Not Guilty: Some Lessons from DOJ’s Recent Criminal Antitrust Trials

As previously discussed on this blog, the DOJ Antitrust Division faced a pair of setbacks in its labor-market enforcement agenda two days in a row in April of this year. The first was in United States v. Jindal, et al., where the Division charged the owner and the former clinical director of a physical therapist staffing company for a conspiracy to fix wages. Both defendants were found not guilty of wage fixing, although the owner was convicted of obstruction of justice. The second was in United States v. DaVita, Inc., et al., where the Division charged DaVita and its former CEO with conspiring with three competitors not to solicit each others’ senior employees. This trial resulted in not guilty verdicts for both the company and the former CEO on all charges.

The Antitrust Division suffered a third defeat this month. In United States v. Penn, et al., five former executives of Pilgrim’s Pride Corp. and Claxton Poultry were found not guilty of violating Section 1 of the Sherman Act through an alleged conspiracy to fix prices of broiler chickens. This was the third time the DOJ tried these individuals; the first two trials resulted in hung juries. The DOJ shifted tactics for this trial, moving forward on cases against only five of the ten individuals who were defendants in the first two trials, but again could not secure a conviction. DOJ did not walk away from this investigation empty-handed, however; this trial followed the guilty plea of Pilgrim’s Pride in 2021, which resulted in the company paying a $108 million fine. In addition, Claxton Poultry and several other industry executives also have been indicted and are awaiting trial.

There are two key takeaways from these recent trial results. First, these cases highlight the importance of testifying cooperators who have accepted responsibility through guilty pleas. For example, in two previous cases, United States v. Aiyer (conspiracy to fix prices of emerging market currencies) and United States v. Lischewski (conspiracy to fix prices of canned tuna), the Division called two and three cooperators, respectively, who had pled guilty for participating in the charged conspiracy. Both trials resulted in convictions. In contrast, the Division has not announced any guilty pleas by individuals in the Jindal, DaVita, and Penn cases, and thus did not have such cooperators to call at trial. The only cooperators called in those trials had received immunity from prosecution.

Second, these cases highlight the challenge of persuading a jury to convict defendants of a crime based purely on antitrust charges. In contrast to these recent antitrust trial results, the Division has had more success in recent fraud trials. Earlier this year, in United States v. Brewbaker, United States v. Guillory, and United States v. Padron, the Division obtained guilty verdicts following trial. One key difference is that each of these cases involved fraud charges, with Brewbaker combining Sherman Act and fraud counts. Unlike antitrust charges, fraud charges require evidence of deception, which may be easier for juries to appreciate as worthy of criminal prosecution than an alleged agreement to limit competition.

The Antitrust Division has made clear that these setbacks will not put the brakes on its criminal enforcement agenda. After the Penn trial, the Division issued a statement that it “will continue to vigorously enforce the antitrust laws, especially when it comes to price-fixing schemes that affect core staples.” And one week later, in a related broiler-chicken price-fixing case, the Division added obstruction charges against another Pilgrim’s Pride executive. On the labor front, following the Jindal trial the Division emphasized its legal victory in the court’s pretrial ruling that wage-fixing can give rise to criminal liability under Section 1 of the Sherman Act. The Division has several pending labor-market trials and is currently working on securing a guilty plea from a Nevada staffing company and its former regional manager who were indicted for conspiracy to fix wages of school nurses. These guilty pleas, if accepted by the court, would be the first criminal convictions for labor-market antitrust violations.

We will continue to monitor these cases and the Antitrust Division’s priorities, here on Enforcement Edge.

© Arnold & Porter Kaye Scholer LLP 2022 All Rights Reserved. This blog post is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.