No-Poaching Collusion Cost Silicon Valley Workers Big; Deal Would Give Them a Pittance

Tuesday, May 27, 2014

Apple Inc. and Google Inc. (with a little help from their friends at Intel Corp. and Adobe Systems) have agreed to scrape together $324.5 million from their combined cash reserves of $210 billion to settle a class-action lawsuit  that alleged the companies colluded to hold down salaries by not hiring each other's highly-skilled workers.

Some of the workers wanted a lot more.

The lawsuit representing 64,600 of them argued they lost $3 billion from 2005 to 2009 and sought triple damages. The companies reportedly established “Do Not Call” lists of employees with instructions to recruiters not to “cold call” them.

Instead, this deal would give them around $4,000 apiece. Lawyers want $81 million, or one-fourth of the money. The settlement was reached last month, but specific terms were not revealed until last week.

At least one of the lead plaintiffs in the case formally asked U.S. District Judge Lucy Koh to reject the proposed settlement. Former Adobe computer scientist Michael Devine wrote (pdf) the judge, “I respectfully ask that you reject this settlement so that we may have our day in court and have a real shot at justice.”

Devine argued that the settlement offered 1% actual compensation, while documentation exists that Google boosted salaries 10% when Facebook refused to join the no-poaching conspiracy. He offered up an analogy for the judge:

“If a shoplifter is caught on video stealing a $400 iPad from the Apple Store, would a fair and just resolution be for the shoplifter to pay Apple $40, keep the iPad, and walk away with no record or admission of wrongdoing? Of course not, nor is such a resolution appropriate in our case.”

Devine also told the judge he was none too pleased to find out that the lawyers from both sides reached the accord at a final mediation session he had been unaware of. He asked the judge, “Does this case belong to the Plaintiffs’ counsel rather than the Class?”

The settlement was reached on the eve of a May 27 trial date set by Judge Koh last October. She has scheduled a hearing on the settlement for June 19.

The lawsuit builds on information gleaned from an investigation by the U.S. Department of Justice (DOJ). The DOJ determined three years ago that six tech giants in Silicon Valley violated anti-trust laws and in the ensuing settlement with Apple, Google, Intel, Adobe, Intuit Inc. and Pixar Animation the companies agreed to stop doing that—for five years.

Lucasfilm was added to those six when the lawsuit was filed but reached a separate settlement, along with Pixar and Intuit, for $20 million last July.

–Ken Broder


To Learn More:

Workers in Tech No-Poaching Case Likely to Get $4,000 Each (by Michael Liedtke, Associated Press)

Plaintiff Blasts Deal in Silicon Valley Poaching Case (by Chris Isidore, CNN Money)

Silicon Valley Conspiracy to Suppress Wages Goes from DOJ to Class-Action (by Ken Broder, AllGov California)

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