US appeals court lets class-action status stand in Silicon Valley collusion case

The suit alleges companies including Google and Apple suppressed wages by agreeing not to hire each other's workers

A U.S. appeals court has cleared the way for thousands of Silicon Valley workers to proceed as a group with a lawsuit alleging that technology companies including Google and Apple colluded to drive down employee compensation.

The U.S. Court of Appeals for the 9th Circuit on Tuesday denied a petition from the technology companies seeking to appeal a previous ruling by U.S. District Court Judge Lucy Koh that gives the case class-action status. If the case proceeds to trial, now set for May 27, and the companies lose, they could be ordered to pay more than US$9 billion in damages to cover lost wages to about 60,000 employees represented in the lawsuit who contend that the companies forged illegal agreements to not hire each other's workers, in violation of federal antitrust laws.

The case pits a number of Silicon Valley software engineers against their employers, over what the employees say amounted to "anti-poaching" agreements that drove down their compensation and promoted unfair competition.

The case dates back to 2011 when five engineers alleged that Adobe Systems, Apple, Google, Intel, Intuit, Lucasfilm and Pixar engaged in an "overarching conspiracy" to fix and suppress employee compensation and to restrict their mobility. Lucasfilm, Pixar and Intuit have since settled with the plaintiffs.

A major component of the case is the companies' alleged use of "Do Not Call" lists, which plaintiffs say put the firms' employees off limits to the other companies, with instructions to recruiters not to call the engineers about possible jobs.

The alleged agreement not to solicit each other's employees is in violation of the Sherman Antitrust Act and the Clayton Antitrust Act, the plaintiffs contend.

Emails sent between former Apple CEO Steve Jobs and then-Google CEO Eric Schmidt concerning the alleged collusion make up some of the evidence in the case, and those exchanges were cited by Judge Koh in her ruling granting the case class-action status.

"We have a voluminous record of evidence supporting the claims," said Kelly Dermody, an attorney at Lieff Cabraser Heimann & Bernstein representing the plaintiffs. She added that she felt confident about taking the case to trial.

Last April, the U.S. District Court for the Northern District of California declined to certify the lawsuit as class action, but in October Judge Koh granted that status.

"At trial, the court predicts that this evidence is likely to be among the most persuasive to a jury as it illustrates and confirms many of the actual dynamics at play within defendants' firms," she said in the ruling.

The technology companies sought to appeal that decision, but Tuesday's ruling from the appeals court lets stand Koh's October order.

Neither Google, Apple, Adobe, nor Intel could be reached for comment.

Zach Miners covers social networking, search and general technology news for IDG News Service. Follow Zach on Twitter at @zachminers. Zach's e-mail address is zach_miners@idg.com

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Zach Miners

IDG News Service
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