Google, Apple, Intel and Adobe are waiting to find out if a California judge will approve a $324.5 million settlement agreement that they reached in April with plaintiffs who claimed that the companies had illegally conspired to control salaries by not recruiting employees who worked for rival companies.
The proposed settlement will be the subject of a June 19 hearing in San Jose, Calif., where U.S. District Judge Lucy Koh will decide whether it will be accepted as written, according to a report by Reuters. The proposed settlement would affect some 64,000 workers who have joined the class-action case against the defendants.
One of the four named plaintiffs in the case, Michael Devine, has told the court that he objects to the proposed settlement because it amounts to only about one-tenth of the $3 billion in damages the plaintiffs were originally seeking, the story reported. That $3 billion amount could have ultimately been tripled to $9 billion under U.S. antitrust laws had the case gone to trial.
Back in April 2010, the U.S. Department of Justice began investigating the hiring practices of Google, Apple and other companies, according to an earlier eWEEK report. The hiring practices at that time allegedly included agreements to not poach each other’s top talent, which could violate antitrust and labor laws. The federal government had previously investigated Google, Apple and other companies over similar deals. The class-action lawsuit targeted the companies in civil court following the government investigation.
The case has been very visible in Silicon Valley and across the nation because it involves some of the most important technology companies in the United States and their leaders. That included Apple’s former leader, the late Steve Jobs, who allegedly sent emails describing the strategy and practice of not hiring workers from other companies to limit such poaching.
With the court hearing on the proposed settlement set for June 19, Chicago attorney David Becker, who specializes in employment and patent litigation for Freeborn & Peters, told eWEEK that Koh will have a lot to consider when she decides the case.
Koh will have to review whether plaintiffs will have the ability to opt out of the settlement and go through legal briefs from both sides, said Becker.
What is particularly interesting about the case, said Becker, is that Jobs put his comments about the practice into emails and sent them to others for discussion. “He didn’t even care about putting it in an email,” he said. “Then, when [other companies] stopped going after those employees, then that ends up being collusion.”
Those emails from Jobs were “just another study about the ego of the guy,” said Becker. “He didn’t care that he was writing it down. I’d be shocked if he didn’t know that there’s something wrong with doing this.”
Apple, Google, Intel, Adobe Anti-poaching Settlement Gets June Hearing
Companies do have “whole vast areas where you can restrict employees from moving to other companies,” such as noncompete agreements, he said. “You can also put anti-poaching arrangements in contracts when you are selling or buying a company. But you can’t just do that outright any time you like, particularly when it could create an antitrust situation. There was no foundation to do that between Apple and Google.”
The fact that the defendants reached a settlement at this point in the matter—it was scheduled to begin trial on May 27—also intrigued Becker because there was still quite a ways to go before the plaintiffs would complete their full case, he said. “They were essentially arguing that the entirety of Silicon Valley was doing this. That’s much tougher to prove to a jury than ‘I didn’t get a job I applied for and when I didn’t get it, I was affected for the balance of my career.'”
The amount of the settlement, at about one-tenth of the original demand, appears to be reasonable considering the dangers on both sides as the case approached trial, said Becker. “I wouldn’t call this an admission that [the defendants] were going to lose or that they had a strong case on the side of the plaintiffs,” he said.
Under the proposed settlement, Devine, one of the four named plaintiffs in the original case, would receive about $80,000 in damages, while other class-action members of the suit would get about $4,000 each. Devine is not happy about that, but such figures appear to be typical in class-action cases, Becker added. The plaintiffs’ attorneys stand to earn about a quarter of the settlement.
Google, Apple and other companies also found themselves in the headlines in January 2014, not for their products but for their involvement in a dispute in the San Francisco Bay Area involving corporate buses the companies use to shuttle their employees back and forth to their jobs. The dispute arose because the companies had not contributed money to the city for the upkeep of the bus stops that were used by the corporate vehicles. The use of the stops without compensation inspired protests by local activists who opposed the practice. In January, an agreement was reached between the city and the companies to establish fees for the use of the bus stops.
In December 2013, a Google commuter bus that whisked employees to and from their San Francisco neighborhoods to their workplace some 34 miles away in Mountain View, Calif., was blocked from proceeding by a group of protestors who oppose the Google buses for traffic and economic reasons, according to an earlier eWEEK report.