Antitrust Staff-poaching lawsuit Allowed to Proceed Against Tech Bigwigs

The antitrust lawsuit against Apple, Google, Intel and four other major tech companies will go forward, as a federal judge has denied the companies' request to dismiss the case, Reuters has reported.

Apple, Google, Intel, Pixar, Adobe, Lucasfilm, and Intuit face charges of illegally colluding not to "poach" each other's employees, thus limiting their chances for career advancement. The lawsuit was filed by five Silicon Valley engineers.

Like Us on Facebook :

On Wednesday, District Judge Lucy Koh rejected the companies' bid to dismiss claims against them, and gave a green light to the antitrust lawsuit, saying that the existence of "Do Not Cold Call" agreements among companies "supports the plausible inference that the agreements were negotiated, reached, and policed at the highest levels" of the companies.

"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," noted Judge Koh, in court documents cited by Reuters.

Back in 2010, a DOJ investigation involving the same companies resulted in a settlement. The companies did not admit to any wrongdoing, but they did pledge to refrain from restricting competition for workers through practices such as setting limits for recruiting and cold-calling. Although the settlement ended the "Do Not Cold Call" agreements between the companies, engineers and other high tech employees were affected during the years these agreements were in place, alleges the private lawsuit.

Gentlemen's Agreement

To illustrate the gentlemen's agreement nature of the anti-poaching deals, Reuters also noted an email trail from 2007, between the late Steve Jobs and then Google-CEO Eric Schmidt. "I would be very pleased if your recruiting department would stop doing this," Jobs politely asked Schmidt in an email. At the time, Schmidt was still a member of Apple's board of directors. Schmidt forwarded that email to Google staff members, asking them to "get this stopped," according to court documents. The Google employee responsible for recruiting was eventually fired.

The "gentlemen's agreements" between the companies, designed to keep them from going after one another's employees, resulted in limiting both pay and job mobility. According to the plaintiffs, these practices eliminated the normal forces of competition for labor and limited their career advancement opportunities.

"While these allegations concerning the labor market effects of cold calling remain to be proven, the court presumes these factual allegations to be true for the purposes of ruling on a motion to dismiss," explained the judge. "It is plausible to infer that even a single bilateral (do-not-call) agreement would have the ripple effect of depressing the mobility and compensation of employees of companies that are not direct parties to the agreement."

(reported by Alexandra Burlacu, edited by Dave Clark)