US lawsuit against Microsoft over employee no-poach deals dismissed

A court in California dismissed the complaint filed by former employees

A lawsuit against Microsoft that charged it with entering into restrictive hiring agreements with other companies has been dismissed by a court in California, with the judge declaring that the employees had waited too long to file the suit.

The lawsuit followed up on a class-action suit filed by hi-tech employees against Intel, Google, Apple, Intuit, Lucasfilm, Pixar and Adobe Systems, which charged these companies with engaging in an “overarching conspiracy” to fix and suppress employee compensation and to restrict employee mobility by introducing measures such as "do-not-cold-call" lists.

Judge Lucy Koh of the U.S. District Court for the Northern District of California approved in September a US$415 million settlement between the tech workers and Intel, Google, Apple and Adobe. Intuit, Lucasfilm and Pixar had earlier settled with the workers.

The seven tech companies had earlier settled similar charges in 2010 with the U.S. Department of Justice while not admitting any wrongdoing, but agreed not to ban cold calls and enter into any agreements that prevent competition for employees.

The suit against Microsoft appeared to refer to a memo, which named a large number of companies that allegedly had special arrangements with Google to prevent poaching of staff. The document was filed as an exhibit on May 17, 2013 in the main class action suit.

Filed last year by former employees Deserae Ryan and Trent Rau, the suit against Microsoft charged, among other things, that Microsoft and other companies entered into anti-solicitation and restricted hiring agreements without the consent or knowledge of its workers. The plaintiffs said that the agreements that involved Microsoft were not disclosed publicly until the filing of May 17, 2013.

Judge Koh, however, dismissed the first complaint as untimely and gave the workers an option to file an amended complaint in which the workers cited 25 companies with whom Microsoft had entered into anti-solicitation agreements. It is the amended complaint that has now been dismissed with prejudice, which bars the workers from refilling on the same claims.

The workers also alleged in the second complaint that between 2007 and 2013, “Microsoft continued to modify and add to its Hands-Off List as it continued to renew and engage in new Secret Agreements with over approximately 75 different companies, most of which were added to Microsoft’s Hands-off List.” None of these 75 companies were named.

In her order, Judge Koh said that the DOJ had informed Microsoft that it would not pursue a case against it on Oct. 29, 2014, nearly two weeks after the workers filed the action. "Although the government complaints relate to non-solicitation agreements by technology companies in the early 2000s, they do not relate to any non-solicitation agreements with Microsoft," she wrote, while denying "tolling" or a time set-off on the statute of limitations on the Microsoft workers' suit.

Judge Koh also ruled out emails that were presented as evidence of fraudulent concealment by Microsoft of its hands-off lists for hires. " Rather than indicate that the Hands-Off List should be kept secret, these emails show Microsoft employees documenting and readily discussing the existence and content of the Hands-Off List," Judge Koh wrote.

Microsoft had argued that all of the alleged non-solicitation agreements were unilateral agreements in which it agreed not to solicit from its partners in order to “protect Microsoft’s business partners, customers, vendors, and affiliated companies from Microsoft’s recruiting efforts," according to court records. One of the companies in the list of 25, for example, is Microsoft's public relations firm.

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John Ribeiro

IDG News Service
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