Acquittals in the First Two Wage-Fixing and No-Poach Criminal Trials

By: Andrew I. Haddad, Amy N. Vegari and William F. Cavanaugh, Jr. (Antitrust Update)

Last month, the first two trials arising from the DOJ’s recent push to criminally prosecute wage-fixing and employee non-solicitation agreements both ended in acquittals on the antitrust charges.  (Check here for our previous coverage of this prosecution trend.)  In United States v. Jindal, the defendants were acquitted on charges of price-fixing, while in United States v. DaVita Inc., DaVita and its CEO were acquitted on charges that they engaged in no-poach agreements with competitors.  Though the DOJ has publicly declared its intent to continue pursuing such prosecutions, these setbacks may affect how it approaches other alleged labor-market antitrust violations.

JINDAL: ACQUITTAL ON PRICE-FIXING CHARGES

Jindal is the DOJ’s first-ever criminal wage-fixing case.  The DOJ charged Neeraj Jindal, the former owner of a Texas healthcare staffing company, and John Rodgers, the company’s former clinical director, with colluding with a competitor to decrease pay rates for physical therapists and their assistants.  United States v. Jindal, et al., No. 4:20-cr-00358 (E.D. Tex.). Recall that the Eastern District of Texas denied Jindal and Rodgers’s motion to dismiss last fall, holding that wage fixing is tantamount to price fixing and is thus per se illegal under the Sherman Act. 

The defendants fared better at trial.  Over the six-day trial, prosecutors argued that Jindal and Rodgers agreed with the owner of a competitor to reduce wages and tried to recruit four other competitors to join them in doing so.  Allegedly, this was part of a scheme to pump up their company’s market value as Jindal tried to sell it.  The government’s star witness was the owner of Jindal and Rodgers’ competitor, with whom they had allegedly colluded, and who received a leniency agreement from the government in exchange for her cooperation.  She testified at trial that she and Rodgers had agreed in text messages to lower wages.  For instance, Rodgers had texted her, “I think we’re going to lower [physical therapist assistant] rates to $45,” and she responded, “Yes I agree,” “I’ll do it with u,” and “I think the PT’s need to go back to 60 … Our margins are disappearing.” 

Defense counsel attacked the cooperator’s credibility by pointing out that her trial testimony differed from what she told the FTC when it investigated this scheme in 2017, before she received leniency.  Transcripts of those proceedings show that she told the FTC she never thought Rodgers was serious about the alleged scheme and that she was just pretending to go along with him.  According to defense counsel, the co-conspirator had been coached by the government in exchange for leniency and, without her testimony, there was no evidence of any deal to lower wages.  In fact, defense counsel contended the co-conspirator did not follow through on this alleged deal, as evidenced by the fact that she never reduced the wages her company paid.  Jindal and Rodgers did not testify. 

The defendants’ strategy appears to have worked: Jindal and Rodgers were acquitted of the wage-fixing charges.  However, Jindal was convicted of obstructing the FTC’s investigation of the allegations by lying to the agency and giving it incomplete documents, for which he faces a maximum of five years in prison..CONTINUE READING…