The Justice Department is pressing ahead with criminal antitrust prosecutions despite a pair of defeats last week, but the losses will influence the department’s strategy and how defense attorneys respond.
When juries in Colorado and Texas failed to convict executives on antitrust charges last week, they delivered setbacks to the government’s boundary-testing theory that anti-competitive practices affecting workplace conditions amount to criminal misconduct.
“I don’t think that these two trial losses will cause DOJ to reconsider its policy or prevent DOJ from continuing to pursue these cases aggressively,” said Katie Hellings, a partner at Hogan Lovells and former assistant chief of the DOJ Antitrust Division’s national criminal enforcement section. “DOJ will likely focus on the favorable decisions they received on motion to dismiss in these cases, and continue to litigate aggressively.”
Still, the department has to take the losses into account as they push ahead.
“Certainly they will need to reflect and prioritize after the events of this week,” Ann O’Brien, a partner at BakerHostetler and former Antitrust Division prosecutor said of her former department.
A U.S. District Court for the Eastern District of Texas jury April 14 found Neeraj Jindal, the owner of a physical therapy staffing company—and his former clinical director—not guilty on charges of violating antitrust law for conspiring with competitors to lower workers’ pay.
A jury in the U.S. District Court for the District of Colorado April 15 found the kidney dialysis provider DaVita Inc. and its former CEO Kent Thiry not guilty of violating federal antitrust law by engaging in “no-poach” agreements with competitors.
Department spokespeople said in statements after the verdicts that the agency would continue to bring such cases.
“In no way should the verdict today be taken as a referendum on the Antitrust Division’s commitment to prosecuting labor market collusion,” a department official said after the Jindal verdict.
There are key differences between the cases and in comparison to other comparable labor-antitrust prosecutions underway—all of which will be scrutinized by government and defense lawyers alike. But the outcome in the DaVita case showed that prosecuting companies for no-poach agreements under antitrust law might be a difficult task.
“It’s going to be very difficult to persuade juries that no-poach agreements should be treated criminally, as opposed to civilly,” said Doug Tween, a partner at Linklaters and a former Justice Department antitrust prosecutor.
Judge R. Brooke Jackson set a high bar in the DaVita case by instructing the jurors that the government had to prove the defendants didn’t just knowingly enter into an agreement, but did so with a specific anticompetitive intent.
Although other judges don’t need to follow that precedent, such instructions “can significantly increase the government’s burden,” in future cases, said Tiffany Rider, a partner at Axinn, Veltrop & Harkrider.
There also could be a significant difference between how judges and juries see these types of cases—and that could have big implications on how effectively DOJ antitrust enforcers can hold parties accountable for labor offenses.
“A loss at trial does raise a question about whether juries will consider this conduct as egregious as other Sherman Act offenses, such as price fixing and bid rigging,” said Lisa Phelan, co-chair of Morrison & Foerster’s global antitrust practice, about the Jindal case. Phelan declined to comment on the DaVita case.
The not-guilty finding in the Jindal case offers a path for DOJ to perhaps “look for wage-fixing cases that present better facts for a jury,” said Andre Geverola, a partner at Arnold & Porter and formerly the Antitrust Division’s director of criminal litigation.
Geverola, who supervised the Jindal case before leaving the department in 2021 but limited his comments to the public record, said that while evidence presented at trial showed the companies initially agreed to lower wage rates, “my understanding is the other company did not follow through, which I think really damages any theory of harm from the conduct.”
Regardless of a judge’s instruction to the jury that an agreement itself is the crime, juries “look to see what happened as a result of this agreement, did somebody get hurt?” Geverola added. “And I think Jindal had really challenging facts on that front.”
Defense counsel are likely to feel less pressure to cooperate in the department’s other pending criminal antitrust enforcement actions involving wage-fixing and non-competes, several attorneys said. The department’s losses show defense attorneys they have a good chance of prevailing at trial.
“Obviously I think it will embolden” defense lawyers, said Deborah Elman, a partner who represents plaintiffs in antitrust cases at Garwin Gerstein & Fisher. “I think we won’t see pleas in the near future.”