Google, Apple To Face Employee-Poaching Antitrust Case

A US district court judge has denied a motion put forward by Google, Apple and five other Californian technology companies to dismiss an antitrust lawsuit.

The case concerns an alleged conspiracy in which the defendants negotiated and enforced ‘Do Not Cold Call’ agreements, reducing competition in the high-tech job market and suppressing potential wage increases for employees.

High-tech conspiracy

Between 2005 and 2007, Google, Apple, Adobe, Pixar, Lucasfilm, Intel and Intuit brokered six bilateral agreements that would prevent any cold calling and aggressive acquisitions of employees from rival companies.

In normal practice, employees at the end of these calls could expect increased salaries either from the enquiring company or the current employer, who would seek to retain them. Former engineers from those companies say their bosses artificially cut competition and mobility options by not making those calls. A 2010 investigation by the Department of Justice echoed similar claims.

“The fact that all six identical bilateral agreements were reached in secrecy among seven Defendants in a span of two years suggests that these agreements resulted from collusion, and not from coincidence,” said Judge Lucy Koh in a ruling on Wednesday.

The defendant companies argued in their move for dismissal that the plaintiffs failed to provide sufficient facts to indicate a conspiracy and failed to show a “meeting of minds”. The judge dismissed these defences by stating that the secrecy and effect of the agreements was enough to restrict a free employment market.

Evidence produced by the plaintiffs shed light on communications between the late Steve Jobs and then-Google CEO Eric Schmidt about a breach of the ‘Do Not Cold Call’. Furthermore, Judge Koh identified the influence of Jobs, Schmidt and Arthur Levinson in arranging many of the agreements. All three were members of the Apple board, while Schmidt and Levinson sat on Google.

Jobs is also highlighted for his position on the Disney board, helping to broker the deal with Pixar, and he had allegedly tried to arrange a ‘Do Not Cold Call’ deal with the CEO of Palm, suggesting that the agreements were formed at the highest levels of companies.

The defendant companies also stated that the possibility of such a conspiracy was implausible as only six of 21 possible ‘Do Not Cold Call’ pairings were enacted. Judge Koh dismissed this as even six arrangements prevented some mobility and competition.

Joseph Saveri, the lawyer for the plaintiff engineers, said after the ruling that the case would be on track for a June 2013 trial.

“This is a significant step forward,” he said in an email to Reuters.

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