Anti-Poaching Lawsuit Becomes Class Action

A federal district court granted class-action status in a lawsuit against Apple, Google, Adobe Systems and Intel. The plaintiffs allege the companies worked to suppress compensation by agreeing not to poach each other’s tech workers over a four year period.

Scales of JusticeIn 2010, the U.S. Department of Justice, which had initiated a probe into the allegations, reached a settlement with the companies along with Pixar, Intuit and LucasFilm. The following year, a handful of software engineers who were former employees of the companies filed an anti-trust suit against them and sought class action status. The lawsuit had initially sought class status for 100,000 tech workers, according to The Wall Street Journal.

In April, U.S. District Court Judge Lucy Koh found that the plaintiffs didn’t demonstrate that the majority of those workers were affected by the no-poach agreements. However, Koh on Thursday determined enough preliminary evidence existed to warrant class status. In her court order, Koh said:

Plaintiffs’ documentary evidence, along with the expert reports and statistical analyses that rely on this evidence, establish that common issues between class members will predominate over individual issues in proving antitrust impact. The documentary evidence supports Plaintiffs’ theory that Defendants had formal compensation structures on a company-wide basis that placed a premium on internal equity concerns, and that collusive communications between various Defendants limited the proportion of each Defendants’ budget that would be dedicated to merit increases. Further, the evidence suggests that the Defendants benchmarked their compensation structures to external data and to each other. The documentary evidence and the expert reports also support Plaintiffs’ theory that the top companies and top employees at these companies set a ceiling, based on which all or nearly all employees of the Technical Class’s compensation was set. This extensive evidence supports Plaintiffs’ theory that each technical employee’s compensation was linked to those of her peers within and across Defendants’ firms.

Among others, the technical class of workers is comprised of software engineers, hardware engineers, application developers, programmers, product developers, user interface or user experience designers, research and development staff, technical editors, Web developers and systems engineers and administrators.

Last month, Pixar, LucasFilm and Intuit reached a tentative settlement in the case. Intuit has agreed to pony up $11 million, according to a Bloomberg report, while Walt Disney-owned Pixar and LucasFilm will pay $9 million.

The companies, meanwhile, dispute that their alleged anti-solicitation agreements, where they declined to cold call competitors’ technical staff, had any effect on job opportunities or flow of information to technical workers.

Google’s Talent War with Facebook

In her court order, Koh noted that the absence of anti-solicitation agreements could prompt companies to offer incentives to minimize their attrition rate. “The evidence suggests that any such preemptive or reactive steps, in the absence of the anti-solicitation agreements, would have had classwide effect and would have impacted all or nearly all members of the Technical Class,” she wrote.

One example cited in the court documents delved into the talent war between Google and Facebook. In 2008, it says, Google’s recruiting director Arnnon Geshuri lamented that Facebook was cold calling Google’s Site Reliability Engineering team. He then allegedly suggested calling Facebook Chief Operating Officer Sheryl Sandberg to try to stop the targeted effort and consider establishing a mutual “Do Not Call” agreement. Facebook refused to go along.

In October 2010, Google began studying Facebook’s solicitation strategy, according to court documents. A month later, and two months after the Justice Department announced its investigation, Google announced plans to increase the base salary of all of its salaried employees by 10 percent and give a $1,000 cash bonus to all employees.

Image: Mike Kirby via Wikimedia Commons

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