Not With A Bang But A Whimper: Court Rejects DOJ's Latest No-Poach Case

• Jurisdiction: United States,Federal,Connecticut
• Law Firm: Arnold & Porter
• Subject Matter: ntitrust/Competition Law, Antitrust, EU Competition
• Author: Jocelyn Porter, Andre Geverola and Wilson D. Mudge
• Published date: 19 May 2023

In a major setback to the DOJ Antitrust Division's labor market enforcement agenda, a U.S. district court in Connecticut recently granted a motion for judgment of acquittal in favor of the six defendants indicted in United States v. Patel. As previously discussed, the DOJ began the case by filing a criminal complaint alleging that an aerospace executive, along with the managers and executives of several engineering services suppliers, conspired to allocate employees by agreeing to restrict the hiring and recruiting of engineers and other skilled-labor employees. The DOJ soon followed up with an indictment against the same executive along with five other individuals.

The district court denied a motion to dismiss the indictment, holding that the alleged conduct was properly pled as a market allocation and subject to per se treatment. The court cautioned, however, that "not all no poach agreements are market allocations subject to per se treatment and therefore, determining whether a no poach agreement is a market allocation is highly fact specific." The court deferred until trial its decision on the defendants' ancillary-restraints defense, which argued that the alleged hiring restrictions were part of legitimate collaborations between the companies involved in the alleged conspiracy ' engineering suppliers providing services to a common customer.

Shortly before trial, the district court ruled that (1) the government bears the burden of proof on ancillary restraints, meaning the government was required to prove that the alleged hiring restraints were not ancillary to a legitimate collaboration and (2) the defendants may introduce evidence of procompetitive benefits of the alleged agreement to dispute whether the conspiracy existed as alleged, to challenge whether the defendants had the requisite intent, and to support their ancillary-restraints defense.

At the conclusion of the government's case-in-chief, the defendants moved for a judgment of acquittal, arguing that the evidence admitted was insufficient to let the case go to the jury. The DOJ opposed the motion, arguing that the government is not required to prove anticompetitive effects and a relevant market and that the defendants bear the burden of producing evidence to support their ancillary-restraints argument, which the government argued they had not met.

The court ruled that as a matter of law the government failed to present sufficient evidence of a market allocation under the per se rule...