Wilson Sonsini Gets Appellate Win in Google Derivative Suits Over 'No-Poach' Agreements
The Sixth District Court of Appeal upheld a lower court ruling which tossed claims against Google execs on statute of limitations grounds.
April 17, 2018 at 11:23 PM
3 minute read
A California appellate court on Monday upheld a lower court ruling tossing out a group of long-running shareholder derivative lawsuits against Google Inc. officers and directors.
Plaintiffs sued in 2014 claiming that Google suffered financial losses due to agreements company executives reached with tech rivals to avoid cold calling each other's employees for recruiting purposes. The suit followed a September 2010 civil antitrust settlement Google and several other companies reached with the Justice Department, under which Google denied any wrongdoing but agreed to cease the no cold call agreements.
Google was among four major technology companies that agreed to a $415 settlement with employees who claimed their wages were deflated by anti-competitive practices.
In the shareholder derivative suits, Santa Clara Superior Court Judge Peter Kirwan granted summary judgment to Google in 2015, finding the cases were filed after the three-year statute of limitations—the applicable limit under Delaware law, the state where Google was incorporated.
On appeal, plaintiffs argued that they lacked enough information to put them on notice of their claims until 2012, when emails produced in discovery in the private class action lawsuits brought on behalf of employees aired certain evidence regarding the no-poach agreements—including emails sent and received by Google's CEO discussing the agreements.
But in a decision handed down Monday, the Sixth District Court of Appeal sided with Google and affirmed Kirwan's summary judgment ruling. Justice Adrienne Grover wrote the opinion, which was joined by Justices Franklin D. Elia and Eugene M. Premo.
The court found that “it is not necessary that a plaintiff find the smoking gun” to trigger so-called inquiry notice or the moment when there's enough information available to prompt an investigation that would lead to the discovery of harm.
“Although neither the allegations made by the Department of Justice nor Google's immediate settlement of the antitrust action necessarily mean that the company's directors and officers were involved with the no cold call agreements, those facts give rise to a reasonable inference that they were,” Grover wrote.
“Plaintiffs conflate the concept of proving a claim with that of being aware of a claim. Certainly, the e-mails would be useful in proving the claims they have alleged,” she wrote. But the court concluded that plaintiffs should have been aware that they had viable claims in September 2013 at the time of the DOJ action. That conclusion means the statute of limitations expired months before the first suits were filed in early 2014.
Neither Brian Robbins of Robbins Arroyo nor Mark C. Molumphy of Cotchett, Pitre & McCarthy, who represented plaintiffs in the case, immediately responded to emails seeking comment.
A team at Wilson Sonsini Goodrich & Rosati including Boris Feldman represented Google. Reached by email Tuesday, Feldman said, “We're glad to see this lawsuit, based on events in 2005 to 2009, conclude.”
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