Judge dismisses $324.5m settlement in Silicon Valley collusion case

Ruling said to make bigger payout to employees likely

Tags: Adobe Systems IncorporatedApple IncorporatedFacebook IncorporationGoogle IncorporatedIntel CorporationUSA
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Judge dismisses $324.5m settlement in Silicon Valley collusion case US District Judge Lucy Koh said that there was "ample evidence of an overarching conspiracy" between the companies and that the proposed settlement amount did not reach standards for "reasonableness".
By  Helen Gaskell Published  August 10, 2014

A federal judge in California on Friday dismissed a $324.5m settlement deal in a case regarding an alleged collusion between the tech giants Apple, Google, Intel and Adobe, online media reports.

The lawsuit, which was filed in 2011 and affects 64,000 tech workers alleged that the companies capped wages and limited job growth by agreeing not to poach each other's employees.

The companies acknowledged that they agreed not to hire each other's staff in some cases, but disputed that they conspired to drive down wages.

The plaintiffs planned to ask for $3bn in damages, arguing that the companies' arrangement made it harder for employees to get better jobs and negotiate raises. The suit alleged that the companies made such deals from 2005 to 2009, in violation of antitrust laws.

US District Judge Lucy Koh in San Jose, California, said the class action settlement was too low, given the strength of the case against the companies and that there was "ample evidence of an overarching conspiracy" between the companies and that the proposed settlement amount did not reach standards for "reasonableness".

Koh estimated that such a settlement would allocate an average of $3,750 to each affected worker.

There is "substantial and compelling evidence" that late Apple Inc co-founder Steve Jobs "was a, if not the, central figure in the alleged conspiracy," Koh wrote. The judge provided details in evidence of anecdotes involving Jobs and other Valley executives to show why she thought the workers deserved more.

During the three-year case, private correspondence between Silicon Valley icons became public, including emails between the Apple co-founder Steve Jobs and former Google chief executive Eric Schmidt which showed the two men agreeing not to poach each other's employees.

The judge also said the plaintiffs had strong evidence to prove how the no-poaching deals impacted wages. In response to hiring pressure from Facebook, Google co-founder Sergey Brin announced a policy in 2007 of making counteroffers "within one hour" to any Google employee approached by the social networking company.

Google then tried to entice Facebook into a no-poaching deal, Koh wrote, but Facebook refused. The Facebook threat eventually led Google to alter its salary structure and increase all salaries by 10%.

A further hearing in the case is scheduled for 10 September.

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