Antitrust Law Daily Wrap Up, ANTITRUST—N.D. Cal.: eBay settles no-hire agreement suit for $3.75M, (Sep 8, 2015)

By Greg Hammond, J.D.

A $3.75 million settlement has received final approval by the federal district court in San Jose, in a suit alleging that eBay, Inc. violated the Sherman Act, Cartwright Act, and California Unfair Competition Law (UCL) by entering into a non-solicitation and no-hire agreement with Intuit, Inc. The court found the settlement to be fair, reasonable, and adequate, given the amount of the settlement, the extent of discovery completed and stage of proceedings, the experience and views of counsel, and the reaction of class members (The People of the State of California v. eBay, Inc., September 3, 2015, Davila, E.).

The State of California claimed that senior executives of eBay and Intuit reached a “handshake” agreement restricting their ability to recruit and hire employees of the other company. The agreement purportedly harmed competition and employees by reducing salaries, benefits, and employment opportunities, and depriving Silicon Valley of its “usual pollinators of ideas, hurting the overall competitiveness of the region.”

eBay agreed to create a settlement fund of $3.75 million, of which $2.375 million will be allocated as restitution to three groups of individuals employed by eBay or Intuit: (1) employees of Intuit that were considered for but were not offered a position at eBay, consisting of about 40 claimants who will receive a maximum amount of $10,000 each; (2) employees of Intuit who applied for but were not offered a position at eBay, and who are not members of the first pool—consisting of approximately 50 claimants who will receive a maximum amount of $1,500 each; and (3) eBay or Intuit employees that are not members of the other two pools, who will receive a maximum amount of $150 each.

The fund will also pay $250,000 in state civil penalties; $150,000 for costs of notice and fund administration; $300,000 for harm to the California economy; and $675,000 to the state for attorney fees and costs. Any remaining amount, which was calculated to be nearly $900,000, will be allocated for cy pres purposes, with the goal of bridging the digital divide among traditionally underserved youth and adults in California by preparing them to enter an increasingly technologically driven workforce. The settlement also provides for injunctive relief and cooperation.

The court granted final approval, finding the terms of the settlement to be fair, reasonable, and adequate. Specifically, it found that the definite and rapid recovery for affected individuals and the amount of recovery—allowing individuals to receive more than they otherwise would by pursuing the action on an individual basis—favored settlement. The state also had sufficient information to properly evaluate its claims and defenses. Third, it was undisputed that counsel on both sides have considerable experience in antitrust and class action cases, and it was significant that counsel engaged in two telephone conferences mediated by the court’s alternative dispute resolution program. Moreover, the government lawyers negotiated the settlement giving considerable weight to the “experience and views of counsel” factor, because the State is charged with the trust of protecting the state and its citizens. Finally, although two class members objected to the settlement, the “reaction of the class members” factor still favored settlement, because: (1) the first objector requested to expand the allegations in the complaint rather than objecting to the settlement itself; and (2) the second objector’s arguments, which attacked the settlement amount, assumed a victory at trial and did into take into account the risks inherent in litigation, which was insufficient to prevent final approval.

The case number is 5:12-cv-05874-EJD.

Attorneys: Kathleen E. Foote, Office of the Attorney General for the People of the State of California. Thomas Patrick Brown (Paul Hastings LLP) for eBay, Inc.

Companies: eBay, Inc.

Cases: Antitrust CaliforniaNews