Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Google and Ask.com allegedly conspired to suppress employee compensation through anti-solicitation agreements, (Oct 21, 2014)

By Linda O’Brien, J.D., LL.M.

Search engine provider Google conspired with question and answer format search engine Ask.com to fix and suppress employee compensation and impose unlawful restrictions on employee mobility through the use of anti-solicitation agreements, according to a complaint filed in the federal district court in San Jose, California (Arriaga v. IAC/InterActiveCorp., October 17, 2014).

Ask.com, owned by IAC/InterActive Corp., is a question and answer format web search company. Robert Arriaga was a Director of Product Management at Ask.com, who managed teams dedicated to implementing custom products, including mobile and browser applications, installer platforms, partner reporting dashboards, and analytics for large clients.

The complaint states that, in 2008, Ask.com and Google entered into a “sensitive company agreement” that placed anti-competitive and restrictive measures on the hiring capabilities of Ask.com and other companies. The agreement required a recruiting company to make a “courtesy call” to the company being recruited from to state its intent to hire any employee at director level or above. Such courtesy calls breached the employee’s privacy rights and severely deterred the companies from competitively seeking contracts with one another’s candidates.

The agreement between Google, Ask.com, and other co-conspirators entered into and implemented the sensitive company agreements with the intent of fixing compensation of employees at artificially low levels. As more companies joined the conspiracy to control labor costs, competition for skilled labor among those companies continued to drop, further suppressing compensation and mobility of the employees of those companies, according to the complaint.

In 2009, the Antitrust Division of the U.S. Department of Justice (DOJ) investigated Google’s anti-solicitation agreements with several technology companies. Google subsequently signed a settlement agreement enjoining the company from make such non-solicitation agreements in the future.

Any applicable statute of limitations allegedly was tolled with respect to the plaintiff’s claims. He did not have actual or constructive notice, or could not have discovered an anti-solicitation agreement been Google and Ask.com until May 2013, when Ask.com’s involvement was first publicly disclosed, the complaint maintained. Ask.com allegedly communicated with other co-conspirators by telephone, email, and in person meetings to further the conspiracy. Moreover, Ask.com provided pretextual or material false and misleading explanations for hiring, recruiting, and compensation decisions, and attempted to create a false impression that its decisions were independent, the complaint alleged.

The plaintiff asserts claims for violations of Section 1 of the Sherman Act, and California’s Cartwright Act and Unfair Competition Law. The action seeks declaratory and injunctive relief, treble damages, restitution, pre- and post-judgment interest, costs of suit, attorney fees, and any other just and proper relief.

The case is No. 5:14-cv-04656.

Attorneys: Jeffrey L. Hogue, Tyler J. Belong, and Bryce A. Dodds (Hogue & Belong) for Robert Arriaga.

Companies: IAC/InterActiveCorp.

News: Antitrust CaliforniaNews