Federal judge disallows class action suit against tech firms

For years, the biggest tech companies in Silicon Valley had a convenient, but highly illegal, agreement among themselves: no one hire away other companies’ employees – especially high-quality engineering workers. The companies were Apple, Google, Intel, Intuit, Adobe, Pixar and LucasFilm, (both now owned by Disney).

But on April 5, 2013, U.S. District Judge Lucy Koh in San Jose, California, denied the right of workers to file a class action lawsuit against the firms and seek compensation of behalf of the many thousands of people who lost out. According to the Associated Press, Koh concluded “... that the companies’ alleged collusion may have affected workers in too many different ways to justify lumping the individual claims together.”

It was a legalistic ruling because the facts aren’t really in question. The U.S. Department of Justice discovered the illegal agreement and launched a probe. In 2010, the DOJ imposed a settlement “which forbade several of the defendants from entering an anti-poaching conspiracy.”

But many of the workers weren’t satisfied by this mild punishment – after all, they had been the ones who had lost out. As a result, dozens of workers and their attorneys banded together to file a class action suit, In re: High-Tech Employee Antitrust Litigation, accusing the tech giants of violating the Sherman Act and Clayton Act antitrust laws. According to the Associate Press:

“The lawsuit is trying to hold the companies accountable for an alleged scheme that cheated employees by artificially suppressing the demand for their services. The complaint hinges on the contention that the workers would have gotten raises either from their current employers or at other jobs if an anti-poaching provision hadn't been imposed. In most instances, the recruiting restrictions were in place from March 2005 through December 2009, according to the lawsuit.”

Worse for the companies, “Documents filed in the lawsuit indicated executives knew they were behaving badly. Both Schmidt and Intel CEO Paul Otellini indicated that they were worried about the anti-recruiting agreements being discovered, according to declarations cited in Koh's ruling. Nevertheless, Schmidt still fired a Google recruiter who riled Jobs by contacting an Apple employee, according to evidence submitted in the case.”

In other words, not only did the companies violate a federal statute, but they knew they were doing so. Nevertheless, a federal judge has deprived the wronged workers of the leverage that can only come from collective action. As it is, each case will pit individuals against the legal power of multi-billion dollar corporations.

Speed Matters hopes that this ill-founded judgment is overturned by a higher court, and that workers can obtain justice.

Judge deals blow to high-tech workers’ lawsuit (AP, Apr. 5, 2013)

In re: High-Tech Employee Antitrust Litigation, U.S. District Court, Northern District of California (Joint Case Management Conference Statement, Jan. 26, 2013)

Apple, Google won't face poaching class action suit, yet (Reuters, Apr. 5, 2013)