Bloomberg News

Jobs Threatened Suit If Palm Didn’t Agree to Hiring Terms

January 23, 2013

Apple Inc. (AAPL:US) founder Steve Jobs suggested the computer maker collude with Palm Inc. to prevent the companies from hiring employees away from each other, according to a court filing in an antitrust lawsuit.

In 2007 Jobs called Edward T. Colligan, who was then Palm’s chief executive officer, to propose the arrangement and during that call suggested that if Palm didn’t agree, Apple might file patent-infringement claims against it, according to the filing yesterday in federal court in San Jose, California.

The declaration by Colligan was filed in a lawsuit claiming the iPhone maker and other technology companies violated antitrust laws by entering into agreements to not recruit each other’s employees. The other defendants in the case include Google Inc. (GOOG:US), Intel Corp. (INTC:US), Adobe Systems Inc. (ADBE:US), Walt Disney Co. (DIS:US)’s Pixar animation unit, Intuit Inc. (INTU:US) and Lucasfilm Ltd.

Colligan rejected Jobs’s proposal in an Aug. 24, 2007 e- mail saying his idea is “not only wrong, it is likely illegal,” and the threat of patent litigation is “just out of line,” according to the filing.

Jobs, who died in October 2011, responded by saying Colligan’s response wasn’t “satisfactory” to Apple because Palm was actively recruiting Apple employees.

Asymmetrical Resources

“I’m sure you realize the asymmetry in the financial resources of our respective companies when you say: ‘We will both just end up paying a lot of lawyers a lot of money.’” Jobs wrote in an e-mail, a copy of which was attached to yesterday’s filing. “My advice is to take a look at our patent portfolio before you make a final decision here.”

Kristin Huguet, a spokeswoman for Cupertino, California- based Apple, didn’t immediately respond to an e-mail yesterday after regular business hours seeking comment on the filing.

Last week, Tim Cook, Apple Inc.’s chief executive officer, was ordered to give a deposition in the private lawsuit brought on behalf of employees. The case mirrors claims the companies settled with the U.S. Justice Department in 2010 following a probe, arguing the companies agreed to refrain from placing “cold calls” to lure workers from competitors.

Robert Mittelstaedt, a lawyer representing the companies, argued at a hearing last week that the employees’ lawyers haven’t demonstrated that everyone in the proposed class was hurt by any such agreements, as is required for the group to be certified as a class.

Engineers, Sous Chefs

The proposed class of employees includes engineers, sous chefs, administrative assistants and others, because all of the employees were harmed by the companies’ conduct and will rely on the same evidence to prove their damages, lawyers for the workers said in a court filing.

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

Palm was acquired by Hewlett-Packard Co. (HPQ:US) in 2010. Michael Thacker, a spokesman for for the company, didn’t immediately respond to an e-mail yesterday after regular business hours seeking comment on the filing.

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 U.S. v. Adobe Systems, 10-cv-1629, U.S. District Court, District of Columbia (Washington).

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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