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CLASS ACTION APPROVED FOR WORKERS TO SUE SEVEN HIGH-TECHNOLOGY EMPLOYERS

April 25, 2012

Seven large technology employers must defend accusations in a class action that they unlawfully conspired to fix employee compensation through the use of bilateral agreements, the U.S. District Court for the Northern District of California ruled on April 18, declining to dismiss employees’ claims under Sherman Act Section 1 (In re High-Tech Emp. Antitrust Litig., N.D. Cal., No. 5:11-cv-02509, 4/18/12).

Following a Justice Department (DOJ) investigation and civil suit involving the same conduct, a group of software engineers employed by certain technology companies in California initiated a class action challenging the companies’ use of agreements not to “cold call” each others’ employees for recruitment purposes.

DOJ concluded that the defendants—Adobe Systems Inc., Apple Inc., Google Inc., Intel Corp., Intuit Inc., Lucasfilm Ltd., and Pixar—had reached “facially anticompetitive” agreements that eliminated a form of competition and were “naked restraints of
trade that were per se unlawful under the antitrust laws.”

The agreements were bilateral and involved the active participation of a company under the control of the late Steven P. Jobs and/or a company whose board shared at least one member of Apple’s board of directors. The agreements allegedly were negotiated, executed, monitored, and policed by senior executives for each company, who also actively concealed each agreement.

From 2005 to 2007, the employees alleged, each pair of companies entered into nearly identical “Do Not Cold Call” agreements, whereby they agreed not to actively recruit employees of the other company. In several cases, when one company suspected violations of the agreement by another, the breaching company responded by changing its conduct to conform to the agreement.

Jobs also allegedly proposed an identical agreement between Apple and Palm Inc. to Palm’s Chief Executive Officer Edward T. Colligan, who responded that such an agreement “is not only wrong, it is likely illegal.”

This conduct, the employees alleged, violated Section 1 of the Sherman Act; California’s Cartwright Act (Cal. Bus. & Prof. Code § 16720); California Business & Professional Code Section 16600; and California’s Unfair Competition Law. They sought damages,
restitution, costs, attorneys’ fees, and pre-judgment and post-judgment interest.  04.25.2012