DOJ Notches A Win In Its Fight Against Anticompetitive Labor-Market Practices, But Victory At Trial Is Far From Assured

• Published date: 23 December 2022
• Subject Matter: Antitrust/Competition Law, Employment and HR, Antitrust, EU Competition , Employee Benefits & Compensation
• Law Firm: Steptoe & Johnson
• Author: Mr Patrick F. Linehan, Damon J. Kalt, John J. Kavanagh and Drew C. Harris

The Department of Justice (DOJ) Antitrust Division secured another labor-side antitrust prosecution win earlier this month in United States v. Patel, a case centered on an alleged no-poach and non-solicitation agreement among Pratt & Whitney and several of its subcontractors, when Judge Victor A. Bolden of the District of Connecticut denied the defendants' joint motion to dismiss.¹ But with a potentially difficult trial set to begin in late March, any celebration within DOJ's halls about the ruling is premature. As we discussed extensively in a prior client alert, the Antitrust Division has developed a track record over the years of defeating motions to dismiss labor-side Sherman Act prosecutions, only to be handed acquittals by unimpressed juries. Thus, while Patel presents the Antitrust Division with another opportunity to vindicate its strategy of availing itself of the criminal justice system to police labor markets, it could also end in an embarrassing third successive trial defeat. And for the reasons explained below, it is far from clear that Patel will be an easier case for DOJ than its predecessors. Given these high stakes, employers would be wise to continue to closely follow Patel.

The Alleged Conspiracy

As alleged, defendants Mahesh Patel, who was a manager at Raytheon subsidiary Pratt & Whitney, and Robert Harvey, Harpreet Wasan, Tom Edwards, Gary Prus and Steven Houghtaling, each of whom was an executive at one of five outsourced engineering service providers used by Pratt & Whitney, agreed "to restrict the hiring and recruiting of engineers and other skilled-labor employees" between 2011 and 2019.² The agreement, which was made orally but was reflected in a number of emails among the participants, restricted all of the defendants from hiring the contractors' employees and prohibited them from contacting, interviewing, and recruiting applicants who were employed by one of the other companies.³ Enforcement was primarily handled by Patel, who also served as an intermediary for communications among the other companies. The indictment quotes various communications between the co-conspirators, including an email from one contractor to Patel, "I am very concerned that [one of the other contractors] believes they can hire any of our employees . . . . Could you please stop this person from being hired by [the other contractor]?" as well as discussions of how the no-poach agreement would help the companies suppress wages.⁴ The indictment lists various devices used to conceal the misconduct: the agreement was unwritten, meetings about it were held in private, and the employees who were the subject of the agreement were provided false and misleading information about its existence.⁵

The Court's Ruling

In deciding the defendants' motion to dismiss the indictment under Federal Rule of Criminal Procedure 12(b), Judge Bolden was faced with arguments that have now been made a few times in similar recent cases in other jurisdictions, and his ruling fell in line with those arguments.

As before, the principal issue...