In Silicon Valley Anti-Poaching Suits, Settlements Prevail

We reported last week that Michael Devine, one of the class representatives in the Silicon Valley anti-poaching suit, had gone public in his dispute with his lawyers. The news broke after a proposed settlement agreement worth $324 million was announced – much to the surprise of Devine, who wrote a letter to Judge Lucy Koh in which he revealed that:

A case this large, with such powerful players, would take a significant amount of time in court.

Devine promptly set up a website, Tech Worker Justice, calling for “Our Day in Court,” and even advertising for alternative counsel. It was an incredibly unusual situation, to say the least. Class representatives rarely fight against settlements, and it’s even rarer that they do so in such a public way. At the heart of the disagreement was the size of the proposed agreement: Devine wants the case to continue to seek $3 billion in lost wages for the 64,000 workers covered by the lawsuit. The potential settlement, at $324 million, comes out to just 10.8% of that.

Well, Judge Lucy Koh wasn’t as moved by Devine’s letter as she could have been. Last week, a similar proposed settlement with a different group of companies was granted final approval. Pixar and Lucasfilm have agreed to pay $9 million each, with Intuit agreeing to pay $11 million. An additional $8.7 million was approved in class counsel costs and fees.

Responding to five plaintiffs’ objections to the Pixar, Intuit and Lucasfilm settlement, Judge Koh ruled that the size of the settlement was justified when taking other relief, such as the proposed Google et al settlement, into account. She also pointed out that judicial policy generally favors settlements – especially, presumably, because a case this large, with such powerful players, would take a significant amount of time in court.

There are now two distinct settlements stemming from tech workers’ allegations that several major companies secretly agreed not to hire each others’ workers. While settlements routinely include requirements that plaintiffs agree to no longer bring claims against defendants, plaintiffs in this first settlement have reserved the right to take action against Google, Apple, Adobe and Intel (all covered by the second, still unapproved settlement) for losses incurred due to the alleged conspiracy. It’s a good move. In a case such as this, where defendants have essentially split into two settlement groups, workers who allege they suffered losses as a result of the wider conspiracy, and not exclusively because of the actions of one company, may still be able to seek compensation.

So, do these settlements represent a victory or a defeat for Silicon Valley workers? The answer depends entirely on whether you think the value of the agreements is enough to compensate Devine and others for years of anti-competitive practices. A worker who enjoys their work and had no desire to switch companies has a very different view than one who was eager to seek new opportunities and may have been blocked by secret company policies. For Devine, the settlements are simply not enough, as the financial hit to the companies fails to reflect the lost earnings of the tech workers.

The overall fight, though, is far from over. Judge Koh has also just certified a class of engineers, who are bringing similar allegations against the companies. Considering that the Department of Justice’s investigation into anti-competitive agreements in Silicon Valley began over five years ago, these suits must be causing some headaches in the nations’ biggest tech firms – would they be willing to offer even more settlement money if pushed?

In a way, those questions don’t matter now. The Lucasfilm / Pixar agreement has been approved, and there’s no real reason to think Judge Koh won’t approve the Google / Apple / Adobe / Intel suit – unless Devine can be a lot more convincing, or can garner support from a significant number of fellow plaintiffs.