reach a record shortage of 80,000 drivers by the end of 2021, according to industry group American Trucking Associations.

Other industries, such as healthcare, have drawn greater attention for their competitive tactics in recruiting and retaining workers. “DOJ likely wants to show the prevalence of the concern with no-poaching agreements across the economy,” said Rutgers Law School professor Michael Carrier in an email.

The case is Curtis Markson et al v. CRST International, Inc. et al, C.D. Cal., no 5:17-cv-01261, 7/15/22.