Silicon Valley Anti-Poaching Suit Gets Go Ahead

Back in October we reported that employees at several Silicon Valley tech companies had filed a lawsuit over an alleged anti-poaching “pact”. The suit, first filed in 2011 by five software engineers, claimed that Intel, Intuit, Apple, Adobe, Google, Pixar and Lucasfilm had a standing agreement not to hire each other’s workers, in an apparent attempt to prevent skilled employees from leaving. The agreement was allegedly conceived of and created in a series of emails between top company executives including Apple’s Steve Jobs and Google’s Eric Schmidt.

The agreements challenged here restrained competition for affected employees.

At the time, Judge Lucy Koh of the Northern District of California certified the case, ruling that a class action lawsuit was warranted due to the number of potential plaintiffs. However, she also denied an “All Employees” class due to lack of common ground, and limited the suit to software and hardware engineers, developers, and designers employed by the companies – an estimated 60,000 people.

The tech companies have always denied that any agreement exists and asked a federal court to block the certification of the class. Now, the Ninth U.S. Circuit Court of Appeals has denied them permission to appeal, paving the way for the lawsuit to proceed.

In seeking permission to appeal the suit’s approval, lawyers for the companies argued that the plaintiffs were too diverse to be considered a single class, with more than 2,400 different job titles among them. It was a questionable argument, and the appeals court has, quite rightly, made short work of it. The trial date has been set for May 27, 2014.

It’s the latest twist in a case that goes back several years. The Department of Justice has had their eye on Silicon Valley for some time, issuing an order in 2010 that companies should terminate “uncompetitive” deals limiting job mobility.

“The agreements challenged here restrained competition for affected employees without any procompetitive justification and distorted the competitive process,” said Molly S. Boast, Deputy Assistant Attorney General in the Department of Justice’s Antitrust Division.

The companies, it was found, had agreed to place each other on “Do Not Call” lists, instructing employees not to call and solicit workers from other companies with job offers. The oldest agreement was reportedly between Apple and Adobe and commenced, the DoJ says, “no later than May 2005.”

It was following the Department of Justice report that the first tech company employees filed suit.

In July 2013, Intuit and the Walt Disney Company (which owns Pixar and Lucasfilm) reached settlements with plaintiffs and agreed to pay compensation - $11 million from Intuit and a combined $9 million from Pixar and Lucasfilm. The remaining companies continue to deny wrongdoing and will, it looks like, face plaintiffs in court come May.

How will they fare? It’s hard to say, but if court and government decisions up till now are anything to go by, the companies have an uphill struggle ahead of them to convince anyone that they haven’t broken the law.