Antitrust Law Daily Wrap Up, ANTITRUST—N.D. Cal: Former employees’ antitrust claims against major high-tech companies can proceed, (Apr 4, 2014)

By Linda O’Brien, J.D., LL.M.

In a class action by former technical employees against major technology companies for allegedly engaging in a conspiracy to fix and suppress employee compensation, the federal district court in San Jose, California has denied the defendant companies’ motion for summary judgment on the grounds that the employees presented sufficient evidence of their claims of an overarching conspiracy to warrant adjudication by a jury (In re High-Tech Employee Antitrust Litigation, March 28, 2014, Koh, L.).

Software engineers and other technical workers who were former employees of several major technology companies filed a class action suit against the companies, alleging that they engaged in a conspiracy to fix and suppress employee compensation and to restrict employee mobility through anti-solicitation agreements among the companies. In October 2013, certification of the proposed class was granted. Subsequently, the defendant companies moved for summary judgment.

The court found that genuine issues of material fact existed to support the employees’ claims of an overarching conspiracy among the high-tech companies. The court noted that there was evidence to exclude the possibility that the companies acted independently. First, the companies conceded the existence of a series of bilateral agreements that contained near identical terms to preclude each company from affirmatively soliciting another’s employees. Company executives recognized the similarities and that the agreements were not designed for circulation. Second, the agreements were negotiated and enforced by a small group on intertwining high level executives at the defendant companies. Many of the same company executives who negotiated and enforced the agreements expanded and attempted to expand the anti-solicitation agreements to non-defendant companies.

Additionally, the companies knew of each other’s anti-solicitation agreements and shared confidential compensation information with each other, even though they considered each other competitors for talent. Thus, the plaintiffs presented sufficient evidence to warrant adjudication by a jury as to whether there was an overarching conspiracy and the anti-solicitation agreements suppressed true competition.

The case is No. 5:11-cv-02509-LHK.

Attorneys: Anne Brackett Shaver (Lieff, Cabraser, Heimann & Berstein) for Siddharth Hariharan, Brandon Marshall, Michael Devine, Mark Fichtner, and Daniel Stover. Anne M. Selin (Mayer Brown LLP) for Google, Inc. George A. Riley (O’Melveny & Myers LLP) for Apple Inc. Catherine Tara Zeng (Jones Day) for Intuit Inc. Gregory P. Stone (Munger Tolles & Olson LLP) for Intel Corp. Robert Addy Van Nest (Keker & Van Nest LLP) for Adobe Systems, Inc. Chinue Turner Richardson (Covington & Burling LLP) for Lucasfilm Ltd. and Pixar.

Companies: Google Inc.; Apple Inc.; Intuit Inc.; Intel Corp.; Adobe Systems Inc.; Lucasfilm Ltd.; Pixar.

Cases: Antitrust CaliforniaNews