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Connecticut Federal Judge Tosses Out Another DOJ No-Poach Prosecution

Insight

V&E Antitrust Update

May 1, 2023
DOJ's Aggressive Pursuit of 'No Poachers' Background Image
Insight

V&E Antitrust Update

May 1, 2023

By Steve Medlock, Craig Seebald, Hill Wellford, Darren Tucker, Rami Rashmawi, and Becky Baker

On April 28, 2023, U.S. District Judge Victor A. Bolden issued the latest blow to the Department of Justice’s (“DOJ”) efforts to criminally prosecute individuals who engage in “no-poach” agreements by granting the defendants’ motion for judgment of acquittal. The DOJ had charged the defendants with entering into a conspiracy “to suppress competition by allocating employees in the aerospace industry,” and provided specific examples of alleged enforcement of the agreement. Although earlier in the case, Judge Bolden had denied the defendants’ motion to dismiss the indictment and found that the DOJ had pleaded sufficient facts to support the charge of labor market allocation, Judge Bolden now ruled that no reasonable juror could have found the defendants guilty beyond a reasonable doubt. Judge Bolden found that, as a matter of law, the case “d[id] not involve a market allocation” that could be subject to criminal prosecution under the Sherman Antitrust Act. The Double Jeopardy Clause of the Constitution prevents the DOJ from appealing this ruling, even if it was predicated upon a clear misunderstanding of the facts or law.1

Judge Bolden focused on Second Circuit precedent in Bogan v. Hodgkins,2 and the recent jury acquittal in United States v. DaVita, Inc.,3 to find that the agreement at issue did not allocate the relevant labor market. This was because permission to hire employees was agreed to on a “case-by-case” basis, which would be granted or denied depending on the circumstances. Further, “restrictions shifted constantly throughout the course of the conspiracy” and “often hiring was permitted, sometimes on a broad scale.” Importantly, Judge Bolden acknowledged that there was some evidence of a blanket no-hire agreement, but that it allowed for many exceptions in specific circumstances. Consequently, Judge Bolden found that “the alleged agreement itself had so many exceptions that it could not be said to meaningfully allocate the labor market of engineers.”

The DOJ’s criminal prosecution of alleged “no-poach” agreements have already suffered multiple defeats in federal courts in Texas, Colorado, and Maine. To date, no jury has convicted any defendant on a “no-poach” charge. It stands to be seen whether this will cause the DOJ to reassess its overall labor market prosecution strategy, or if the DOJ is willing to suffer another major setback before going back to the drawing board. The ruling also may result in increased efforts by the Federal Trade Commission (“FTC”) to ensure its final Non-Compete Clause Rule casts a net broad enough to capture non-recruiting agreements between employers and workers. If the DOJ’s attempts at criminal enforcement of “no-poach” agreements between businesses continues to fail, the FTC might pick up the baton and focus on regulation of similar agreements between employers and workers in its final rule.

1 See, e.g., United States v. Martin Linen Supply Co., 430 U.S. 564 (1977); Evans v. Michigan, 568 U.S. 313 (2013); Martinez v. Illinois, 572 U.S. 833 (2014).

2 166 F.3d 509 (2d Cir. 1999).

3 No. 1:21-cr00229-RBJ, 2022 WL 1288585, at *3 (D. Colo. Mar. 25, 2022).

Key Contacts

Partner
Hill Wellford
Partner
Darren Tucker

This information is provided by Vinson & Elkins LLP for educational and informational purposes only and is not intended, nor should it be construed, as legal advice.