DOJ Continues Losing Streak in Misguided Push to Criminally Punish No-Poach Violations

In last month’s antitrust column, we discussed the Department of Justice’s (DOJ) reiteration of its commitment to enforcement of Section 1 of the Sherman Act through its willingness to litigate such cases in the context of alleged no-poach violations. A week later, on April 28, the DOJ again failed to secure a conviction in a criminal no-poach case in United States v. Patel. This time, a Connecticut federal judge granted the criminal defendants’ motion for judgment of acquittal after a four-week trial before it went to the jury, ruling that the case did not involve market allocation subject to the per se rule of illegality under Section 1 of the Sherman Act. The defendants were six aerospace engineering managers from an aerospace engineering company and competing aerospace employee outsourcing companies that provided employees for-hire to work on its projects. The outsourcing companies compete with each other to recruit and hire engineers in pursuit of aerospace engineering projects. The DOJ alleged that the defendants conspired to restrict the hiring and recruiting of engineers and other aerospace employees between their companies, specifically agreeing not to hire employees of each other’s companies or to contact, interview, or recruit applicants who were employed by the other co-conspirators.

In granting the defendants’ motion, the court reasoned that even assuming the government could establish that the defendants had entered into an agreement to restrict hiring, the evidence did not show that the alleged agreement allocated the market to any significant extent because hiring by competitors was still permitted under certain circumstances. The Patel court specifically pointed to examples where one company interviewed employees of another company multiple times throughout the alleged conspiracy time period. The court also noted that the evidence showed that the nature of the restrictions were constantly in flux, meaning that at certain points hiring competitor employees was permissible, and at others it was not. For the Patel court, these facts tended to show that the market was not meaningfully allocated by any alleged agreement, and the court ultimately took the decision away from the jury to decide.