A court in California declined to certify as class action a lawsuit by workers alleging an illegal cartel formed by seven technology companies including Apple, Google and Intel.
The judge, however, raised the possibility that she may review her decision, after giving the software engineers leave to amend their petition in the light of new information.
The five engineers alleged in their lawsuit, individually and on behalf of a class of all those similarly situated, that Adobe Systems, Apple, Google, Intel, Intuit, Lucasfilm and Pixar, all high-tech companies with principal place of business in the San Francisco-Silicon Valley area of California, engaged in an "overarching conspiracy" to fix and suppress employee compensation and to restrict employee mobility.
The companies are said to have set up "Do Not Call" lists, putting each firm's employees off-limits to the other companies, with instructions to recruiters not to "cold call" these employees.
The employees alleged the anti-solicitation agreements centered around three of the most important figures in Silicon Valley including former Apple CEO Steve Jobs, Eric Schmidt who was then Google CEO and is now its executive chairman, and Intuit Chairman Bill Campbell, all of whom served on Apple's board of directors throughout the alleged conspiracy, according to court records.
"The Court is most concerned about whether the evidence will be able to show that Defendants maintained such rigid compensation structures that a suppression of wages to some employees would have affected all or nearly all Class members," Judge Lucy H. Koh of the U.S. District Court for the Northern District of California, San Jose division, wrote in her ruling last week.
"The Court is also concerned that Plaintiffs' proposed classes may be defined so broadly as to include large numbers of people who were not necessarily harmed by Defendants' allegedly unlawful conduct," she added, while agreeing with the employees that a class action would be a more effective way than alternate adjudication from a number of aspects including manageability.
The software engineers had proposed two classes, the first consisting of all employees, except for retail employees, corporate officers, members of the boards of directors and senior executives, that were employed at the seven companies in the U.S. on salaries during the periods under consideration. Alternately, it was proposed to have a "technical class" consisting of "persons who work in the technical, creative, and/or research and development fields" in the seven companies during the same periods. The first class would likely have over 100,000 members, while the second class was expected to have over 50,000 members.
The lawsuit has served to highlight ways in which top executives allegedly tried to make deals and impose their will on other top executives, including allegedly with threats. Jobs is said to have threatened Palm with a patent lawsuit in 2007 if it did not enter into an agreement in which the companies pledged not to hire employees from each other, according to a written affidavit made public in the court.
The seven companies were also investigated in this connection by the U.S. Department of Justice, and they settled in 2010 while admitting no wrongdoing, but agreed not to ban cold calling and not to enter into any agreements that prevent competition for employees. The employees have held that the DOJ ultimately put an end to the allegedly illegal agreements, but the government was unable to compensate the victims of the conspiracy. The plaintiffs brought the lawsuit as private attorneys general "to pick up where the DOJ left off, to seek damages for themselves and for the Class."
"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," Judge Koh wrote in her ruling, citing mails between some of the chief executives. Based on the evidence, it appears that the defendant companies recognized that eliminating the anti-solicitation agreements would lead to greater competition for employees and require enhanced incentives for retaining employees, she added.