Why Does the Antitrust Division Keep Losing Criminal Trials?

Why Does the Antitrust Division Keep Losing Criminal Trials? MICHAEL TUBACH, ANNA PLETCHER, AND KELSE MOEN THE ANTITRUST DIVISION OF THE U.S. Department of Justice, under President Biden, is widely recognized for taking a more aggressive approach to enforcing the nation’s antitrust laws—a development well documented in both the trade and popular press. 1 But this approach has garnered mixed results. 2 While the Division 3 has earned some high-profile wins on the civil side, those courtroom victories have been outnumbered by high-profile losses on the criminal side. The Division’s struggle to bring successful criminal cases for alleged violations of Section 1 of the Sherman Act, its bread-and-butter of criminal enforcement, is especially illustrative. Since January 2020, the Division has brought 30 defendants to trial in eight Section 1 cases and has secured a conviction against just a single defendant 4 —and even that conviction was recently reversed on appeal. 5 Why does the Division keep losing these cases? This article attempts to answer that question. To do so, we draw on our experience as trial counsel for Jayson Penn, an individual defendant in the government’s three unsuccessful trials for alleged price-fixing in the broiler chicken market. We also spoke with more than 30 lawyers—including former Antitrust Division prosecutors and defense attorneys involved in all of these trials. Based on this, and notwithstanding our position on the opposite side of the “v” from the Antitrust Division, we conclude by offering some modest suggestions. Contextualizing the Division’s Recent Struggles The Department’s own published data on conviction rates sheds some light on the Division’s performance. 6 The Division’s recent conviction trends, compared to the rest of DOJ, paint a mixed picture. At least before 2020, the Division had a conviction rate on par with or slightly higher than the rest of the Department. From 2012 to 2019, the average conviction rate for antitrust defendants was 92.2% compared to 91.4% for all criminal defendants. But this data includes both guilty pleas and trial convictions. When we strip out the guilty pleas and look at the trial conviction rate alone, the numbers tell a different story. In pre-2020 criminal antitrust trials, 14 of 27 defendants were acquitted, a trial conviction rate that lagged behind the rest of the Department every year during this period. In the last four years, the Antitrust Division’s conviction rate for Section 1 crimes has plummeted. The Division secured a Section 1 conviction in just one of the eight such cases it has taken to trial since January 2020—and that sole conviction was fleeting. 7 In the Division’s only conviction ( United States v. Brewbaker ), a jury found former Contech Engineering Solutions executive Brent Brewbaker guilty of conspiring to rig bids for certain construction projects in North Carolina. The Fourth Circuit overturned the Sherman Act conviction on appeal, holding that the district court should have dismissed that charge for failure to state a per se offense. 8 The Division’s other cases resulted in acquittals on the Section 1 charges: ■ United States v. Jindal . 9 In April 2022, Neeraj Jindal, the former owner of a physical therapist staffing company, and John Rodgers, the company’s former clinical director, were acquitted after a jury trial of conspiracy to fix wages for physical therapists in Texas. 10 ■ United States v. DaVita, Inc. 11 Also in April 2022, a jury acquitted leading dialysis provider DaVita, Inc., and its former chief executive Kent Thiry, of conspiracy charges stemming from alleged agreements with competitors to not poach each other’s employees. This was the first no-poach criminal trial brought under the Sherman Act, and it came in the wake of the DOJ’s 2016 guidance that it would seek to prosecute such no-poach agreements as market allocation agreements. 12 ■ United States v. Penn, et al . 13 The government tried its case against executives of leading poultry processing Mr. Tubach and Ms. Pletcher are partners, and Mr. Moen is Counsel, at O’Melveny & Myers LLP. They served as trial counsel for Jayson Penn (former CEO of Pilgrim’s Pride Corp.) in one of the cases discussed in this article. The authors wish to thank their O’Melveny colleagues Julia Schiller, Brian Quinn, and Daniel Lautzenheiser for their substantial contributions to this article. S P R I N G 2 0 2 4 · 1 7 C O V E R S T O R I E S companies, including our client Jayson Penn, three times, alleging a conspiracy to fix prices and rig bids for broiler chickens. The first two trials ended in hung juries against all 10 defendants. In the spring of 2022, the government dropped charges against five defendants and pursued an unprecedented third trial against the remaining five. In July 2022, the third jury acquitted the five remaining defendants of all charges. ■ United States v. Manahe . 14 In March 2023, a jury acquitted business managers of four Maine in-home healthcare agencies on wage-fixing and no-poach charges stemming from allegations that the managers conspired to fix the hourly rates for home healthcare workers and agreed to refrain from hiring each other’s workers. ■ United States v. Patel . 15 In April 2023, at the end of the government’s case, the District Court granted a Rule 29 motion to acquit in this no-poach case that alleged that the six defendants, who worked for staffing companies in the aerospace industry, conspired to restrict the hiring of engineers and other skilled workers. In particular, the court ruled that “[a]s a matter of law,” the alleged no-poach agreement in the case “does not involve a market allocation under the per se rule.” 16 Patel is a rare example of a case where criminal antitrust charges were thrown out at the Rule 29 stage. ■ United States v. Dornsbach . 17 In May 2023, a jury acquitted Steven Dornsbach and his business, a concrete repair and construction company, of conspiring to rig bids on construction projects in Minnesota. ■ United States v. O’Brien . 18 In September 2023, a jury acquitted Lawrence O’Brien, Bruce LaRoche, and Thomas Dailey—owners of companies that sold customized promotional products such as backpacks, water bottles, and hats to the U.S. Army—of conspiring to rig bids for such products. To be sure, the Division has also achieved some notable guilty pleas in Section 1 criminal cases. According to data from the Administrative Office of the U.S. Courts, antitrust criminal defendants entered 31 guilty pleas between 2020 and 2022. 19 Noteworthy among these is United States v. VDA OC, LLC , in which a healthcare staffing company in Nevada pleaded guilty to conspiring with a competitor to allocate nurses and to fix wages. 20 The plea marked the DOJ’s first conviction in a criminal no-poach case and came in the wake of the losses in DaVita and Jindal . But even this win was tempered by the case’s size: It garnered only $72,000 in restitution to victim nurses and a $62,000 criminal fine. 21 Explaining The Trend: What Attorneys in the Trenches Say To attempt to explain this trend, we interviewed more than 30 lawyers, including former Antitrust Division prosecutors and defense attorneys involved in all eight of the trials mentioned above. This diverse group across the country included solo practitioners, lawyers at big and small firms, criminal defense attorneys who do not specialize in antitrust cases, and antitrust specialists, many of whom have decades of experience. A few common themes emerged: An overly expansive interpretation of criminal conduct . Even in the best of circumstances, prosecuting criminal antitrust cases can be challenging. They require a...