A lawsuit settlement against Adobe, Apple, Google, and Intel was announced. The four tech giants were accused of holding down Silicon Valley salaries with a no hiring agreement. The out of court settlement failed to disclose specific terms. Those details will be made available May 27th.
The trial, scheduled to begin at the end of May was filed on behalf of 64,000 people employed by the four companies. The defendants accused their employers of wanting to avoid a salary war. The best way of achieving such a goal would be a no recruiting policy.
Court documents contained an email sent from Google’s CEO Eric Schmidt to Apple’s Steve Jobs. Schmidt apologized to Jobs about one of his recruiters attempting to hire an Apple employee. Schmidt promised the recruiter would be fired. Steve Jobs sent a smiley face as his reply.
Another interoffice Google email documented as evidence occurred between Schmidt and one of his human resources directors. The director wanted more information concerning Google’s no cold call agreement with competitors. Schmidt advised discretion and preferred verbal agreements. The goal was to avoid creating a paper trail that could lead to litigation.
In the settling of a pending $9 billion lawsuit, Adobe, Apple, Google, and Intel acknowledged they entered into a no hiring agreement with each other. They dispute the conspiracy charge to keep wages in Silicon Valley down.
Lucasfilm and Pixar, divisions of the Walt Disney Company, along with Intuit were accused of no hiring practices among its employees. They have already consented to an out of court settlement. Disney will paid close to $9 million, Intuit $11 million. The final settlement for Disney and Intuit is scheduled for next week.
Kelly Dermody, a plaintiff lawyer with the law firm of Lieff Cabraser Heimann & Bernstein, could provide details as of yet. Instead, Dermody said out of court settlement was an excellent resolution. There was no comment from the Adobe, Apple, Google, and Intel.
Professor Daniel Crane from the University of Michigan commented that corporate defendants often agree among themselves how much they will contribute for a settlement. One formula would be to take the portion of the 64,000 working for their companies and divide the damages among their employees.
Had the pending case gone to court, the plaintiffs intended to ask a jury for $3 billion in damages from Adobe, Apple, Google, and Intel. A successful verdict would have tripled the payment under antitrust laws. With company reputations considered more important than losing a case, the four tech giants opted for a settlement than paying a $9 billion lawsuit along with attorney fees and a enduring bad press.
Some companies in Silicon Valley refused to follow the no-hire agreement. Sheryl Sandberg, Facebook’s Chief Operating Officer, refused overtures in 2008 from Google who wanted Sandberg to stop recruiting Google employees.
Steve Jobs threatened Edward Colligan, the Chief Executive for Palms, with a lawsuit if Colligan’s company recruited Apple employees. Colligan refused to be intimidated and informed Jobs that the no recruitment policy sounded illegal.
The final settlement must still be approved by San Jose, CA District Judge Lucy Koh. All parties will disclose the details by May 27th. By settling out of court, Adobe, Apple, Google, and Intel have avoided embarrassing details of a pending $9 billion lawsuit becoming more public.
By Brian T. Yates