Antitrust Law Daily Wrap Up, ANTITRUST—D. Colo.: Au pair wage fixing claims against sponsor organizations proceed, (Apr 1, 2016)

By Edward L. Puzzo, J.D.

Allegations by foreign national au pairs, that sponsor organizations conspired to fix their wage stipend below competitive levels, adequately stated an antitrust claim under the Sherman Act because the allegations contained both direct and circumstantial evidence, the federal district court in Denver has ruled (Beltran v. InterExchange, Inc., March 31, 2016, Arguello, C.).

Defendants were fifteen for-profit and not-for-profit organizations designated by the U.S. Department of State as the exclusive entities (known as Sponsors) permitted to recruit and place foreign national au pairs with families in U.S. under the J-1 Visa program. Plaintiff au pairs brought claims alleging that the Sponsors were engaged in an anticompetitive conspiracy to jointly set au pair compensation rates below competitive levels, in violation of Section 1 of the Sherman Act. A magistrate judge’s recommendation found that the plaintiffs’ allegations were sufficient to state a price fixing claim.

Direct evidence. Defendants argued that the magistrate's recommendation failed to recognize the impermissibility of inferring anticompetitive conspiracy from parallel conduct where there was an independent business rationale for the behavior. However, the court noted, more than mere parallel behavior had been alleged. Plaintiffs alleged that several Sponsor Directors explicitly admitted that the Sponsors had agreed among themselves to keep au pair wages at the lowest possible level by paying au pairs the same weekly wage stipend. This was direct evidence of price-fixing, not mere parallel conduct, in the form of admissions by employees of the conspirators, that officials of the defendants had met and agreed explicitly on the terms of a price conspiracy.

In addition, plaintiffs sued every single Sponsor in the au pair market, so there was no doubt as to which competitors were included in the conspiracy. They also specifically alleged that every Sponsor had conspired and agreed to pay wages no higher than a set weekly amount. Taken in a light most favorable to plaintiffs, these allegations were sufficient to indicate that there may have been a direct agreement among defendant Sponsors to take collective action, the court stated.

The court characterized this as direct evidence, but opined that it was weak direct evidence, as it did not provide critical details such as which individuals made these statements and whether they had the authority to speak for any or all of the defendant Sponsors. However, under Champagne Metals v. Ken-Mac Metals, Inc., 458 F. 3d 1073 (10th Cir. 2006), a plaintiff can survive a summary judgment motion by presenting a combination of direct evidence and circumstantial evidence positing an economically rational theory of an agreement.

Circumstantial evidence. Plaintiffs, the court noted, also presented circumstantial evidence of a viable economic theory of collusion, including (1) a written statement from a Sponsor to a prospective au pair stating that the weekly stipend would be the same regardless of which agency was used; (2) Sponsor statements to au pairs and host families that there was only one permitted compensation level; and (3) a presentation at a Sponsors' trade association advising host families to not compete with each other to offer au pairs a higher stipend because they did not want au pairs shopping for a higher stipend.

Thus the court concluded that plaintiffs' complaint did not rely exclusively on parallel conduct, but contained well-pleaded allegations of direct agreement among the Sponsors as well as circumstantial evidence establishing a setting that would make such an agreement plausible. Therefore, the court ruled that the magistrate had correctly concluded that the plaintiffs adequately stated a Section 1 claim.

The case is Civil Action No. 1:14-cv-03074-CMA-KMT.

Attorneys: Lauren Fleischer Louis (Boies Schiller & Flexner, LLP) for Johana Paola Beltran. Brooke A. Colaizzi (Sherman & Howard, LLC) for InterExchange, Inc.

Companies: InterExchange, Inc.

Cases: Antitrust ColoradoNews