Labor Markets and Antitrust: The Role of the Economic Expert in US v. DaVita Inc. and Kent Thiry

In April 2022, Analysis Group President Pierre Cremieux testified as an economic expert in US v. DaVita Inc. and Kent Thiry, the first criminal no-poach case brought by the Department of Justice (DOJ) to go to trial.

Retained as the sole economic expert for the defense and supported by a team led by Managing Principals Jee-Yeon Lehmann and Aaron Yeater and Vice President Rebecca Scott, Dr. Cremieux provided economic analysis and insight into allegations that DaVita and its former CEO Kent Thiry had conspired with three other health care companies to allocate labor. A jury in the US District Court for the District of Colorado found DaVita and Thiry not guilty on all charges.

We spoke with Dr. Cremieux about Analysis Group’s work on the trial.

This was the first case that the DOJ has brought alleging that no-poach or non-solicitation agreements are a per se violation of the Sherman Act. Did that present any unusual challenges for you in your role as an economic expert?

Pierre Y. Cremieux: President, Analysis Group

Each case presents its unique set of challenges. In this specific case, one challenge was determining how an economist could be helpful to the jury in answering the questions before them given the assertion by the DOJ that this was a per se case that required no economic expertise.

In antitrust cases brought under the rule-of-reason standard, the economist’s role is clearer. In such cases, the key legal questions of market definition, market power, restrictions on competition, and the balancing of procompetitive and anticompetitive effects have ready translations into economics, and our toolkit is well suited to assisting the trier of fact in the assessment of these questions.

In a typical per se case, by contrast, the case proceeds on the premise that the alleged conduct is in fact anticompetitive irrespective of its effect and, plaintiffs often argue, even irrespective of the intent or purpose of the alleged conduct. This was the situation here, as the DOJ did not even offer an economic expert. However, this was not a typical per se case.

How was this case different from other per se cases?

Unlike nearly all previous per se cases, this case related to the labor market rather than the product market. It also was the first criminal case that the DOJ brought with no-poach or non-solicitation allegations. The DOJ’s theory was that non-solicitation agreements are per se violations of the Sherman Act because they amount to labor market allocations, which are, in the DOJ’s view, akin to customer allocation agreements in the product market.

However, the court’s pretrial order ruled that such agreements are only subject to per se treatment if they are naked non-solicitation agreements with the purpose of allocating the market.¹ In the court’s jury instructions, the judge also stated that proof of market allocation required “cessation of ‘meaningful competition’ in the allocated market.”² These rulings helped to clarify the economist’s role in this case. In my view, that instruction put economics back at the heart of the case.

How so?

First, as you’d expect, economists are well-situated to examine whether meaningful competition ceased as a result of the alleged behavior. And second, economics can also provide an objective, fact-based perspective on the purpose or intent of a particular behavior, which was one of the issues the DaVita court called out specifically.

The first statement is probably noncontroversial. Economists routinely assess the state of competition. The second statement may require some explanation, as economists are not in the business of getting into people’s heads. But we can speak to the economic circumstances that may help determine what a rational actor would do. For example, were there economic incentives or rationales for the alleged actions – in this case, for a no-poach agreement specifically designed to allocate labor, as opposed to any other reason?

If the economic analysis shows that no rational actor would undertake the alleged conduct with the intent of allocating labor, as the conduct would have no impact on turnover or wages, the trier of fact might be skeptical of such an allegation.

Do you think economic testimony can help assess the questions at issue in a per se labor antitrust case?

Yes, I do. My team and I put a lot of thought into how economics can be valuable even in a per se environment – especially given the court’s pretrial rulings, which put economic questions at the heart of the case. And the jury’s many questions to me during the trial suggested that they were thinking carefully about those issues and were eager for tools that could help them answer the questions before them. What is “meaningful” competition, and how can it be assessed? Was labor allocated, and how can that question be assessed? Economic analysis provides a toolbox for exactly the sort of questions that a jury may be asked to decide even in a per se case. ■

1. Order Denying Defendants’ Motion to Dismiss, U.S. v. DaVita Inc and Kent Thiry, US District Court, District of Colorado, No. 1-21-cr-00229-RBJ, January 28, 2022.
2. Order Resolving Disputes on Proposed Jury Instructions, U.S. v. DaVita Inc and Kent Thiry, US District Court, District of Colorado, No. 1:21-cr-00229-RBJ, March 25, 2022, p. 6.