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High Stakes High Tech Drama: Why Companies with Millions of Users Are Concerned About A Class Action Lawsuit By Thousands of Workers

April 22 2014

By The Labor and Employment Group

As you will recall from previous posts, a large high tech antitrust class action is being waged in California that has major implications for employer non-solicitation agreements.  Questions regarding agreements between employers that impact employee mobility are being addressed in this lawsuit against the backdrop of antitrust allegations.

High-Tech Employee Mobility Antitrust Class Action: Background Developments

On October 24, 2013, U.S. District Court Judge Lucy H. Koh granted plaintiffs’ motion for certification in a class action alleging that Adobe, Apple, Google, Intel, and other large tech companies worked together from approximately 2005 to 2009 to negatively impact the pay of valuable employees by, among other things, agreeing not to actively recruit each other’s employees. The complaint seeks lost compensation and treble damages for the alleged antitrust violative employment practices of Adobe, Apple, Google, Intel Corporation, Intuit, Lucasfilm, and Pixar. The complaint states the tech companies formed agreements to (1) not recruit each other’s employees; (2) provide notification when making an offer to another’s employee (without the knowledge or consent of that employee); and (3) cap pay packages offered to prospective employees at the initial offer.  The allegations are an interesting twist on previous employee mobility cases.

On January 14, 2014, the U.S. Court of Appeals for the Ninth Circuit denied defendants’ petition to appeal the district court’s order granting class certification.  Now past the certification process, the individual plaintiffs that filed the antitrust lawsuit can now represent all class members in claims that Adobe, Apple, Google, Intel and other tech companies violated federal antitrust laws.

Trial of the class action is set to begin on May 27, 2014.

Latest Pre-Trial Developments: Documents Show Not Everyone Joined 

As the parties prepare for trial next month, documents show that the companies that are accused of creating a system to prevent employee mobility were unable to pull another tech giant into the group.  Facebook declined the other companies’ friend request.  Facebook would not agree to not poach other’s employees, share salary information or agree to cap technical workers pay.

Today, these companies vigorously compete for talent.  However, pretrial documents seem to show that in the 2000s, executives of various tech companies frequently had conversations with one another before recruiting each others’ technical workers or making strategic moves in hiring and setting of salaries.

The failed effort to bring Facebook into the group was revealed in recently released pretrial documents, which include emails and depositions filed with the court.  In a March 28 ruling allowing the case to go to trial, U.S. District Judge Lucy Koh stated that an executive from one of the Defendant Companies “unsuccessfully sought to expand Google’s anti-solicitation agreements to Facebook.”

Waiting for Trial

If this matter proceeds to trial, it has the potential to captivate the world like no other trial since the Lindberg Baby Trial.  Tech’s glitterati will parade through the courtroom with court reporters and the press hanging on every word.  If the reports are correct, a potential mediated settlement may deny us the opportunity to see this spectacle.  More importantly for other companies, we will not get an answer to the vexing question of what mobility agreements can companies agree to between themselves when they potentially have an impact on employees.

We will continue to monitor this case here at the blog.  In the meantime, if you are currently considering employee mobility questions, please contact your Weintraub Tobin attorney to discuss.