In 2010, several high-profile tech companies -- including Apple, Google, Adobe, Intuit, Lucasfilm, Intel and Pixar -- settled a suit with the US Justice Department regarding anti-poaching agreements. The suit alleged that the aformentioned companies, from 2005 to 2009, agreed not to recruit employees from one another.
One year later, five software engineers filed a class action lawsuit against those same companies alleging that the anti-poaching agreements lessened their employment opportunities and ultimately affected their negotiation power, resulting in lower salaries.
Originally covered by Reuters, US District Judge Lucy Koh this past Friday ruled that the case can't proceed as a class action. At least not yet.
While Koh decided against class action certification for the time being, that may change once the plaintiffs address Koh's concern that the proposed class group as defined by the plaintiffs is too broad.
"Plaintiffs' examples, though compelling," Koh writes in her ruling, "may not be sufficient to show that all or nearly all class members were affected by the anti-solicitation agreements without additional documentary support or empirical analysis."
Bloomberg later specified that the proposed class group put forth by the plaintiffs encompasses more than 160,000 employees.
The chronology of the anti-poaching agreements, along with who partnered up with whom, can be gleaned from the graphic below.
Regardless of whether or not the case proceeds as a class action, the plaintiffs appear to have a strong case as Koh has found the evidence introduced thus far to be both persuasive and damning.
Koh's ruling reads in part:
Indeed, the sustained personal efforts by the corporations' own chief executives, including but not limited to Apple CEO Steve Jobs, Google CEO Eric Schmidt, Pixar President Ed Catmull, Intuit Chairman Bill Campbell and Intel CEO Paul Otellini, to monitor and enforce these agreements indicate that the agreements may have had broad effects on defendants' employees.
Koh specifically cited a 2007 email sent from former Pixar president Ed Catmull to the head of Disney Studios wherein Catmull alludes to practices geared towards keeping salaries down.
"We have avoided wars up in Norther[n] California because all of the companies up here -- Pixar, Dreamworks and couple of smaller places -- have conscientiously avoided raiding each other," the email reads.
One example involving Apple was first brought to light during the initial 2010 investigation. There, it was was revealed that Google in 2007 was recruiting an Apple engineer. Upon getting wind of this, Steve Jobs fired off an email to then Google CEO Eric Schmidt which read, "I would be very pleased if your recruiting department would stop doing this."
Schmidt reportedly forwarded the message along and implored employees to "get this stopped."
Another example involving Jobs transpired when the Apple co-founder emailed former Palm CEO Ed Colligan and threatened legal action if Palm continued to recruit and hire Apple employees.
Colligan indicated that Palm wasn't intimidated by Apple's threats and fired off the following email response to Jobs:
Your proposal that we agree that neither company will hire the other's employees, regardless of the individual's desires, is not only wrong, it is likely illegal. [...] Palm doesn't target other companies -- we look for the best people we can find. l'd hope the same could be said about Apple's practices. However, during the last year or so, as Apple geared up to compete with Palm in the phone space, Apple hired at least 2 percent of Palm's workforce. To put it in perspective, had Palm done the same, we'd have hired 300 folks from Apple. Instead, to my knowledge, we've hired just three.
It'll certainly be interesting to see what other types of evidence, if any, come to the surface as the case proceeds.
In the meantime, Apple expectedly had no comment on the matter while a spokesperson for Google stated that the company has "always and aggressively recruited top talent."