Appeal by Apple, Google and other tech companies of antitrust class certification rejected

Posted on: February 24th, 2014 by Steve Larson
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Law and justice concept, gavelA Ninth Circuit panel rejected the efforts of Apple, Inc., Google, Inc. and other major technology companies to overturn a lower court’s class certification in a suit accusing the companies of violating antitrust laws by agreeing not to poach one another’s employees.  In a brief opinion, the court denied the defendants permission to appeal the district court’s class certification.

U.S. District Judge Lucy H. Koh certified the class in October, ruling the engineers’ antitrust claims and damages could be proved on a classwide basis. Though Judge Koh denied the plaintiffs’ original bid for class certification in April, she concluded that the additional evidence and expert testimony they had provided since then cleared the bar for certification.

Judge Koh noted that she could not identify another case at the same stage with the same “level of documentary evidence” that the plaintiffs had provided to support their claims that Apple, Google, Intel Corp., Adobe Systems, Inc., Lucasfilm Ltd. LLC, Pixar Animation Studies and Intuit, Inc.promised not to cold call one another’s technical employees.

The tech defendants argued in their petition that Judge Koh’s order was based on the theory that a raise for some employees would “ripple” through the class of 60,000 employees holding 2,400 different titles at companies that create significantly different products.

“But undisputed evidence shows that each class member’s compensation is determined by highly individualized factors unsuited for classwide adjudication, and that the compensation of individuals within a job title — let alone across jobs — did not rise and fall together,” the petition said.

The plaintiffs countered in their reply that without the ban on cold calling, the technology companies would have been forced to increase compensation as competition for the software engineers increased.

“Google did exactly that — increased compensation to all of its employees — in response to Facebook refusing to agree not to solicit Google employees,” the reply said.

The suit stems from a U.S. Department of Justice investigation into the hiring practices of Silicon Valley businesses that revealed the companies had brokered agreements not to compete for one another’s engineers. In 2010, the DOJ concluded the companies had reached “facially uncompetitive” deals that limited the employees’ job prospects and ordered the companies to put an end to those agreements.

The software engineers later sued for damages, claiming the tech companies had agreed to provide one another notice whenever one made an offer to another company’s employee. They also agreed to cap pay packages for prospective hires in order to prevent bidding wars and to abstain from recruiting one another’s personnel, the plaintiffs said. The agreements allegedly depressed the workers’ pay 10 percent to 15 percent lower than it would have been with natural market conditions.

Judge Koh in April denied the plaintiffs’ attempt to certify the suit as a class action, saying the engineers lacked evidence to prove the plot affected all salaried workers at the Silicon Valley companies, in addition to all their technical employees.

But she later agreed to let the plaintiffs file an amended certification motion after finding that the companies had waited until after the initial class certification hearing to make a significant amount of evidence and key witnesses available.

Intuit, Pixar and Lucasfilm reached settlements in July with the plaintiffs. Intuit agreed to pay $11 million, and Lucasfilm and The Walt Disney Co.’s Pixar agreed to pay a combined $9 million.

The case is Siddharth Hariharan et al. v. Adobe Systems Inc. et al., case number 12-80223, in the U.S. District Court for the Ninth Circuit.