After DOJ antitrust losses in employment trials, defense lawyers urge ‘rethink’

The U.S. Department of Justice building is pictured in Washington, U.S., March 21, 2019. REUTERS/Leah Millis

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  • Defense lawyers for DaVita, ex-CEO chide criminal “no-poach” prosecution after their victory at trial
  • DOJ’s antitrust head declares in speech “we’re not backing down” on criminal actions in labor markets

(Reuters) – The U.S. Justice Department’s antitrust head on Thursday vowed to move forward with criminal cases against restrictions on employee hiring and mobility, despite two trial losses last week and a chorus of defense lawyers urging the government to rethink its drive to criminalize conduct in labor markets.

Jurors in Colorado federal court on April 15 rejected claims against dialysis provider DaVita Inc and its retired chief executive that they were criminally liable for “no-poach” agreements with industry competitors. In a separate case, a Texas panel a day earlier spurned a criminal wage-fixing allegation against the former owner of a physical therapy staffing company.

The verdicts resonated widely, as U.S. law firms try to glean takeaways from the novel prosecutions, and as the DOJ prepares for more trials that will test the application of criminal antitrust laws in labor and employment arenas.

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Jonathan Kanter, leader of the DOJ’s antitrust division, in remarks in Chicago touted the previous court rulings that allowed the two cases to head to trial. He called the prosecutions “extremely important programmatic cases establishing that harm to workers is an antitrust harm.”

Kanter added: “We’re going to continue to bring the cases — we’re not backing down.”

Many big law firms that were tracking the two cases issued client advisories this week that predicted the verdicts might slow, but not halt, criminal antitrust enforcement targeting labor-related conduct.

A lead trial lawyer for DaVita, Jack Dodds of Morgan, Lewis & Bockius, in an interview with Reuters said the DOJ’s trial loss should cause the government to “reevaluate and reassess and rethink what they’re doing.”

Dodds said he was “troubled by the idea of the government using criminal prosecution, with everything that comes with it” to “send signals” and to make new policy.

McDermott Will & Emery’s Jeffrey Stone, a lawyer for former DaVita CEO Kent Thiry, said the DOJ “shouldn’t have brought this case in the first place. This was not a righteous case.”

Prosecutors in the DaVita case argued Thiry leveraged his industry friendships to compel agreements that would shield his senior level employees from recruitment.

“There’s no ‘bro code’ exception to the Sherman Act,” Justice Department lawyer Sara Clingan told jurors. “You don’t get to violate federal law with your friends.”

DaVita’s lawyers, including Dodds and John Walsh of Wilmer Cutler Pickering Hale and Dorr, argued the company’s agreements with competitors were not illegal.

“They agreed to ground rules about the way they will compete, but they never agreed to stop competing,” Dodds told jurors.

The Denver-based company faced potentially hundreds of millions of dollars in penalties if it had been found guilty.

The federal judge in the DaVita prosecution, R. Brooke Jackson, told jurors at the start of the case that it was “a big deal” and said “what you folks do with it is going to be heard in other places.”

Read more:

DaVita and its former CEO acquitted of U.S. antitrust charges

U.S. prosecutors, DaVita clash at novel antitrust trial over hiring practices

DaVita loses bid to dismiss DOJ’s criminal antitrust charges

First DOJ criminal wage-fixing antitrust case survives challenge

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