DOJ Says Agreement Not To Recruit And To Suppress Wages In Las Vegas Case Is Clearly Illegal
10/13/2021On October 1, 2021, the U.S. Department of Justice (“DOJ”) filed a response in Nevada federal court opposing a motion to dismiss from defendants VDA OC LLC and its former regional manager Ryan Hee, in a case in which they are charged with agreeing with another unnamed contractor not to recruit or hire from one another, and to suppress wages for Las Vegas school nurses. The DOJ stated that this is a simple case arguing that agreeing to allocate nurses is market division, and fixing nurses wages is price fixing, both of which have long been considered per se unlawful under the antitrust laws.
VDA is a healthcare staffing agency that provides contract healthcare staffing services in a number of states, including Nevada. While under previous management and a different name, together with Hee, its regional manager at the time, VDA allegedly conspired with another contractor to not recruit one another’s nurses and agreed not to negotiate any further wage increases with their own.
The DOJ first filed its indictment against VDA and Hee in March of this year; one of a number of recent indictments alleging employee no-poach and wage-fixing agreements between competing employers. These indictments follow on from guidance issued in 2016 announcing the Government’s intention to criminally prosecute such agreements as per se violations of the antitrust laws. Most conduct alleged to violate the antitrust laws is judged under the “rule of reason,” which requires courts to consider potential justifications to determine if the agreement or restraint is reasonable. The per se designation is reserved for narrow classes of conduct that, through long judicial experience, have been proven to be inherently anticompetitive, and therefore criminally prosecutable. Conduct found to be per se unlawful has tended to be price-fixing, bid rigging, and market allocation. Defendants filed a motion to dismiss the case on its merits in September, arguing that labor market restrictions like the ones at issue here have not had the kind of judicial scrutiny necessary to class them as per se violations. They argued that the DOJ’s assertion that they are per se violations is a “novel theory” that has not been sanctioned by the courts and raises due process concerns. The DOJ, on the other hand, argues that the conduct at issue here is no different from categories of conduct long held to be per se illegal, namely market allocation and price fixing, and that there is nothing novel about it.
In its recent filing, the DOJ asks the court to reject defendants’ “newly minted employer-cartel exception to the per se rule against horizontal market allocation,” saying that they “misapprehend the role of ‘judicial experience’ in the per se rule’s application.” Its response distinguishes the decision to recognize “a new per se rule” from the decision about whether conduct falls within a category of economic restraint necessarily prohibited by Section 1 of the Sherman Act. Accordingly, it argues, the per se rule applies to horizonal restraints even if not “precisely identical” to those that appear in the case law as a per se violation.
The DOJ also addresses defendants’ argument that the restraints were ancillary to a separate procompetitive venture, saying that would require evidence of a meaningful business integration between the parties to the challenged restraint, which there was not in this case according to the DOJ. They also answer defendants’ constitutional claims, saying that because this is not a new type of prosecution defendants had fair notice of the conduct’s illegality, and the claim that the per se rule itself is unconstitutional is foreclosed by settled precedent to the contrary. According to the DOJ, “[s]ome antitrust cases are complicated. This one is not.”