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The DOJ Finally Secures Its First No-Poach and Wage-Fixing Conviction

Last month, the DOJ finally secured its first criminal conviction for a labor-market antitrust offense.  (Check here for our previous coverage of this prosecution trend.)  VDA OC LLC (“VDA”), a healthcare staffing company, pleaded guilty to a Sherman Act offense in United States v. Hee.

In Hee, the DOJ charged VDA and its regional manager, Ryan Hee, in Nevada federal court with violating Section 1 of the Sherman Act by conspiring with a rival staffing firm to fix the wages of nurses working in the Clark County School District in Nevada and to not recruit or hire each other’s nurses.  In June, VDA and Hee stated to the court that they had reached a “preliminary resolution” with the DOJ.  VDA later notified the Court in August of its intent to plead guilty without a plea agreement and to litigate all sentencing issues at a future sentencing hearing.  But VDA’s plea was delayed by an unexpected development at its change-of-plea hearing in September: the government contended that pleading guilty to a Sherman Act section 1 offense requires a defendant to admit that their conduct “substantially affected” interstate commerce, while VDA disagreed.  The Court directed the parties to confer on this topic and file additional briefs if needed. 

Before briefing this topic, the parties resolved their disagreement and filed a plea agreement in October.  The government acceded to VDA’s view of the elements of the offense: the agreement stated that the conspiracy “occurred within the flow of interstate commerce,” not that it “substantially affected” interstate commerce.  The parties also agreed that the “volume of commerce corresponding to the wages paid to the affected nurses was $218,016,” and that the appropriate sentence for VDA was a criminal fine of $62,000 and restitution in the amount of $72,000, for a total of $134,000 in penalties.  The Court then accepted VDA’s guilty plea and imposed the recommended sentence. 

The case is not over.  Hee, the other defendant, has not entered a plea, and the Court plans to hold a hearing on Hee’s pending motion to dismiss the charges against him in January.  To support his motion, Hee posited that wage-fixing and no-poach agreements are not a crime—an argument that other courts have recently rejected—and that the government improperly failed to disclose its criminal investigation when an FBI agent interviewed Hee without his counsel present and obtained his consent to copy the contents of his electronic devices.  While Hee previously told the court that he had reached a preliminary resolution with the DOJ, it now appears likely that he will wait for the Court’s ruling on his motion before entering any plea. 

We’ll continue to follow how Hee’s case develops.  In the meantime, DOJ may continue to pursue no-poach criminal prosecutions in light of VDA’s guilty plea, despite two well-publicized acquittals in other cases this past spring.  In a recent interview with Law360, Richard Powers—who was the acting head of the DOJ Antitrust Division for most of 2021 before entering private practice, and was the head of criminal enforcement at the Division before that—opined that the DOJ’s enforcement efforts had greatly increased employers’ awareness of the legal risks associated with labor-market agreements and “will continue to be a priority area for antitrust enforcement moving forward.”  Addressing the recent acquittals, Powers noted that “when you bring principled but tough cases, you are going to have a mixed trial record,” and that the DOJ would not “view outcomes as referendums on the decision to bring a case.”

We’ll continue watching how the DOJ’s labor-market enforcement efforts unfold.