Antitrust Law Daily Wrap Up, ANTITRUST—D. Colo.: Au pairs state valid price fixing conspiracy claims against sponsors, (Feb 23, 2016)

By Greg Hammond, J.D.

Au pairs—participants in a “cultural exchange” program who are required to work 45 hours per week and provide child care services to their host families—have adequately alleged that various sponsor companies conspired and agreed to fix the standard au pair wages at the purported minimum wage, according to a magistrate judge’s recommendation in the federal district court in Denver. The magistrate judge therefore recommends that the sponsor companies’ motions to dismiss the price fixing claim be denied (Beltran v. InterExchange, Inc., February 22, 2016, Tafoya, K.).

The au pair plaintiffs claim that, in spite of the fact that the applicable regulations require that au pairs receive “not less than” the applicable minimum wage as compensation, sponsors have conspired and agreed to set all of the au pairs’ weekly wages at the purported minimum amount—currently $195.75 per week plus room and board. They also claim that the sponsors falsely informed au pairs and host families that the minimum wage is the maximum wage au pairs are permitted to receive. The au pair plaintiffs brought claims for violation of the Sherman Act, the Racketeer Influenced and Corrupt Organizations Act (RICO), and the Fair Labor Standards Act, as well as state law claims. The sponsors moved to dismiss.

Adequacy of price fixing claim. In support of their Sherman Act claim, the au pair plaintiffs allege that the sponsors conspired and agreed to fix the standard au pair wages at the purported minimum wage, in violation of the Sherman Act. The magistrate judge concluded that the au pairs adequately alleged a price fixing conspiracy claim because they sufficiently pleaded factual allegations that the sponsors entered into an agreement to set the au pairs stipend at the purported lowest minimum wage.

In particular, the au pairs alleged that: (1) at least one sponsor informed prospective au pairs that the weekly stipend arranged would be the “same regardless of which au pair agency you use”; (2) sponsors informed au pairs and host families that $195.75 per week, plus room and board, was the only permitted compensation for au pairs; (3) as the exclusive entities authorized to recruit, provide training, place, and supervise au pairs with host families in the United States, the sponsors control au pair opportunities within the United States; (4) the sponsors’ industry structure facilitates collusion because they are a relatively small group; (5) many sponsors are members of the Alliance for International Education and Cultural Exchange and the International Au Pair Association, and a recent featured speaker published an article arguing for strict maintenance of the fixed $195.75 weekly wage for standard au pairs; (6) the sponsors uniformly advertise au pair wages at an identical amount, even though the government does not require that au pairs receive only minimum wage; (7) there are no adjustments to advertised compensation with regard to geographic differences, varying state laws, and number of children in the home; (8) by depressing wages, the sponsors reap artificially high profits; (9) representatives from certain sponsors have admitted that the sponsors agreed to fix au pair wages; and (10) sponsors advertise that their labor costs are set lower than the cost of comparable child-care workers in the free market.

These allegations, according to the magistrate judge, are sufficiently specific to raise a reasonable expectation that discovery will reveal evidence of illegal agreement and include facts that suggest a “conscious commitment to a common scheme designed to achieve an unlawful objective.” She therefore recommends that the court deny the motions to dismiss the Sherman Act claim.

The case is No. 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. Chanda Marie Feldkamp (Kelly & Walker LLC) for USAuPair, Inc. Martin Jose Estevao (Armstrong Teasdale LLP) for Great Au Pair, LLC. Bogdan Enica for Expert Group International, Inc.

Companies: InterExchange, Inc.; USAuPair, Inc.; Great Au Pair, LLC; Expert Group International, Inc.

Cases: Antitrust RICO ColoradoNews