Antitrust Division Stumbles in Recent Criminal Cases (Part III of III)
Players with fight never lose a game, they just run out of time – John Wooden (UCLA Basketball Coach)
If you even dream of beating me you’d better wake up and apologize – Muhammad Ali
The Justice Department’s Antitrust Division has suffered setbacks in recent months. Prior to these recent cases, DOJ’s Antitrust Division secured some significant trial victories, including Bumble Bee’s former CEO Chris Lischewski, who was convicted after a lengthy trial.
No-Poach and Wage-Fixing Prosecutions
DOJ has trumpeted its criminal prosecutions into a new area – labor market wage fixing and no-poaching agreements. While there is no discernible difference between price-fixing of goods and services and wage-fixing in the hiring of labor, DOJ’s first two trials did not end well.
In a setback, a Texas federal jury acquitted Neeraj Jindal and John Rodgers of conspiracy to fix compensation rates for physical therapists in the Dallas-Ft. Worth market. Jindal, however, was convicted of obstructing an FTC investigation in this area. DOJ has charged nearly 15 defendants in other markets and cases on this same theory of criminal liability. Three major wage-fixing cases are pending in Maine, Nevada and Connecticut.
In a second criminal case, a jury acquitted DaVita, a kidney dialysis company, and its former CEO on similar charges of wage-fixing and no poaching. The case was built on the same legal theory of agreements among competitors not to solicit employees from each other’s companies. The jury deliberated for two days before acquitting both defendants.
In the Jindal and Rodgers case, the government alleged that the defendants struck an illegal agreement with a competitor to reduce the pay rate to physical therapists. The prime witness against the defendants initially told the FTC she did not believe the request made by the defendants. At the criminal trial, she reversed her testimony. The defense argued to the jury that the government’s star witness lacked credibility and had been coached by DOJ prosecutors.
Chicken Industry Price-Fixing
The Antitrust Division brought a major set of criminal cases against companies and executives in the chicken producing industry. The case grew out of a related class action lawsuit claiming that numerous major chicken producing companies participated in a major price fixing cartel in the sale of chicken products to restaurants, food chains and cooperatives. After two lengthy trials, the juries hung and mistrials were declared.
In an unprecedented move, the trial judge demanded that AAG Jonathan Kanter appear in court to address the issue of whether a third trial would be warranted.
Before these setbacks, DOJ collected plea agreements and settlements from various companies and executives. Tysons Food has been cooperating and earned leniency. Pilgrim’s Pride agreed to pay a $107.9 million criminal fine.
Interestingly, the defendants acknowledge that they shared sensitive price information and bidding developments but claim that no illegal agreement was ever reached. In response to the two mistrials, the trial judge took the unusual step of requiring AAG Jonathan Kanter to appear in court and explain why a third trial should be conducted. The defendants have requested that the cases be dismissed.
A third trial would be an interesting development. It is not known what the split of the juries was in the first two trials. The first two trials involved ten defendants. DOJ dropped five defendants from the requested third trial.