10 Facts Revealed in the Silicon Valley Antitrust Hiring Lawsuit

by Don Reisinger

Apple was extremely aggressive in its dealings with the court prior to the settlement. Just a week before the settlement, Apple requested that emails sent between Steve Jobs and Google Executive Chairman (then-CEO) Eric Schmidt be stricken from the record. It was believed that the company had such trouble with the emails because it not only would hurt the case, but also harm the image of Apple’s founder, a man respected and beloved by so many. In one email exchange, Jobs sent a “smiley” face to an HR executive after he learned that Google fired a recruiter for poaching an Apple employee.

According to documents obtained through the discovery phase of the case, Google’s Eric Schmidt was concerned that the deal between the companies could prompt a lawsuit. In a discussion with an HR director at Google who asked if the no-poaching policy could be shared with others, Schmidt said that he wanted it to be shared “verbally, since I don’t want to create a paper trail over which we can be sued later.”

Although this latest settlement is making headlines, it’s actually the second one related to this case. Pixar and Lucasfilm, along with financial software maker Intuit, agreed to a settlement with engineers that sued the companies over hiring practices. Disney, which owns Pixar and Lucasfilm, paid $9 million to settle the case, while Intuit doled out $11 million. One interesting thing to note: Jobs once owned Pixar, and the Apple co-founder played an integral role at Disney in the early 2000s.

It’s nice to see that at least one company didn’t want to get involved. According to reports, Google approached Facebook COO Sheryl Sandberg in 2008, asking to agree not to poach the search company’s employees. Sandberg declined the offer and, as history has shown, wasn’t shy about hiring Google engineers whenever possible.

Mobile device maker Palm found its way into the middle of the anti-poaching scandal prior to Hewlett-Packard acquiring it. According to court documents, Jobs threatened Palm for targeting Apple employees. According to the documents, Jobs told Palm’s then-CEO Edward Colligan that if he didn’t stop targeting Apple employees, the iPhone maker would launch a patent lawsuit against Palm. Colligan reportedly responded by saying that he wasn’t “intimidated” by the threat, adding that such a move would be “likely illegal.”

Unfortunately, some people were fired as a result of the anti-poaching agreements. In one instance, Google’s Eric Schmidt told Jobs that he would fire a recruiter who went after Apple employees, despite that person having no knowledge of the executives’ agreement. In another instance, Schmidt told Intel’s former CEO Paul Otellini that if he discovered one of his recruiters targeting an Intel employee, he’d fire that person. It’s believed the other companies would offer similar action as part of the deal.

One of the big question marks surrounding the case is why the plaintiffs, some 64,000 engineers and programmers, decided to settle for such a small amount rather than battle it out in court next month. The plaintiffs’ spokespeople say that they were confident in their case but were concerned with going up against the high-paid attorneys on retainer at big companies. Others, however, have suggested that while the case might have been won in a lower court, it would have been tossed out in a higher court on the ground that the engineers couldn’t form a class to take on the companies, since it’s possible many of them weren’t affected by the alleged deals.

The companies, meanwhile, seemed to have every intention of settling the lawsuit with as little cost and trouble as possible. The plaintiffs made it abundantly clear in court documents that they wanted to show the jury as many unsavory emails between executives and employees as possible. That would have been a PR nightmare, and something none of the companies involved in the case wanted to see.

There’s no doubt about it: The executives involved in this case were extremely careless. From Apple and Google’s exchanges to Intel’s Otellini saying in an email that he had a “handshake ‘no recruit'” with Eric Schmidt that he didn’t want “broadly known,” the executives harmed their own chances of defending themselves in the case. Why executives who allegedly had off-the-record conversations would then put them on-record in text is something none of the firms has been able to explain. It was a massive blunder that’s costing the companies serious cash.

Although the companies involved in the lawsuit stopped short of confirming or denying the charges in the lawsuit, a few, including Intel and Adobe, had something to say on the matter. Both companies issued the same statement, saying that their decision to settle was based in their desire “to avoid the risks, burdens, and uncertainty of ongoing litigation.” And that is likely to be the last word on this case, unfortunately.