Judge Accepts $415 Million Settlement in High-Tech Anti-Poaching Case

A U.S. district court judge has tentatively accepted a $415 million settlement in a lawsuit charging that Silicon Valley companies illegally agreed not to poach each others' employees.

Tech Recruiting Case 2

The judge in a high-profile class action lawsuit in federal court that claimed Apple, Google and other Silicon Valley tech companies illegally agreed not to recruit each other's employees has tentatively approved a $415 million settlement.

The settlement, which also included an investigation by the U.S. Department of Justice, affects about 64,000 workers. The lawsuit was originally filed in 2011 by ex-employees of the firms involved. It charged that late Apple CEO Steve Jobs, Google Chairman Eric Schmidt and other executives reached a secret accord to restrict hiring among the firms. Judge Lucy Koh in U.S. District Court for Northern California in San Jose had rejected an earlier settlement offer of $324.5 million as too low.

Final approval isn’t expected until a hearing on June 9. The judge has invited interested parties to submit comments on the deal before then.

Adobe and Intel are also defendants in the case. Intuit, Pixar and Lucasfilm were also named in the lawsuit, but settled in 2013, in a deal approved by the court last year for $20 million

The settlement would allow the defendants to avoid a prolonged trial sure to reveal evidence that would prove further embarrassing to some of the largest technology companies in the San Francisco Bay region.

Frequent employee movement among companies in highly-competitive industries even at a high level isn't unusual, Bob O’Donnell, founder and chief analyst with TECHnalysis Research, told eWEEK. He noted that the Detroit-centered auto industry an example of another industry where key competitors are geographically close together as in Silicon Valley.

“If an individual wants to take a job at another firm, I don’t think there’s much of anything you can do to preclude that,” O’Donnell said. “Highly-prized employees are always going to be targeted.”

O’Donnell thinks the tech firms involved and others who may have considered even informal anti-poaching agreements will be chastened by the verdict. “But the battle for human capital will go on as it should."

If there was a smoking gun in the case, it was the revelation of an email exchange between the Jobs and Schmidt in March 2007. The tech rivals were on much friendlier terms then and Schmidt, then Google’s CEO, was a member of Apple’s board of directors. Jobs asked Schmidt about a Google employee trying to recruit an Apple engineer. "I would be very pleased if your recruiting department would stop doing this," Jobs wrote.

Schmidt forwarded Job's email to other, undisclosed recipients. "Can you get this stopped and let me know why this is happening?" Schmidt wrote.

Google's staffing director responded that the employee who contacted the Apple engineer "will be terminated within the hour."

He added: "Please extend my apologies as appropriate to Steve Jobs."

Joseph R. Saveri, a lead attorney for the plaintiffs, said collusion by the tech firms had a direct impact on employees’ salaries.

“Competition in the labor market results in better salaries, enhanced career opportunities for employees, and better products for consumers,” Saveri said in a statement posted at his firm’s website earlier this year.

“We estimate that because of reduced competition for their services, compensation for skilled employees at Adobe, Apple, Google, Intel, Intuit, Lucasfilm, and Pixar was reduced by 10 to 15 percent. These companies owe their tremendous successes to the sacrifices and hard work of their employees, and must take responsibility for their misconduct,” Saveri's statement said.

David Needle

David Needle

Based in Silicon Valley, veteran technology reporter David Needle covers mobile, bi g data, and social media among other topics. He was formerly News Editor at Infoworld, Editor of Computer Currents...