Bloomberg News

Apple, Google Poaching Case Will Go Forward, U.S. Judge Says

January 31, 2012

(Updates with plaintiffs’ lawyer in fifth paragraph.)

Jan. 26 (Bloomberg) -- Google Inc., Apple Inc. and five other technology companies must face a lawsuit claiming they violated antitrust laws by entering into agreements not to recruit each other’s employees, a federal judge said.

U.S. District Judge Lucy H. Koh in San Jose, California, said today that even if she dismisses some claims, she will give the plaintiffs a chance to amend their complaint and re-file it. Intel Corp., Adobe Systems Inc., Walt Disney Co.’s Pixar animation unit, Intuit Inc. and Lucasfilm Ltd. are also named as defendants.

“They still have an antitrust claim that’s going forward so I don’t want to see any obstruction on discovery,” she told lawyers during a hearing.

The case is a private lawsuit brought on behalf of employees that mirrors claims the companies settled with the U.S. Justice Department in 2010 following a probe. The companies agreed to refrain from placing “cold calls” to lure workers from competitors, the government said at the time.

Koh didn’t take issue with the allegations about the agreements between individual companies, Joseph Saveri, a lawyer for the plaintiffs, said in an interview after the hearing. Instead, Koh has questions about “how it ties together,” or claims of an over-arching conspiracy between all the companies, he said.

Possible Damages

The ruling today requires the defendants to produce documents describing the agreements and permits lawyers to take depositions, Saveri said. “We get to see what really happened,” he said, adding that damages in the case could amount to hundreds of millions of dollars.

While the accord “may have exposed defendants’ illegal antitrust violations and put an end to them,” the agreements “did not provide any compensation to the employees defendants harmed,” lawyers for the plaintiffs said in a court filing.

Google said in a statement that is has “always actively and aggressively recruited top talent,” declining to comment further.

George Riley, a lawyer for Apple, and Robert Mittelstaedt, an attorney for Adobe, declined to comment immediately after the hearing.

Zenia Mucha, a Disney spokeswoman, wasn’t immediately available for comment after regular business hours.

Intel spokeswoman Laura Anderson, Intuit spokeswoman Sandra Corradetti, and a representative at Lucasfilm didn’t immediately return calls seeking comment on Koh’s ruling after regular business hours.

Restrained Competition

In the 2010 settlement, the Justice Department said the companies kept do-not-call lists to avoid such recruiting, and that such agreements restrained competition, which hurt employees.

The government said that in May 2005, senior Adobe and Apple executives agreed not to cold-call each other’s employees. Adobe was placed on an internal Apple “do-not-call” list, while Adobe put Apple on a list of “companies that are off- limits,” according to the department.

Apple and Google had each other on internal do-not-call lists starting in 2006, according to the department. The next year, Apple and Pixar agreed not to call each other’s staffs, and Google entered into no-cold-calling agreements with Intel and Intuit, the department said.

The San Jose case is In Re High-Tech Employee Antitrust Litigation, 11-2509, U.S. District Court, Northern District of California (San Jose). The previous case is United States v. Adobe Systems, 10-cv-1629, U.S. District Court, District of Columbia (Washington).

--With assistance from Sara Forden and Jeff Bliss in Washington. Editors: Peter Blumberg, Michael Hytha

To contact the reporter on this story: Joel Rosenblatt in San Francisco at jrosenblatt@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net


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