A US federal judge has decided a US$324.5 million settlement is not sufficient to cover the damages done to more than 60,000 high-tech workers in a class-action lawsuit alleging Google Inc and Apple Inc conspired with other technology companies to block their top employees from getting better job offers.
The ruling on Friday by US District Judge Lucy Koh overturns a settlement reached in April, prolonging a three-year-old case that paints a mean-spirited picture of Apple founder Steve Jobs and other prominent Silicon Valley executives.
Koh estimated that the workers deserve at least US$380 million, based on the evidence indicating their earning power was undermined by collusion among their employers.
Attorneys representing the workers were originally seeking US$3 billion in damages before settling for about 10 percent of that amount in a deal reached in April.
A US$9 billion award would have paid the affected workers an average of more than US$140,000 each. Koh estimated that after subtracting lawyers’ fees and other payments, the workers would have received an average of US$3,750 had she approved the US$324.5 million settlement. That amount “falls below the range of reasonableness,” she wrote.
The settlement would have been paid by Apple Inc, Google Inc, Intel Corp and Adobe Systems Inc. The lawsuit alleges they and three other companies — Intuit Inc, Pixar Animation and Lucasfilm — secretly agreed not to recruit each other’s workers at various junctures from 2005 through 2009.
Apple and Google declined to comment on Koh’s ruling. Intel spokesman Chuck Mulloy said the company was disappointed by the decision, but had not yet decided its next step. Adobe did not immediately respond to requests for comment.
A US$20 million settlement of the claims against Intuit, Pixar Animation and Lucasfilm was approved in June.
Koh indicated that the workers at Google, Apple, Intel and Adobe had built a strong case against their employers.
“There is ample evidence of an overarching conspiracy,” she said in her 32-page ruling.
In their arguments for approving the US$324.5 million settlement, attorneys for the workers said that the conspiracy would not have been easy to prove to a jury. If the settlement had been approved, the workers’ attorneys’ would have received US$82 million in fees and expenses.
To illustrate why she believes the workers have a strong case, Koh referred to depositions and e-mails detailing some of the machinations that led to the “no-poaching” agreements.
She depicted Jobs, who died in October 2011, as the ringleader of the scheme. The ruling also chastized Google and Adobe for following Jobs’ wishes “out of fear and deference to him.”
Koh pointed to evidence showing that Google scrapped plans for an engineering center in Paris staffed by former Apple employees after Jobs strenuously objected. In another instance cited by Koh, Google’s then-CEO Eric Schmidt fired a recruiter who had contacted an Apple engineer in 2007, raising Jobs’ ire. When Schmidt e-mailed the news that the recruiter had been fired, Jobs forwarded the note to Apple’s personnel department with a smiley face above it, Koh noted.
Not all Silicon Valley executives were so submissive. Koh’s ruling cited an instance when Jobs tried to cajole now-defunct device maker Palm Inc to join the no-poaching cartel.
Palm’s then-CEO Edward Colligan warned Jobs that his no-poaching demand was “likely illegal” in an e-mail recounted in Koh’s ruling.
“We can’t dictate where someone will work, nor should we try,” Colligan wrote. “I can’t deny people who elect to pursue their livelihood at Palm the right to do so simply because they now work for Apple, and I wouldn’t want you to do that to current Palm employees.”
Palm never joined the no-poaching club and neither did Facebook Inc, despite Google’s attempts to persuade its rival to join in, evidence obtained in the lawsuit showed.
The US Justice Department opened an investigation into Silicon Valley’s no-poaching pacts in 2009, resulting in a 2010 settlement requiring the participating companies stop the practice. The companies did not acknowledge any wrongdoing.
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