Facing a class action now are Apple, Google, Pixar, Intel, Intuit, Lucasfilm and Adobe. The plaintiffs are five former employees, two who worked for Adobe during the relevant time period, one for Lucasfilm, one for Intel, and one for Intuit. The class is defined as “everyone employed by Defendants in the US on a salaried basis during the period from January 1, 2005 through January 1, 2010 (the “Class Period”). Excluded from the class are: retail employees; corporate officers, members of the boards of directors; and senior executives of Defendants who entered into the illicit agreements alleged herein; and any and all judges, justices, and chambers’ staff, assigned to hear or adjudicate any aspect of this litigation.” The plaintiffs believe there could be tens of thousands of potential class members.
The seven companies allegedly formed identical agreements with one another to not cold call each other’s employees. Cold calling is a form of recruitment wherein direct contact is made (either orally, in writing, telephonically, or electronically) with an employee who has not otherwise applied for a job opening. This method of recruitment is very effective because employees are often unresponsive to other forms of recruitment.
Upon receiving a cold call, employees are given access to employee benefit information from rival companies. Armed with this information, they can either move to the rival company, or they can inform their current employer of what the rival company is willing to offer and use that to negotiate a higher pay rate. Employees who receive cold calls can also pass on the information to their colleagues who can then use it to negotiate higher pay for themselves, even if they did not receive a cold call. When companies expect that their employees could get poached by rival companies, they will pay them at a higher base rate in order to provide an incentive to stay. By allegedly agreeing not to cold call each other’s employees, the Defendants allegedly kept their employees’ salaries artificially low.
According to Plaintiffs, the alleged conspiracy began began in 2005 between Lucasfilm and Pixar (which was under the control of Steve Jobs at the time) and consisted of three parts:
1. each company allegedly agreed not to cold call the other’s employees,
2. each company allegedly agreed to notify the other if making an offer to an employee of the other company if that employee applied for a job without having received a cold call, and
3. each company allegedly agreed that if either company made an offer to such an employee of the other company, neither company would counteroffer above the initial offer.
These alleged agreements were not limited by geography, job function, product group, or time period.
Shortly after this, Apple (also under the control of Steve Jobs) allegedly entered into an identical agreement with Adobe. The alleged agreement expanded to include Google no later than 2006. Beginning in April of 2006, Apple allegedly entered into an identical agreement with Pixar. In September of 2007, Google allegedly entered into an identical agreement with Intel and then, in June of 2007, Google allegedly entered into an identical agreement with Intuit. None of the employees of these companies were ever aware of these agreements.
Beginning in 2009, the Antitrust Division of the US Department of Justice (DOJ) conducted an investigation into the employment practices of the Defendants and on September 24, 2010, the DOJ filed a complaint regarding the Defendants’ agreements against Adobe, Apple, Google, Intel, Intuit, and Pixar. On December 21, 2010 the DOJ filed another complaint regarding the Defendants’ agreements, this time against Lucasfilm and Pixar. In both cases the DOJ filed stipulated proposed final judgments in which the seven companies agreed that the DOJ’s complaints “state a claim upon which relief may be granted” under federal antitrust law. The US District Court for the District of Columbia entered the stipulated proposed final judgments on March 17, 2011 and June 3, 2011.
The Plaintiffs are seeking three times their damages caused by the Defendants’ agreements, the costs of bringing the suit, and attorneys’ fees. In their joint motion to dismiss, the Defendants argued that there was no “overarching agreement” because each agreement existed only between two of the Defendants. Intuit, for example, had an agreement with Google and only Google. Intuit was still free to cold-call employees from the other five defendants and there was nothing in the agreements which prevented the Defendants from ever hiring each other’s employees.
The Court disagrees, having found that the Plaintiffs have given enough evidence to support a claim of damages to convince the Court that even a single such agreement as is alleged here could have a ripple effect. The existence of six such agreements, therefore, could have extensive repercussions.
The Defendants deny any evidence of collusion between the Defendants. Despite the fact that Steve Jobs owned or controlled two of the companies involved in the agreements and that several of the companies shared board members on their boards of directors, the Defendants maintain that this is not sufficient evidence of collusion.
The Court, however, found that “it strains credulity that Apple and Adobe reached an agreement in May 2005 that was identical to the “Do Not Cold Call” agreement Pixar entered into with Lucasfilm in January 2005, without some communication or coordination between these two sets of Defendants. The only apparent link between the Apple-Adobe agreement and the Pixar-Lucasfilms agreement is Mr. Jobs, who controlled Apple and oversaw Pixar.”
Lucasfilm filed a separate motion to dismiss in which it claimed that, because it is based in Presidio, it is outside the jurisdiction of the California state court. The Court however, found that the initial agreement between Lucasfilm and Pixar was entered into in January 2005, six months before Lucasfilm moved to Presidio. The instigating agreement therefore, was entered into in Emeryville, CA and is under the jurisdiction of the United States District Court, Northern District of California, San Jose Division.
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