Tech Giants Up the Ante to Make Worker-Poaching Lawsuit Go Away

Tuesday, January 20, 2015
Apple’s Steve Jobs and Google’s Eric Schmidt (photo: Tony Avelar, Agence France Presse)

When Apple, Google, Intel and Adobe offered $324.5 million to settle a class-action lawsuit by tech workers in Silicon Valley who caught them colluding to not hire each others’ more valued employees, former Adobe computer scientist Michael Devine (pdf) called it “grossly inadequate” and an incentive for corporations to behave badly in the future.

U.S. District Judge Lucy H. Koh agreed last August and rejected the settlement, which would have paid 64,000 employees a pittance of the alleged $3 billion in lost wages they suffered between 2005 and 2009. Success in a lawsuit could generate treble damages. She said it was not “within the range of reasonableness.”

Last week, the tech giants ponied up an extra $90 million and resubmitted their settlement offer. Ars Technica did the math and figured that even with the new money, each employee would net around $6,500 after the lawyers were paid. Devine told the New York Times he could live with that. “A reasonable person could go either way on whether it is adequate,” he said.    

One such reasonable person was University of San Diego professor of employment law Orly Lobel, who described the violations to the Times as “egregious” in light of the sustained collusion at the highest corporate levels, yet nonetheless thought a greater good than punishment would be rendered by the settlement.

“It’s a good result in that there has been much media attention to the illegality of such retention practices, real monetary consequences and promises to cease all such practices in the future,” he said.

Who is to say that bad publicity is not more onerous than a $415-million settlement to companies with cash reserves of $210 billion? 

The bad publicity began in 2010 when the U.S. Department of Justice (DOJ) announced that the four companies, plus Pixar and Intuit, agreed to kill their anticompetitive employee solicitation pacts. The deal settled a civil anti-trust lawsuit brought by the government that covered actions beginning no later than 2005. Steve Jobs at Apple appeared to the prime mover behind the no-poaching deals.

After the DOJ settled, Pixar, Lucasfilm and Intuit settled a lawsuit for damages in 2013 before it was approved as a class-action, paying a combined total of $20 million.

The Times said the judge will likely approve last week’s settlement. Lawyers will get about 25%.

–Ken Broder


To Learn More:

Bigger Settlement Said to Be Reached in Silicon Valley Antitrust Case (by David Streitfeld, New York Times)

Apple, Google Give High Tech Workers an Extra $90 Million in “No-Poach” Suit (by Megan Geuss, Ars Technica)

Justice Department Requires Six High Tech Companies to Stop Entering into Anticompetitive Employee Solicitation Agreements (U.S. Department of Justice)

Federal Judge Rejects Settlement in High-Tech Anti-Poaching Scandal (by Ken Broder, AllGov California)

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