Tech Titans Settle Wage Antitrust Case

As often happens in the vicinity of courthouse steps, the high-profile Silicon Valley hiring antitrust class-action lawsuit has settled, pending court approval. In re: High-Tech Employee Antitrust Litigation originally pitted five software engineers as representatives of a broad putative class of high-tech workers against the titans of the high-tech world (including Apple, Google, Intel, Adobe Systems, Inuit, Lucasfilm, and Pixar) over collusive anti-poaching agreements and policies.

Three of the original defendants, Lucasfilm, Pixar and Intuit, settled for a total of $20 million last year, before a class was certified. Now, after certification, the remaining defendants, Apple, Google, Intel and Adobe, have agreed to settle for north of $300 million.

That’s a big difference. And, while it may be tempting to say that the remaining defendants should have settled earlier (as some have suggested), we doubt that it is that simple. Plaintiffs, besotted by the evidence against the bigger players, certainly may have made pre-certification settlement much more expensive and difficult for those big players than they did for the earlier-settling defendants. The remaining defendants are certainly extremely sophisticated and are represented by able counsel capable of reading the writing on the wall.

It is true, for instance, that the evidence in the case (much of which was uncovered by the Justice Department in its investigation) has long placed Apple and Google at the center of the storm—including emails that must have had the plaintiffs’ lawyers salivating. In one string of emails, Eric Schmidt, Google’s chairman, assured Apple’s Steve Jobs that a Google recruiter who had dared to contact an Apple employee would be terminated “within the hour.” Jobs responded with this:   🙂

Meanwhile, the defendants focused on what appeared to be significant damages and procedural problems for the plaintiffs. They argued throughout 2013 that, despite the rather unsavory emails and the existence of anti-poaching agreements, there was no antitrust injury—that is, there was no evidence that the plaintiffs were actually paid any less or were given any less favorable terms because of those agreements. The defendants also maintained that individual issues predominated over common issues, precluding certification.

And things were looking up for the tech giants – for a while. In April 2013, Judge Lucy Koh of the Northern District of California refused to certify the plaintiffs’ class.

Judge Koh, however, left the door ajar for the plaintiffs to renew their motion to certify a narrower class. And she nailed a roadmap to the door. Following that roadmap, in May 2013, the plaintiffs filed a motion to certify the narrower class (more than 60,000 individuals who worked for the defendants in technical, creative, or research and development capacities between 2005 and 2009). That’s when LucasFilm, Pixar and Intuit settled. Apple, Google, Adobe and Intel stayed the course.

But on October 24, 2013, three days after the court held a hearing on preliminary approval of the LucasFilm/Pixar/Intuit settlement, the court certified the plaintiffs’ amended class. Then the Ninth Circuit refused to review class certification on an interlocutory basis. That’s not a great place to be.

So, facing a certified class and no immediate way to de-certify it, the remaining defendants tried a summary judgment motion. They also moved to exclude the plaintiffs’ economist’s expert report. Less than a month ago, the court denied both motions.

Within three weeks, the terms of the settlement had been hammered out.

We’ll never know what settlement discussions occurred before the court certified the narrower class. That’s the way these things go. But we feel fairly confident that the plaintiffs were not making settlement easy or cheap for the remaining defendants during that time. And, with that, we’re hesitant to conclude that the lesson here is simply that the remaining defendants should have settled earlier. It probably wasn’t nearly that easy.

We will update you as the proposed settlement moves toward approval.

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Posted in Antitrust, Settlement, Uncategorized

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