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Did Apple Mastermind Anti-Poaching Deal? Lawsuit Says it Did

John Zappe
May 6, 2011, 1:58 pm ET

The other shoe is dropping in last year’s anti-poaching case the U.S. Department of Justice brought against six big-name tech firms, and it is falling most heavily on Apple.

The six firms — and a seventh,  Lucasfilm — are facing a class action suit claiming their agreement not to pursue each other’s employees depressed wages and was a violation of California antitrust law.

According to the suit filed Wednesday, Google, Adobe, Intel, Apple, Pixar, and Intuit (the six firms, which were sued and settled with the DoJ), and Lucasfilm agreed not to cold-call each other’s skilled workers. Doing so, the lawsuit alleges, denied workers information about job opportunities, pay scales, and reduced their ability to negotiate.

That much the Justice Department claimed when it settled with the six companies it sued. But it alleged then that the conspiracy was a series of interconnected agreements negotiated between companies. Now, the suit suggests Apple and its CEO Steve Jobs was behind the scheme. Claims the suit:

Defendants’ conspiracy consisted of an interconnected web of express agreements, each with the active involvement and participation of a company under the control of Steve Jobs (currently CEO of Apple) and/or a company that shared at least one member of Apple’s board of directors.

In the DoJ settlement, the six firms agreed to refrain from “entering, maintaining or enforcing any agreement that in any way prevents any person from soliciting, cold calling, recruiting, or otherwise competing for employees. The companies will also implement compliance measures tailored to these practices.”

In announcing the settlement in September, the Justice Department didn’t allege a single grand conspiracy. For instance, the DoJ said that in 2005 Apple and Adobe agreed not to cold call each other’s employees. Thereafter, Google and Apple agreed to do the same, and so on among the six firms.

Detailing the individual arrangements, the suit, however, pointedly says:

Defendants entered into, implemented, and policed these agreements with the knowledge of the overall conspiracy, and did so with the intent and effect of fixing the compensation of the employees of participating companies at artificially low levels. For example, every agreement alleged herein directly involved a company either controlled by Apple’s CEO, or a company that shared a member of its board of directors with Apple.

Joseph R. Saveri, attorney with the firm that brought the case, Lieff Cabraser Heimann & Bernstein, in a statement said, ”We estimate that because of reduced competition for their services, compensation for skilled employees at Adobe, Apple, Google, Intel, Intuit, Lucasfilm, and Pixar was reduced by 10 to 15 percent.”

The companies managed that, the suit claims, because, ”The recipient of the cold call has an opportunity to use competition among potential employers to increase her compensation and mobility.” Others benefit even if they don’t get called when their co-workers share information about the opportunity and the pay range.

The Justice Department made almost exactly the same point in its announcement of the settlement in September. The agreement among the companies not to cold-call each other’s workers “eliminated a significant form of competition to attract highly skilled employees, and overall diminished competition to the detriment of affected employees who were likely deprived of competitively important information and access to better job opportunities.”

The suit names just one plaintiff, former Lucasfilm software engineer Siddharth Hariharan. However, if the court agrees to certify the class, it could potentially involve tens of thousands of participants.

Intel said it planned “a vigorous defense.” Lucasfilm called the action “meritless.” None of the other companies has yet issued a statement. Adobe and Intuit told CNET they wouldn’t comment.

This article is provided for informational purposes only and is not intended to offer specific legal advice. You should consult your legal counsel regarding any threatened or pending litigation.

  1. Martin Snyder

    The US Supreme Court really does not like Class Actions, seems of any sort…but this could leave a real mark.

    Interested to see what “compliance” activities are going to look like. Sounds good for third-party firms if you ask me, whose demise is once again a topic du jour….

  2. Gerry Crispin

    Lessons learned.

    Most of us in current or past lives successfully penetrated a competitor and wooed talent to the extent that we were told to ‘lay off’ for awhile.

    More often then not we did’t know ‘who called who’ as the orders just came down the org chart.

    Occasionally, it was more direct. I was named in a suit 25 years ago by 3M for taking too many scientists with adhesives expertise for a scale-up group I was staffing within J&J. Fortunately, our corporate lawyers saw it as a challenge and we demonstrated quickly it wasn’t about stealing proprietary info but instead developing our own formulations. (On the other hand, I didn’t go back to that well anytime soon).

    This case is something different and shows a serious disregard for a free, two-way marketplace that should not be tolerated.

  3. Here Comes the Anti-Trust Lawsuit — Finally -

    [...] this havoc resulted from this in which the U.S. Justice Department settled in 2010 with Google, Apple, Adobe, Intel, Walt Disney’s Pixar, and Intuit for not “cold calling” one another’s [...]

  4. Maureen Sharib

    Few in the recruiting industry understand what a huge impact this is going to have.
    I can’t wait!

    Maureen Sharib
    Phone Sourcer
    513 899 9628
    I just can’t resist:
    Call us – we can help protect your organization from this kind of “oversight.” Uhhh… I really want to say “undersight” but that’s another issue…or is it?

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