High-Tech Employee Antitrust Litigation

High-Tech Employee Antitrust Litigation is a 2010 United States Department of Justice (DOJ) antitrust action and a 2013 civil class action against several Silicon Valley companies for alleged "no cold call" agreements which restrained the recruitment of high-tech employees.

The defendants are Adobe, Apple Inc., Google, Intel, Intuit, Pixar, Lucasfilm and eBay, all high-technology companies with a principal place of business in the San Francisco–Silicon Valley area of California.

The civil class action was filed by five plaintiffs, one of whom has died; it accused the tech companies of collusion between 2005 and 2009 to refrain from recruiting each other's employees.

"No cold call" agreements

Cold calling is one of the main methods used by companies in the high-technology sector to recruit employees with advanced and specialised skills, such as software and hardware engineers, programmers, animators, digital artists, Web developers and other technical professionals.[1] Cold calling involves communicating directly in any manner with another firm's employee who has not otherwise applied for a job opening. Cold calling may be done in person, by phone, letter, or email.[2] According to the legal brief filed by a plaintiff in one of the class-action cases, cold calling is an effective method of recruiting for the high-technology sector because "employees of other [high-technology] companies are often unresponsive to other recruiting strategies... [and] current satisfied employees tend to be more qualified, harder working, and more stable than those who are actively looking for employment."[3]

Amy Lambert, Google’s associate general counsel, noted in a blog post shortly after the DOJ's actions, that Google's definition of cold calling does not necessarily eliminate recruiting by letter or email, but only the process of calling on the telephone. By implication, recruiting through LinkedIn incurs recruiting by "InMail" - LinkedIn's own mail contact system: "In order to maintain a good working relationship with these companies, in 2005 we decided not to "cold call" employees at a few of our partner companies. Our policy only impacted cold calling, and we continued to recruit from these companies through LinkedIn, job fairs, employee referrals, or when candidates approached Google directly. In fact, we hired hundreds of employees from the companies involved during this time period."

The challenged "no cold call" agreements are alleged bilateral agreements between high technology companies not to cold call each other's employees. The DOJ alleges that senior executives at each company negotiated to have their employees added to 'no call' lists maintained by human resources personnel or in company hiring manuals. The alleged agreements were not limited by geography, job function, product group, or time period. The alleged bilateral agreements were between: (1) Apple and Google, (2) Apple and Adobe, (3) Apple and Pixar, (4) Google and Intel, (5) Google and Intuit,[4] and (6) Lucasfilm and Pixar.[5]

The civil class action further alleges that agreements also existed to (1) "provide notification when making an offer to another [company]'s employee (without the knowledge or consent of the employee)" and (2) "agreements that, when offering a position to another company's employee, neither company would counteroffer above the initial offer."[3]

Department of Justice antitrust action

On September 24, 2010, the United States Department of Justice Antitrust Division filed a complaint in the US District Court for the District of Columbia alleging violations of Section 1 of the Sherman Act. In US v. Adobe Systems Inc., et al., the Department of Justice alleged that Adobe, Apple, Google, Intel, Intuit, and Pixar had violated Section 1 of the Sherman Act by entering into a series of bilateral "No Cold Call" Agreements to prevent the recruitment of their employees (a similar but separate suit was filed against Lucasfilm on December 21, 2010[6]). The DOJ alleged in their Complaint that the companies had reached "facially anticompetitive" agreements that "eliminated a significant form of competition...to the detriment of the affected employees who were likely deprived of competitively important information and access to better job opportunities." The DOJ also alleged that the agreements "were not ancillary to any legitimate collaboration," "were much broader than reasonably necessary for the formation or implementation of any collaborative effort," and "disrupted the normal price-setting mechanisms that apply in the labor setting."[4] The same day it filed the suit, the DOJ and the defendants proposed a settlement.[7]

A final judgment enforcing the settlement was entered by the court on March 17, 2011.[8] Although the DOJ Complaint only challenged the alleged "no cold call" agreements, in the settlement, the companies agreed to a more broad prohibition against "attempting to enter into, entering into, maintaining or enforcing any agreement with any other person to in any way refrain from, requesting that any person in any way refrain from, or pressuring any person in any way to refrain from soliciting, cold calling, recruiting, or otherwise competing for employees of the other person", for a period of five years; the court can grant an extension.[8] The settlement agreement does not provide any compensation for company employees affected by the alleged agreements.[9] Lucasfilm entered into a similar settlement agreement in December 2010.[5]

Civil class action

In re: High-Tech Employee Antitrust Litigation (U.S. District Court, Northern District of California 11-cv-2509 [10]) is a class-action lawsuit on behalf of over 64,000 employees of Adobe, Apple Inc., Google, Intel, Intuit, Pixar and Lucasfilm (the last two are subsidiaries of Disney) against their employer alleging that their wages were repressed due to alleged agreements between their employers not to hire employees from their competitors.[11][12] The case was filed on May 4, 2011 by a former software engineer at Lucasfilm and alleges violations of California’s antitrust statute, Business and Professions Code sections 16720 et seq. (the "Cartwright Act"); Business and Professions Code section 16600; and California’s unfair competition law, Business and Professions Code sections 17200, et seq. Focusing on the network of connections around former Apple CEO Steve Jobs, the Complaint alleges "an interconnected web of express agreements, each with the active involvement and participation of a company under the control of Steve Jobs...and/or a company that shared at least one member of Apple's board of directors." The alleged intent of this conspiracy was "to reduce employee compensation and mobility through eliminating competition for skilled labor."[13]

On October 24, 2013 the United States District Court for the Northern District of California granted class certification for all employees of Defendant companies from January 1, 2005 through January 1, 2010.[9]

As of October 31, 2013, Intuit, Pixar and Lucasfilm have reached a tentative settlement agreement. Pixar and Lucasfilm agreed to pay $9 million in damages, and Intuit agreed to pay $11 million in damages.[9] In May 2014, Judge Lucy Koh approved the $20 million settlement between Lucasfilm, Pixar, and Intuit and their employees. Class members in this settlement, which involved fewer than 8% of the 65,000 employees affected, will receive around $3,840 each.[14]

The trial of the class action for the remaining Defendant companies was scheduled to begin on May 27, 2014. The plaintiffs intended to ask the jury for $3 billion in compensation, a number which could in turn have tripled to $9 billion under antitrust law.[15] However, in late April 2014, the four remaining defendants, Apple Inc, Google, Intel and Adobe Systems, agreed to settle out of court. Any settlement must be approved by Judge Lucy Koh.[16][17]

On May 23, 2014, Apple, Google, Intel, Adobe agreed to settle for $324.5 million. Lawyers sought 25% in attorneys’ fees, plus expenses of as much as $1.2 million, according to the filing. Additional award payments of $80,000 would be sought for each named plaintiff who served as a class representative.[18] Payouts will average a few thousand dollars based on the salary of the employee at the time of the complaint.

In June 2014, Judge Lucy Koh expressed concern that the settlement may not be a good one for the plaintiffs. Michael Devine, one of the plaintiffs, said the settlement is unjust. In a letter he wrote to the judge he said the settlement represents only one-tenth of the $3 billion in compensation the 64,000 workers could have made if the defendants had not colluded.[19]

On August 8, 2014, Judge Koh rejected the settlement as insufficient on the basis of the evidence and exposure. Rejecting a settlement is unusual in such cases. This left the defendants with a choice between raising their settlement offer or facing a trial.[20]

On September 8, 2014, Judge Koh set April 9, 2015 as the actual trial date for the remaining defendants, with a pre-trial conference scheduled for December 19, 2014. Also, as of early September 2014, the defendants had re-entered mediation to determine whether a new settlement could be reached.[21]

A final approval hearing was held on July 9, 2015.[22] On Wednesday September 2, 2015, Judge Lucy H. Koh signed an order granting Motion for Final Approval of Class Action Settlement. The settlement website stated that Adobe, Apple, Google, and Intel has reached a settlement of $415 million and other companies settled for $20 million.

According to the settlement website, Gilardi & Co., LLC distributed the settlement to class members the week of December 21, 2015.

See also

References

  1. ^ Singer, Bill. "After Apple, Google, Adobe, Intel, Pixar, And Intuit, Antitrust Employment Charges Hit eBay". Forbes. Retrieved 2013-12-02.
  2. ^ DOJ. "Complaint, US v. Adobe Systems Inc., et al" (PDF). DOJ. Retrieved 2013-12-02.
  3. ^ a b "Complaint, Hariharan v. Adobe Systems Inc., et al" (PDF). Lieff, Cabraser, Heimann & Bernstein. Retrieved 2013-12-02.
  4. ^ a b "Complaint, US v. Adobe Systems Inc., et al" (PDF). Department of Justice. Retrieved 2013-12-02.
  5. ^ a b Richey, Warren. "Lucasfilm settles antitrust case over wage suppression of top animators". The Christian Science Monitor. Retrieved 2013-12-02.
  6. ^ "Complaint, US v. Lucasfilm Ltd". Department of Justice. Retrieved 2013-12-02.
  7. ^ "Justice Department Requires Six High Tech Companies to Stop Entering into Anticompetitive Employee Solicitation Agreements" (Press release). United States Department of Justice. September 24, 2010. Retrieved 2016-01-14.
  8. ^ a b "U.S. v. Adobe Systems, Inc., et al.: Final Judgment". United States Department of Justice. March 17, 2011. Retrieved 14 January 2016.
  9. ^ a b c "Judge OKs class-action suit against Apple, Intel, Google, Adobe". San Jose Mercury News. Retrieved 2013-12-02.
  10. ^ Dan Levine (2014-04-24). "Apple, Google agree to settle lawsuit alleging hiring conspiracy". Chicago Tribune. Reuters. Retrieved 2016-01-17.
  11. ^ Rosenblatt, Joel. "Apple, Google Must Face Group Antitrust Hiring Lawsuit". Bloomberg. Retrieved 2013-10-27.
  12. ^ "Judge Grants Class-Action Status in Silicon Valley Hiring Suit". The Wall Street Journal. 2002-10-03. Retrieved 2013-10-27.
  13. ^ "Complaint, Hariharan v. Adobe Systems Inc., et al" (PDF). Lieff, Cabraser, Heimann & Bernstein. Retrieved 2013-12-02.
  14. ^ Cooley, Brian (2014-05-16). "Judge approves first payout in antitrust wage-fixing lawsuit". CNET. Retrieved 2016-01-17.
  15. ^ "Dockets & Filings: In re: High-Tech Employee Antitrust Litigation". Justia. Retrieved 2013-12-02.
  16. ^ Levine, Dan (2014-04-24). "Apple, Google agree to settle lawsuit alleging hiring, salary conspiracy". The Washington Post. Retrieved 2016-01-17.
  17. ^ Levine, Dan (2014-04-24). "Apple, Google agree to settle lawsuit alleging hiring conspiracy". Reuters. Retrieved 2016-01-17.
  18. ^ "Apple, Google, Intel, Adobe Settle for $324.5 Million". Bloomberg News. Retrieved 2014-05-26.
  19. ^ "Judge questions settlement in Silicon Valley no-poaching case". San Jose Mercury News. 2014-06-19. Retrieved 2016-01-17.
  20. ^ "Court Rejects Deal on Hiring in Silicon Valley". The New York Times. 9 August 2014.
  21. ^ "Judge Koh Sets April 2015 Trial In Tech Anti-Poach Row". Retrieved 2015-01-13.
  22. ^ "Court preliminarily approves $415m settlement of high-tech no-poaching lawsuit". Retrieved 2015-06-30.

External links

Antipoaching

Antipoaching is a term used to define the anti-competitive conduct of companies conspiring not to hire each other's employees.

Apple Inc. litigation

The multinational technology corporation Apple Inc. has been a participant in various legal proceedings and claims since it began operation and, like its competitors and peers, engages in litigation in its normal course of business for a variety of reasons. In particular, Apple is known for and promotes itself as actively and aggressively enforcing its intellectual property interests.

From the 1980s to the present, Apple has been plaintiff or defendant in civil actions in the United States and other countries. Some of these actions have determined significant case law for the information technology industry and many have captured the attention of the public and media. Apple's litigation generally involves intellectual property disputes, but the company has also been a party in lawsuits that include antitrust claims, consumer actions, commercial unfair trade practice suits, defamation claims, and corporate espionage, among other matters.

Arnnon Geshuri

Arnnon Geshuri (born 1969 or 1970) is an American corporate executive. He was vice president of human resources at Tesla Inc. from 2009 until 2017, Senior Director of Human Resources and Staffing at Google from 2004 to 2009, and Vice President of People Operations and Director of Global Staffing at E-Trade Financial Corporation circa 2002. In January 2016, he briefly served on the Wikimedia Foundation Board of Trustees before stepping down after opposition arose due to his involvement in anti-competitive employer collusion in Silicon Valley.

Criticism of Google

Criticism of Google includes concern for tax avoidance, misuse and manipulation of search results, its use of others' intellectual property, concerns that its compilation of data may violate people's privacy and collaboration with Google Earth by the military to spy on us , censorship of search results and content, and the energy consumption of its servers as well as concerns over traditional business issues such as monopoly, restraint of trade, antitrust, "idea borrowing", and being an "Ideological Echo Chamber".

Alphabet Inc. is an American multinational public corporation invested in Internet search, cloud computing, and advertising technologies. Google hosts and develops a number of Internet-based services and products, and generates profit primarily from advertising through its AdWords program.Google's stated mission is "to organize the world's information and make it universally accessible and useful"; this mission, and the means used to accomplish it, have raised concerns among the company's critics. Much of the criticism pertains to issues that have not yet been addressed by cyber law.

Eric Schmidt

Eric Emerson Schmidt (born April 27, 1955) is an American businessman and software engineer. He is known for being the Executive Chairman of Google from 2001 to 2015 and Alphabet Inc. from 2015 to 2017. In 2017, Forbes ranked Schmidt as the 119th-richest person in the world, with an estimated wealth of US$11.1 billion.As an intern at Bell Labs, Schmidt did a complete re-write of Lex, a software program to generate lexical analysers for the UNIX computer operating system. From 1997 to 2001, he was Chief Executive Officer (CEO) of Novell. From 2001 to 2011, Schmidt served as the CEO of Google. He has served on various other boards in academia and industry, including the Boards of Trustees for Carnegie Mellon University, Apple, Princeton University, and Mayo Clinic.

Google

Google LLC is an American multinational technology company that specializes in Internet-related services and products, which include online advertising technologies, search engine, cloud computing, software, and hardware. It is considered one of the Big Four technology companies, alongside Amazon, Apple and Facebook.Google was founded in 1998 by Larry Page and Sergey Brin while they were Ph.D. students at Stanford University in California. Together they own about 14 percent of its shares and control 56 percent of the stockholder voting power through supervoting stock. They incorporated Google as a privately held company on September 4, 1998. An initial public offering (IPO) took place on August 19, 2004, and Google moved to its headquarters in Mountain View, California, nicknamed the Googleplex. In August 2015, Google announced plans to reorganize its various interests as a conglomerate called Alphabet Inc. Google is Alphabet's leading subsidiary and will continue to be the umbrella company for Alphabet's Internet interests. Sundar Pichai was appointed CEO of Google, replacing Larry Page who became the CEO of Alphabet.

The company's rapid growth since incorporation has triggered a chain of products, acquisitions, and partnerships beyond Google's core search engine (Google Search). It offers services designed for work and productivity (Google Docs, Google Sheets, and Google Slides), email (Gmail/Inbox), scheduling and time management (Google Calendar), cloud storage (Google Drive), social networking (Google+), instant messaging and video chat (Google Allo, Duo, Hangouts), language translation (Google Translate), mapping and navigation (Google Maps, Waze, Google Earth, Street View), video sharing (YouTube), note-taking (Google Keep), and photo organizing and editing (Google Photos). The company leads the development of the Android mobile operating system, the Google Chrome web browser, and Chrome OS, a lightweight operating system based on the Chrome browser. Google has moved increasingly into hardware; from 2010 to 2015, it partnered with major electronics manufacturers in the production of its Nexus devices, and it released multiple hardware products in October 2016, including the Google Pixel smartphone, Google Home smart speaker, Google Wifi mesh wireless router, and Google Daydream virtual reality headset. Google has also experimented with becoming an Internet carrier (Google Fiber, Project Fi, and Google Station).Google.com is the most visited website in the world. Several other Google services also figure in the top 100 most visited websites, including YouTube and Blogger. Google is the most valuable brand in the world as of 2017, but has received significant criticism involving issues such as privacy concerns, tax avoidance, antitrust, censorship, and search neutrality. Google's mission statement is "to organize the world's information and make it universally accessible and useful", and its unofficial slogan was "Don't be evil" until the phrase was removed from the company's code of conduct around May 2018.

Google litigation

Google has been involved in multiple lawsuits over issues such as privacy, advertising, intellectual property and various Google services such as Google Books and YouTube. The company's legal department expanded from one to nearly 100 lawyers in the first five years of business, and by 2014 had grown to around 400 lawyers. Google's Chief Legal Officer is Senior Vice President of Corporate Development David Drummond

Lucy Koh

Lucy Haeran Koh (born August 7, 1968) is a United States District Judge of the United States District Court for the Northern District of California and is a former nominee to be a United States Circuit Judge of the United States Court of Appeals for the Ninth Circuit. She is the first Asian American United States district court judge in the Northern District of California, the first district court judge of Korean descent in the United States, the first female Korean American Article III judge, and the second Korean American federal judge, after Herbert Choy of the Ninth Circuit.

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