The Department of Justice (DOJ) Antitrust Division recently suffered another setback in its most recent effort to secure criminal convictions for labor-side violations of Section 1 of the Sherman Act. Having finally secured a successful criminal conviction, which came by way of plea deal and deferred prosecution agreement, the DOJ proceeded to trial in Maine against four home health executives who the government alleged had conspired to enter into a no-poach agreement and fix wages paid to home health aides. After a two-week trial, the jury acquitted all four of the defendants, marking the third time the DOJ has failed to convince a jury to convict defendants for alleged Section 1 violations in the labor market.
No-Poach Case Against HP Dismissed for Failure to Allege a Plausible Conspiracy
Q: Is proof of conspiracy required to state a claim that a no-poach agreement violated antitrust laws?
A: Many recent no-poach agreement antitrust claims have risen within the franchise context, where the alleged agreement was plainly described in the operative franchise agreements. In those cases, the parties fought over what standard of review should apply to the undisputed agreement. However, franchise cases are the exception not the norm. Many, if not most, Sherman Act Section 1 claims rise or fall on the plausibility of the allegations of an agreement, often oral, between the accused firms. Recently, the Ninth Circuit affirmed a district court’s dismissal of a factually threadbare no-poach antitrust claim. In Fonseca v. Hewlett-Packard Co.,[1] a former employee of Hewlett-Packard Co. (HP), who was fired by HP and not hired by one of HP’s competitors, alleged HP had entered into an illegal no-poach agreement with the competitor. Highlighting that no-poach antitrust cases require more than simply allegations of agreements and parallel conduct, the Ninth Circuit upheld the district court’s dismissal because the allegations of a conspiracy did not make sense and were not plausible. The decision serves as a poignant reminder that despite the class action bar’s and various government enforcement agencies’ (FTC, DOJ, and states attorneys general) stated desire to use the antitrust laws to protect employees’ wages and mobility, the law requires sufficient proof of a conspiracy to get beyond the pleadings stage of litigation.
Are No-Hire Provisions Now Void and Unenforceable Under Pennsylvania Law?
Q. Can two business entities agree not to hire each other’s employees?
A. On January 11, an en banc panel of the Superior Court of Pennsylvania affirmed a trial court’s decision declaring that a no-hire provision in a commercial contract between two businesses was void and unenforceable under Pennsylvania law.