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First DOJ criminal wage-fixing antitrust case survives challenge

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The crest of the United States Department of Justice (DOJ) is seen at their headquarters in Washington, D.C., U.S., May 10, 2021. REUTERS/Andrew Kelly

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  • Texas federal judge says antitrust laws "fully apply to the labor markets"
  • Lawyers for two defendants in physical therapy market alleged due process violations

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(Reuters) - A U.S. Justice Department criminal antitrust case alleging a wage-fixing conspiracy for physical therapy services in Texas survived an early hurdle on Monday when a federal judge rejected bids to dismiss charges in the novel prosecution.

U.S. District Judge Amos Mazzant III's ruling in Sherman, Texas, federal court kept in place antitrust claims against two defendants charged in April in the Justice Department's first criminal indictment for an alleged effort to restrain wages.

The Texas case has attracted substantial attention within major U.S. law firms as a warning that U.S. enforcers will not shy from pursuing price-fixing charges concerning labor. The Biden administration has said labor markets will be a top focus for antitrust enforcement.

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Mazzant's ruling embraced a broad view of the reach of price-fixing conspiracy claims. Courts, he said, have not limited such "conspiracies to agreements concerning the purchase and sale of goods but have found them to cover the purchase and sale of services."

Prosecutors alleged Neeraj Jindal, who owned a therapist staffing company providing in-home services, participated in a conspiracy to suppress rates paid to physical therapists. Jindal was charged along with John Rodgers, a physical therapist who contracted with Jindal's company.

Locke Lord partner Paul Coggins, an attorney for Jindal, told Reuters on Monday, "We have a better case on the law, and I know we have a better case on the facts."

A lawyer for Rodgers, Brian Poe in Fort Worth, Texas, did not immediately return a message seeking comment.

The Justice Department declined to comment.

Lawyers for Jindal and Rodgers in motions to dismiss broadly attacked the charges as failing to provide any fair warning that the alleged conduct was unlawful. Coggins called the indictment "unprecedented."

Mazzant said in his ruling that "any naked agreement among competitors—whether by sellers or buyers—that fixes components that affect price meets the definition of a horizontal price-fixing agreement."

Antitrust laws, Mazzant wrote, "fully apply to the labor markets." He said that "just because this is the first time the government has prosecuted for this type of offense does not mean that the conduct at issue has not been illegal until now."

Jury selection and trial are set to begin in April 2022, court records show.

The case is United States v. Neeraj Jindal and John Rodgers, U.S. District Court for the Eastern District of Texas, No. 4:20-cr-00358-ALM-KPJ.

For the United States: Matthew Lunder of the Justice Department

For Jindal: Paul Coggins of Locke Lord

For Rodgers: Brian Poe

Read more:

Corporate America unloads on Biden's newly active business watchdogs

U.S. antitrust official says competition in labor markets a top concern

Biden signs order to tackle corporate abuses across U.S. economy

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