DOJ Defeats Motion To Dismiss In Precedent-Setting Criminal Wage-Fixing Case

• Published date: 09 December 2021
• Subject Matter: nti-trust/Competition Law, Antitrust, EU Competition
• Law Firm: Arnold & Porter
• Author: Mr Wilson D. Mudge and Andrew Ellingsen

On November 29, 2021, Judge Amos L. Mazzant III of the United States District Court in the Eastern District of Texas denied a motion to dismiss the government's first ever criminal indictment for alleged wage-fixing. The court rejected three primary arguments made by Neeraj Jindal, the owner of a therapist staffing company, and John Rodgers, the clinical director of the company. First, the court found that the indictment-which alleged a wage-fixing conspiracy-had adequately alleged a per se violation of the Sherman Act. Second, it determined that the defendants had "fair warning" that their alleged actions were illegal, so that their Constitutional rights were not violated by a prosecution. Finally, it determined that the per se standard does not unconstitutionally strip the jury of the ability to judge intent. The court's decision supports the Department of Justice's (DOJ's) recent efforts to identify and prosecute collusion in labor markets and will likely further embolden the Antitrust Division of the DOJ to continue seeking criminal indictments in this context.

The Case Against Jindal and Rodgers

The DOJ has accused Jindal and Rodgers of violating Section 1 of the Sherman Act by engaging in a scheme to fix the wages paid to physical therapists (PTs) and physical therapist assistants (PTAs) in the Dallas-Fort Worth area in 2017.

Jindal's company contracted with PTs and PTAs to place them with in-home patients. The company acted as a middleman staffing the PTs and PTAs based on patient referrals it received from home health agencies and paid the PTs and PTAs a set rate for their services. The indictment alleges that, beginning in March 2017, Jindal and Rodgers texted the owners of several therapist staffing companies to recruit competitors to join a conspiracy to lower the rates paid to PTs and PTAs. In a text sent separately to four different owners of therapist staffing companies on March 10, 2017, Jindal stated, "I am reaching out to my counterparts about lowering PTA rates to $45. What are your thoughts if we all collectively do it together?"

Jindal and Rodgers raised three primary arguments in their motion to dismiss.¹ First, the defendants claimed that the DOJ had failed to properly state a criminal offense because it did not allege a per se Sherman Act violation. While most restraints under Section 1 of the Sherman Act are analyzed under the rule of reason, requiring a context-specific inquiry, the Supreme Court has held that certain agreements are "so plainly anticompetitive that no elaborate study of the industry is needed to establish...