You don’t often hear complaints about working for Apple, Google, Intel, Lucasfilm, Adobe, Intuit, or Pixar. But according to plaintiffs lawyers at Lieff, Cabraser, Heimann & Bernstein, Berger & Montague, and Grant & Eisenhofer, employees at the septet of tech powerhouses were the victims of a conspiracy to suppress their salaries and keep them tied down at their jobs. And on Wednesday, a judge in San Jose ruled that the lawyers had come up with enough evidence to allow their case to move forward.
In a 29-page decision, Federal District Court Judge Lucy Koh refused to dismiss a proposed antitrust class action against all seven companies, ruling that “it strains credulity” that the defendants would develop nearly identical “Do Not Cold Call” agreements to restrict recruiting without some coordination.
“The fact that all six identical bilateral agreements were reached in secrecy among seven defendants in a span of two years suggests that these agreements resulted from collusion, and not from coincidence,” Judge Koh wrote.
The case follows a Justice Department investigation into the companies’ employment and recruitment practices. The DOJ sued Adobe, Apple, Google, Intel, Intuit, and Pixar in September 2010, alleging that the companies entered into a series of agreements that restrained competition for highly skilled employees. Another similar complaint was filed against Lucasfilm and Pixar in December 2010. The companies eventually settled with DOJ without admitting to any wrongdoing.
Employees at the companies filed five separate suits in California state court; lawyers for Intuit succeeded in getting the cases consolidated last July, and in August the case was transferred to San Jose federal district court and assigned to Judge Koh.
In their September 2011 amended complaint, the plaintiffs allege that senior executives at the companies entered agreements to cut down on poaching, to notify each other when making offers to one another’s employees, and to avoid making higher counteroffers. The complaint claims that the late Steve Jobs, former head of both Apple and Pixar, was central to a conspiracy that “consisted of an interconnected web of express agreements, each with the active involvement and participation of a company under the control of [Jobs] and/or a company that shared at least one member of Apple’s board of directors.” The complaint specifically points to current Apple chairman Arthur Levinson and Google chairman Eric Schmidt, a former member of Apple’s board.
The tech companies are relying on a who’s who of California antitrust counsel to defend the case. An O’Melveny & Myers team led by George Riley and Michael Tubach represents Apple and took top billing in the defendants’ joint motion to dismiss. The rest of the defense lineup includes Bingham McCutchen (for Intel); Mayer Brown (for Google), Keker & Van Nest (for Lucasfilm); Jones Day (for Adobe Systems and Intuit); and Covington & Burling (for Pixar). Lawyers at the firms either declined to comment or couldn’t be reached on Thursday.
The defendants argued in their motion that the plaintiffs hadn’t alleged any facts to support an overarching conspiracy and failed to establish any injury. Defendant Lucasfilm filed a separate motion to dismiss state law claims, since Lucasfilm is located on the Presidio of San Francisco, a federal enclave governed exclusively by federal law.
Judge Koh denied Lucasfilm’s motion, ruling that Presidio isn’t the locus of the claims, and she refused to dismiss the employees’ core antitrust claims against all the other defendants. However, the judge did dismiss the plaintiffs’ claims under California’s state Unfair Competition Law.
Lead plaintiffs counsel Joseph Saveri of Lieff, Cabraser told us Thursday that the defense’s win on the UCL issues won’t likely have much effect on potential damages in the case. Saveri said the plaintiffs are still gauging the size of the potential class as discovery moves forward, adding that there are potentially “tens of thousands” of class members.
“Right now we’ve got pretty solid antitrust claims and they’re relatively simple,” Saveri said. The defendants, he said, “did this for a reason and they kept doing it because it worked. I think that’s good evidence it did have an effect on the class.” The plaintiffs’ motion for class certification is due in late June, and Saveri said Judge Koh has the case set for a June 2013 trial date.
When asked how the death of Steve Jobs might affect the case moving forward, Saveri said the plaintiffs still have e-mail evidence and access to people with whom Jobs talked. “Now he’s not going to be able to explain what happened and I don’t know which way that cuts, to tell the truth,” Saveri said.
This article originally appeared in The AmLaw Litigation Daily.
