Following a two-week trial, on March 22, 2023, the jury acquitted all four of the defendants. Despite the introduction of evidence in the form of messages and recorded meetings that revealed the defendants discussed an agreement to pay all PSS workers $15 or $16 an hour, it appears the prosecution failed to convince the jury that an agreement was ever actually reached or acted upon by any of the defendants. Part of the prosecution’s difficulty likely stemmed from the fact that in practice, the defendants never reduced the PSS workers’ wages—they actually paid them $18 or $19 an hour. Further, while the alleged agreement was reduced to writing, the writing was never signed by any of the defendants. Notably, the defendants—all of whom were immigrants from Iraq—argued that in their culture, the only way to confirm an agreement is to sign a formal written contract.
This third acquittal may also indicate a more fundamental challenge the DOJ is facing: convincing juries that people should face jail time for agreeing not to solicit and hire competitors’ employees. The DOJ’s record appears to support this theory. To date, the DOJ is zero for three in securing a criminal conviction from a jury for a violation of Section 1 related to a no-poach agreement. The DOJ’s sole conviction in this arena was against VDA OC LLC and came via a plea deal. Notably, even that conviction was not a complete success, as its prosecution against VDA’s former manager Ryan Hee resulted in a deferred prosecution agreement and not a criminal conviction.
Businesses should not expect this most recent loss to slow down the DOJ’s enforcement actions. Despite the DOJ’s difficulty in securing jury convictions, the guilty plea by VDA and the Biden administration’s stated policy of trying to protect employees from what it perceives to be unreasonable restraints suggest that the DOJ will continue to indict businesses and individuals for alleged Section 1 violations involving no-poach agreements or wage fixing. Accordingly, clients should be careful when seeking to limit the movement of their employees in agreement with competitors or discussing their employees’ pay with competitors.
Related Cases Worth Watching
Opening arguments have begun in U.S. v. Mahesh Patel, Robert Harvey, Harpreet Wasan, Steven Houghtaling, Tom Edwards, and Gary Prus. There, the defendants are each charged with one count of conspiracy in restraint of trade in violation of Section 1. The government alleges that each of the defendants, who managed or otherwise controlled the hiring decisions at various unnamed companies, entered into a no-poach agreement regarding their employed aerospace engineers. Notably, the court recently denied the DOJ’s motion in limine, seeking to prevent the defendants from arguing the procompetitive benefits of the alleged agreement. While the court agreed that such evidence could not be used to argue that the agreement had procompetitive benefits because the DOJ alleged a per se violation, the court ultimately ruled that the evidence could be used to rebut the allegations that the defendants “joined the charged conspiracy, whether the conspiracy existed as alleged, and whether defendants had the requisite intent to join the conspiracy.” Time will tell if this ruling will further hinder the DOJ’s attempt to convince a jury to deliver the DOJ its first Section 1 conviction following a trial.