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DOJ gets first guilty plea in non-poaching case

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Nearly six years after the U.S. Department of Justice (DOJ) and Federal Trade Commission (FTC) warned human resources managers and their companies that no-poaching and wage-fixing agreements would be subject to criminal prosecution , the DOJ secured its first guilty plea in a non-poaching case.1 On October 27, 2022, a healthcare staffing agency, VDA OC LLC (VDA), formerly Advantage On Call LLC, pleaded guilty to participating in a conspiracy to assign school nurses and not raise salaries nurses.2 At the same time, a U.S. District Court judge in Nevada ordered VDA to pay a $62,000 criminal fine and $72,000 in restitution.3

The VDA plea agreement was the first successful criminal prosecution for the DOJ in a labor market case involving a no-poach or wage-fixing agreement. The DOJ had previously failed to secure convictions in either of the two labor cases it filed with criminal charges. In April 2022, a Texas jury acquitted two people accused of fixing salaries for physical therapists and physical therapist assistants.4 That same month, a Denver jury acquitted kidney dialysis company DaVita and its former CEO of charges of entering into non-poaching agreements with other companies.5

Despite past losses, the DOJ has not been deterred from investigating and prosecuting behaviors in labor markets. The DOJ’s success in securing its first criminal plea with the VDA is likely to encourage the DOJ to continue to make these cases an enforcement priority. The VDA’s plea is also notable because it is one of the first cases where the DOJ has won restitution for victims in a criminal prosecution. The DOJ recently noted that it will seek to ensure that victims are compensated for damages caused by collusive conduct,6 and this is an example of the DOJ following through on this enforcement priority as well.seven

VDA Case Summary

A grand jury indicted VDA and its former regional director, Ryan Hee, in March 2021 for participating in a conspiracy to assign nurses and fix the salaries of nurses working for the Clark County School District.8 The cartel alleged in the indictment lasted less than a year, from October 2016 to July 2017, when VDA was acquired by another company.9 Meanwhile, VDA and another company agreed not to recruit or hire nurses from each other and to fix the nurse’s salary by refusing to raise their salary. According to the indictment, nurses provided care to students in the Clark County School District who either had complex medical needs or were medically fragile.ten

After being charged, VDA and Hee attempted to argue in a motion to dismiss that the government could not criminally prosecute the non-poaching and wage-setting cases because in itself violations of the Sherman Act, while arguing that their due process rights were violated because the DOJ’s guidance on criminal prosecution for non-poaching and wage-fixing agreements was only released a day before the start of the plot.11 However, the U.S. District Court judge indicated he was unlikely to dismiss the charges.12 Shortly after, VDA and Hee signaled that they intended to plead guilty. Although the company pleaded guilty, Hee did not and is expected to stand trial in April 2023.

Assistant Attorney General Jonathan Kanter, head of the DOJ’s antitrust division, hailed the VDA plea deal, calling free and open labor markets a “cornerstone of the American dream.”13 He said the guilty plea demonstrates the DOJ’s commitment to “ensuring that workers receive competitive wages and a fair chance to seek better work and that the criminals who conspire to deny them those rights are held accountable.” “.14

Comment on VDA Fine

While fines for criminal antitrust violations can reach $100 million or more depending on gain or loss, VDA’s $62,000 fine reflects the amount of nurses’ salaries affected by this conspiracy. In this case, the plot lasted less than a year and affected a relatively small number of nurses. Although the company was ordered to pay what may seem like a relatively modest fine, the methodology used to calculate the fine in this case could result in a much higher fine for a company with a larger volume of trade.

VDA also agreed to pay $72,000 restitution as part of its plea deal, which is not usually required in a criminal antitrust case.15 According to the DOJ, VDA’s payment of restitution to its employed nurses “would potentially spare them the trouble and expense of pursuing parallel civil lawsuits to recover damages.”16 The key word is “potentially”. In some limited circumstances, this might be true, and if the DOJ continues to pursue restitution in these criminal cases, time will certainly tell what effect (if any) restitution payments will have on civil lawsuits. For now, it’s important to know that the DOJ could demand restitution from companies that plead criminally guilty.

Conclusion

The DOJ’s first victory in its mission to criminally prosecute non-poaching and wage-fixing agreements will certainly motivate the DOJ to pursue this enforcement priority.17 Although VDA’s fine may seem relatively modest, the amount is attributable to VDA’s low trading volume. The DOJ’s approach to the VDA fine could result in significantly higher fines in future cases with higher trade volumes. Given the DOJ and FTC’s continued aggressive stance on agreements that affect labor markets, companies should familiarize themselves with the Antitrust Guidelines for Human Resources Professionals issued jointly by the DOJ and FTC in October 2016 and ensure their compliance programs prevent poaching or wages. – fixing conspiracies to arise.

For more information please contact Marc Rosmann, Brent Snyder, Jeff VanHooreweghe, or another member of the firm antitrust and competition practice.


[1]US Department of Just. & fed. Trade Comm’n, Antitrust Guidance for Human Resource

Professionals (Oct. 2016), https://www.justice.gov/atr/file/903511/download; see Wilson Sonsini Alert, “DOJ and FTC Warn Human Resources Officials That Anticompetitive Hiring and Compensation Practices May Be Subject to Criminal Prosecution” (October 24, 2016), https://www.wsgr.com /en/insights/doj-and-ftc-put-hr-executives-on-advice-that-anti-competitive-hiring-and-compensation-practices-may-be-legal-suited -criminales.html.

[2]Press release, US Dep’t of Just., “Health Care Company Pleads Guilty and is Sentenced for Conspiring to Suppress Wages of School Nurses” (October 27, 2022), https://www.justice.gov/opa/pr/ the-health-care-company-pleads-guilty-and-convicted-of-conspiracy-to-remove-schools-nurses-wages.

[3]Identifier.

[4]Verdict, United States v. Neeraj Jindal and John Rodgers, No. 4:20-cr-00358-ALM-KPJ (ED Tex. April 14, 2022). One of the defendants of Jindal was found guilty of obstructing the government investigation. See also Wilson Sonsini Alert, “DOJ’s First Criminal Wage-Fixing and Non-Poaching Trials End in Acquittals” (April 18, 2022), https://www.wsgr.com/en/insights/first-doj- criminal-wage-Fixing-and-No-poach-trials-end-in-acquittals.html.

[5]Verdict, United States v. DaVita Inc. and Kent Thiry, no. 1:21-cr-00229 (D. Colo. 15 Apr 2022); see also Wilson Sonsini Alert, “DOJ’s First Criminal Wage-Fixing and Non-Poaching Trials End in Acquittals” (April 18, 2022), https://www.wsgr.com/en/insights/first-doj- criminal-wage-Fixing-and-No-poach-trials-end-in-acquittals.html.

[6] Matthew Perlman, DOJ Obtains First ‘No Poach’ Guilty Plea With School Nurse (October 27, 2022), https://www.law360.com/articles/1544215/doj-gets-1st-no-poach-guilty-plea-with-school-nurse-case.

[7] The DOJ’s Antitrust Division recently revised its corporate leniency policy to emphasize remedial action. See Wilson Sonsini Alert, “DOJ Antitrust Division Updates Corporate Leniency Policy” (April 12, 2022), https://www.wsgr.com/en/insights/doj-antitrust-division-updates-corporate-leniency-policy.html.

[8] Press Release, US Dep’t of Just., “Health Care Staffing Company and Executive Indicted for Colluding to Suppress Wages of School Nurses” (October 27, 2022), https://www.justice.gov/opa/pr/l care-care-company-and-executive-charged-with-collusion-cuts-school-nurses-wages.

[9]ID.; see Indictment, United States v VDA OC, LLC, No. 2:21-cr-00098-RFB-BNW (D. Nev. October 27, 2022).

[10]Indictment at 2.

[11]Max FillionVDA’s motion to dismiss US DOJ’s non-poaching case met with skepticism from federal judgemlex (November 2, 2021), https://content.mlex.com/#/content/1334095.

[12] ID.

[13]Press release, US Dep’t of Just., “Health Care Company Pleads Guilty and is Sentenced for Conspiring to Suppress Wages of School Nurses” (October 27, 2022), https://www.justice.gov/opa/pr/ the-health-care-company-pleads-guilty-and-convicted-of-conspiracy-to-remove-schools-nurses-wages.

[14]Identifier.

[15] In July 2022, the DOJ entered into proposed civil consent decrees with poultry processors for participating in a conspiracy to fix the wages of poultry processing plant workers that required the companies to pay $84.8 million. dollars in restitution for workers injured in the conspiracy. News Release, U.S. Dep’t of Just., “DoJ Files Lawsuit and Proposes Consent Decrees to End Long-Running Conspiracy to Cut Workers’ Pay at Processing Plants Poultry and Combat Deceptive Abuses Against Poultry Farmers” (July 25, 2022), https://www.justice.gov/opa/pr/justice-department-files-lawsuit-and-proposed-consent- decrees-end-long-running-conspiracy.

[16] United States’ Sentencing Memorandum at 6, US v. VDA OC, LLC, No. 2:21-cr-00098-RFB-BNW (D. Nev. 27 Oct. 2022).

[17] The DOJ currently has criminal labor market cases pending against surgical care affiliates (SCAs) of UnitedHealth Group, executives of Raytheon and other aerospace engineering companies, and directors of healthcare agencies. home health in Maine.