The Evolution of DOJ's Views on No-Poach Litigation
![handle is hein.journals/antitruma36 and id is 193 raw text is: The Evolution of DOJ's Views
on No-Poach Litigation
BY JAMES H. MUTCHNIK, DR. JOHN H. JOHNSON IV, AND CHARLES FIELDS
VEN THOUGH THE SHERMAN ACT
outlaws every contract, combination, or con-
spiracy in restraint of trade, the courts and the
antitrust agencies recognize that the Sherman
Act does not prohibit every restraint of trade,
only those that are unreasonable.' Per se treatment of anti-
trust violations is, in principal, therefore reserved for the
most egregious types of conduct that have no redeeming
procompetitive benefits.2 In its 2016 Antitrust Guidance for
Human Resource Professionals, the Department of Justice
highlighted that naked no-poach agreements would be
subject to criminal prosecution. Since then, the DOJ has
attempted to broaden the scope of its criminal enforcement,
including no-poach agreements that may have vertical char-
acteristics and may be ancillary to legitimate and procom-
petitive collaborations between labor market competitors.
In this article, we map the DOJ's evolving position over
time and discuss both the legal and economic reasons why
it is improper to presume that all such agreements should
be treated under a per se standard as de facto market alloca-
tion. We also discuss the outcome and consequences of the
DOJ's first two attempts to criminally prosecute no-poach
conduct.
Background on Per Se vs. Rule of Reason
From the early days of the Sherman Act, courts and schol-
ars all took the view that the Sherman Act did not strictly
describe what conduct was prohibited (or even criminal)
and had a common law element to it that was created, speci-
fied, and limited by the judiciary: The Sherman Act, unlike
most traditional criminal statutes, does not, in clear and cat-
egorical terms, precisely identify the conduct which it pro-
scribes.3 To address the lack of specificity and incredible
scope of the Sherman Act, the Supreme Court realized that
there had to be some limiting principle, which initially
evolved into a restriction that prevented only unreasonable
restraints.4 The view that unreasonable restrains were the
only ones to be condemned evolved into what became the
rule of reason.5
Of course, determining whether all conduct was reason-
able had benefits and drawbacks. The benefit was that not
every contract or restraint was condemned. The detriment
was that an assessment of whether each alleged violation was
reasonable was burdensome. To counteract this burden,
the Court determined that there should be certain categories
of conduct that are so inherently pernicious as to merit per
se condemnation under the Sherman Act.6 Ultimately, the
Court created the per se doctrine in United States v. Socony-
Vacuum Oil Co.,7 to condemn certain types of conduct with-
out consideration of market power: Under the Sherman
Act a combination formed for the purpose and with the
effect of raising, depressing, fixing, pegging, or stabilizing
the price of a commodity in interstate or foreign commerce
is illegal per se.8
The Court then faced the issue of deciding whether and
when to invoke the per se rule and when it must resort to a
rule of reason analysis. [C] onsiderable experience with the
conduct became an important factor in the determination.9
Facial appearance and whether the conduct would always
or almost always restrict competition and decrease output
were other key factors.10 The modern Court has limited
application of the per se rule to a narrow set of categories.
The categories deemed worthy by the courts of per se treat-
ment are: (1) price fixing, which includes various flavors
such as traditional price fixing, bid rigging, setting mini-
mum prices or maximum prices, and setting credit terms;
(2) market allocations where competitors divide geographic
areas, customers, or other components of a market between
them to limit competition; and (3) some concerted refusals
to deal or group boycotts. The modern trend has been to
limit, rather than expand, the categories of conduct that are
subject to the per se rule.
Historically, only conduct deemed per se unlawful has
been subject to criminal persecution under the Sherman
S U M M E R 2 0 22 - 3 5](ViewImageLocal?handle=hein.journals/antitruma36&div=34&collection=&method=preview&ext=.png&size=3)
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The Evolution of DOJ's Views on No-Poach Litigation
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