SAN JOSE — More than 60,000 tech workers can seek monetary damages from Apple (AAPL), Intel (INTC), Google (GOOG) and Adobe Systems (ADBE) because of a federal judge’s ruling in a suit claiming that former Apple CEO Steve Jobs conspired with other local executives to limit the workers’ pay by barring them from moving from one company to another.
In granting class-action status to the suit Thursday, U.S. District Judge Lucy Koh in San Jose cited what she termed “considerable, compelling common proof” that the Silicon Valley companies engaged in antitrust behavior by agreeing not to try to lure away each others’ employees.
Koh’s decision makes it much easier for the workers to win compensation — potentially tens of millions of dollars — because without class-action status, each of them would have to file costly lawsuits on their own. The ruling also is likely to put pressure on the companies to reach a financial settlement with the workers, as three other companies — Pixar, Lucasfilm and Intuit (INTU) — did in July, said Stephen Hirschfeld, CEO of the Employment Law Alliance, a network of labor and employment lawyers.
Although a trial in the case has been set for May 27, companies in class-action cases often try to avoid getting that far, he said, because “there is an assumption that if they actually get in front of a jury and there are thousands of plaintiffs, a jury will think, ‘Well, if there’s smoke, there must be fire.’ “
Judith Zahid, a San Francisco lawyer specializing in antitrust matters, said the sued companies face an additional problem if the case goes to trial because, under antitrust law, any damage award against them would be automatically tripled.
“It raises the stakes even more” and adds further pressure to settle the case, she said.
Officials at Adobe, Intel and Apple declined to comment on Koh’s ruling. Google issued a statement that said only, “we have always actively and aggressively recruited top talent.”
In court filings, the companies have denied having an agreement not to poach each others’ employees and have argued that the case doesn’t warrant class-action status because they’ve always paid their workers well.
The allegations prompted an investigation in 2009 by the U.S. Department of Justice to determine if the companies had violated the Sherman Antitrust Act. A year later, the agency announced a settlement in which the companies acknowledged having had agreements to not “cold-call” employees at certain firms. They agreed to refrain from such no-poaching-pacts for five years, but the deal provided no compensation for their employees.
Consequently, some workers filed suit in 2011 seeking class-action status and demanding damages for pay they lost as a result of the alleged conspiracy. Although the suit initially claimed that more than 100,000 employees were affected by the alleged scheme, the plaintiffs have since scaled that number back to about 64,000.
In her decision, Koh noted that the accusations largely center on former Apple CEO Jobs, because each of the alleged no-hire agreements involved a company under his control or that shared at least one director who was on Apple’s board.
The lawsuit contains several examples of conversations Jobs had with other executives demanding that they not poach Apple’s workers. In many cases, the suit claims, the executives complied. In one email Jobs told Google CEO Eric Schmidt, “I would be very pleased if your recruiting department would stop doing this,” referring to a Google recruiter contacting an Apple engineer in 2007.
But not everyone complied with Jobs’ demands, according to evidence Koh cited in her ruling. She noted as an example an incident in 2007 when Jobs allegedly threatened to sue Palm for patent infringement if it didn’t heed the no-poaching arrangement. In response, Palm’s former CEO, Edward Colligan, told Jobs the demand was “not only wrong, it is likely illegal.”
In the settlement with Pixar, Lucasfilm and Intuit, the three companies — which employed about 8 percent of the affected workers — agreed to pay a total of $20 million, according to Kelly Dermody, the plaintiffs’ lead lawyer.
Noting that none of the workers have received that money yet, she added that it remains unclear what additional financial damages might be sought at the trial. But aside from the money, she said, just having the case certified as a class-action suit sends an important message “that people need to pay more attention to employee rights and fairness in the workplace.”
Contact Steve Johnson at 408-930-5043. Follow him at Twitter.com/steveatmercnews.
