Last week, the United States Department of Justice (“DOJ”) Antitrust Division suffered back-to-back trial defeats in its recent enforcement initiative to use the Sherman Act to stop employers from using allegedly anticompetitive tactics to suppress wages and employee mobility. In the first case, the DOJ’s first ever criminal wage-fixing prosecution ended with not guilty verdicts. In the second case, a national healthcare provider and its former CEO were acquitted on charges involving allegedly illegal “no-poach” agreements.

On Thursday, April 14, 2022, in United States v. Jindal, a Texas federal jury handed a near total loss to the DOJ, finding the former owner and the former clinical director of a physical therapist staffing company not guilty of orchestrating a wage-fixing scheme. The DOJ had alleged in the indictment, filed in December 2020, that the defendants conspired with competing companies providing in-home physical therapy services to suppress the wages of physical therapists and physical therapist assistants by providing each other non-public information about the rates paid to physical therapists and assistants; communicating about and agreeing to decrease the rates paid to those physical therapists and assistants; and paying those physical therapists at collusive and noncompetitive rates.

According to legal news outlets, during the six-day trial prosecutors told the jury that the defendants had worked together to reach out to the owners of five competing staffing businesses in the Dallas-Fort Worth area to discuss collectively lowering wages paid to contracting physical therapists and physical therapist assistants. The DOJ claimed the defendants sought to lower wages across the market to maintain the value of their company. The pair then purportedly took steps to cover up their scheme when the Federal Trade Commission (FTC) opened an investigation in April 2017, according to prosecutors. But defense attorneys disputed the DOJ’s characterizations and argued the men never made deals to fix wages of physical therapists and assistants.

The jury returned not guilty verdicts for both men on the wage fixing claim. On related charges that the men had obstructed the FTC’s investigation, the jury returned a mixed verdict, acquitting the clinical director but convicting the owner on the obstruction charge. In a publicly released statement, DOJ Antitrust Division chief Jonathan Kanter said, “Lying to federal agencies is a crime, plain and simple,” adding that “as the court’s rulings in this case make clear, so is wage fixing. When obstruction affects the federal government’s investigations into labor market collusion and impedes our ability to protect workers, we will use all the tools available to prosecute all of these crimes to the full extent of the law.”

The following day, on Friday, April 15, 2022, a Colorado federal jury acquitted a national healthcare provider and its former chief executive on all counts of conspiring with competing employers to suppress competition for employees through the use of “no-poach” agreements, handing the DOJ a second consecutive high-profile loss in its crackdown on employment-related antitrust crimes in as many days. This second case was particularly significant because it tested the DOJ’s theory that entering into such “no poach” deals can be a per se violation of the Sherman Act. Although the judge presiding over the case had previously denied a motion to dismiss, finding that the indictment adequately alleged a per se violation of the Sherman Act, the jury found the evidence insufficient and acquitted the defendants on all charges.

These two high-profile losses suggest that the DOJ Antitrust Division may face headwinds in using Sherman Act criminal prosecutions to deter anticompetitive conduct in employment markets. The DOJ Antitrust Division website was silent last week about the outcome of the second criminal prosecution, but according to a Law 360 report, Kanter was unrepentant, declaring that “[b]oth of those cases—which were extremely important cases establishing that harm to workers is an antitrust harm—survived motions to dismiss …The courts said, ‘These are legally sound cases.’ We want those decisions.” What the DOJ can allege and what it can prove are, of course, two very different things, but businesses should be aware that DOJ leadership appears poised to continue bringing these cases, win or lose.