DOJ dealt a loss in first-ever criminal wage-fixing trial
The defendant had been accused of conspiring with a competing physical therapist staffing company and others to fix wages for physical therapists.
A federal jury found the former owner of a physical therapist staffing company not guilty on two counts and guilty to a third count in the first-ever criminal wage-fixing and no-poach indictments.
Following a six-day trial in the U.S. District Court for the Eastern District of Texas, the jury declared in its verdict that Neeraj Jindal, the former owner of a physical therapy staffing company, was not guilty of violating Section 1 of the Sherman Act. He was accused in United States v. Jindal of conspiring with competitors to lower pay for physical therapists.
Jindal was found guilty on a third count, obstructing a Federal Trade Commission investigation into the company’s alleged anti-competitive conduct. A second defendant, John Rodgers, an employee of Jindal’s, was found not guilty on three counts.
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Following the verdict, the U.S. Department of Justice issued a prepared statement:
“Today’s guilty verdict should serve as a warning to companies and their top executives that contemplate obstructing FTC investigations,” said Holly Vedova, director of the Federal Trade Commission’s Bureau of Competition. “The FTC will continue to work closely with the DOJ and will not hesitate to refer companies and executives for criminal prosecution for obstructing FTC investigations and threatening the Agency’s ability to protect competition and American consumers.”
Jindal was represented by Locke Lord attorneys Paul Coggins and Jennifer McCoy of the Dallas office. Additional assistance in the case was provided by Tatianna Witter, Holly Atchley, Veronica Long, Brad Weber and Brendan Gaffney, all of Dallas.
The Department of Justice and Federal Trade Commission jointly released the Antitrust Guidance for Human Resource Professionals in 2016. The guidance warned human resource professionals that agreements between competitors to set wages or to refrain from soliciting each other’s employees could result in criminal prosecution.
This was an expansion of the agencies’ enforcement policy in labor markets. The DOJ had previously only prosecuted such agreements in civil court. However, the agencies continued to bring civil enforcement actions involving wage-fixing and no-poach agreements.
In April 2020, the agencies issued a joint statement reaffirming the importance of competition for workers and warned employers, staffing companies, and recruiters that the agencies would be on alert for such agreements.
On Dec. 9, 2020, the DOJ obtained an indictment against Jindal. He was conspiring with a competing physical therapist staffing company and others to fix wages for physical therapists and physical therapist assistants in the Dallas-Fort Worth metropolitan area.
The indictment was preceded by a Federal Trade Commission 2017 complaint against Jindal, then owner of Integrity Home Therapy, of conspiring with the chief executive officer of another physical therapy entity to lower wages to their contracted therapists and inviting four other competitors to collude on those rates.
Coggins said the jury acquitted Jindal of the antitrust charges because there were no actual anti-competitive acts.
“The government’s case boiled down to four text messages that were sent within five minutes. The jury rightly saw that there was no follow-up to these messages by my client,” Coggins said. “Actions speak louder than words.”
Another weakness in the government’s case, Coggins added, was that there were no victims; The government could not show a harm was done.
The obstruction of an investigation charge is punishable by up to five years. Coggins said Jindal be sentenced in two to three months.
U.S. District Judge Amos L. Mazzant III is presiding.
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