Antitrust Law Daily Wrap Up, ANTITRUST—D. Colo.: Jury instruction disputes partially resolved in kidney dialysis criminal antitrust conspiracy trial, (Mar 29, 2022)

By Kenneth H. Ryesky, M.B.A., J.D.

Defendants allowed to introduce evidence of salary increases to show that purpose of agreement was to retain employees.

A federal district court in Colorado issued an order to resolve disputes over the instructions to be given to the jury in a criminal antitrust case brought against various companies and individuals who owned and operated outpatient medical facilities across the country alleging Sherman Act violations of agreements between business competitors not to solicit the services of each other’s employees. The order was given "to create a record of the Court's resolution of important issues" that remained in a jointly-submitted set of Proposed Instructions. The parties were directed to revise a proposed set of jury instructions consistent with the order, with each party having the option to brief the court on further issues so that a final version of the instructions can be attained. Subsequent to the order, the trial, which had been scheduled to begin on March 28, 2022, was postponed to start on April 4, 2022 (U.S. v. DaVita Inc., March 25, 2022, Jackson, R.).

Some individuals and companies that own and operate outpatient kidney-dialysis facilities throughout the United States were charged with criminal violations of the Sherman Act. The government alleged a conspiracy to allocate high-ranking employees through mutual non-solicitation agreements. The defendants allegedly furthered the conspiracy by, inter alia, proactively engaging in discussions to refrain from soliciting one another's employees, taking measures to ensure such non-solicitation, and requiring their employees to give advance notice before seeking employment with competitors. Counsel for the parties jointly propounded a set of proposed jury instructions, which was submitted to the court notwithstanding the disputes as to what the final instructions should be. The court issued an order that resolved the disputes highlighted in their joint submission and accompanying briefs.

Unlawful antitrust conduct-description. The court opined that "conspiracy to allocate the market for employees" was the appropriate terminology to describe the unlawful conduct alleged. Here, the wording proposed by the government was "conspiracy to allocate employees," while the defendants had proposed "agreement to allocate the market for employees across the United States." In a previous order denying the defendants' motion to dismiss the indictment, the court noted that the government would need to prove that the defendants conspired to allocate "the market" for senior employees. While the typical Sherman Act criminal prosecution for horizontal market allocation pertains to markets for goods or services, this case breaks legal ground as the first criminal antitrust prosecution for allocating a labor market. The court further found the geographical reference in the defendants' proposed instructions to potentially confuse a jury by implying that the alleged conspiracy, if proven, needed to be national.

Antitrust conspiracy-definition. The court opined that the "conspiracy to allocate the market for employees" should be limited to defining what entails that conspiracy, without distractions regarding the intent and purpose elements, which can be covered in later instructions. Here, the conspiracy alleged was a horizontal one among players on the same level of the market. Horizontal conspiracies are per se illegal, while vertical conspiracies, to which a rule of reason analysis is applied, necessarily requires a definition of the relevant market. The government accordingly did not need to define the relevant market in defining the conspiracy. The court also opined that horizontal market allocation should be defined to entail a halt to "meaningful competition." Here, the "meaningful competition" standard was consistent with the government's cited precedent that illegal allocation of one submarket is not rendered legal where competition is not impeded in other submarkets. This standard was not as strict as requiring that all competition be stifled, the standard that had been advocated by the defendants and which the court rejected.

Antitrust conspiracies-purpose. The court suggested additional instructions to clarify the purpose element that the government would need to prove at trial. In doing so, the court agreed with the government that evidence to justify the alleged conspiracy should not be admitted, inasmuch as the charged violation was a horizontal market allocation, which is per se illegal and not subject to rule of reason analysis. The court also indicated that the defendants should be allowed to introduce evidence of salary increases in order to show that the purpose of the agreement was not to allocate any markets among themselves, but to retain employees in a robust industry.

Other issues. Anticipating other potential disagreements among counsel for the parties, the court also offered suggestions on how other matters might be addressed in their resubmission of jury instructions. These included some adjustments to the sequential order in which the instructions would be given to the jury, and bifurcation of the instruction on the intent element into (1) intent to join the conspiracy; and (2) intent to further the conspiracy.

The case is No. 1:21-cr-00229-RBJ.

Attorneys: Megan S. Lewis for the U.S. Daniel Robert Crump (WilmerHale LLP) for DaVita Inc.

Companies: DaVita Inc.

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