Last October, Judge Lucy Koh cleared the way for a class action lawsuit against a handful of tech companies accused of fixing wages and halting active employee recruiting. The companies involved in the matter include Apple, Google, Intel, Intuit, Adobe, Pixar, and Lucasfilm. The companies allegedly worked together from 2005 to 2009. A recent ruling from the U.S. Circuit Court of Appeals upheld Koh’s initial ruling.
A lawsuit in the works
A class action lawsuit could give the defendants a significantly higher penalty than if each company was sued separately. The tech companies made the argument that it would not be fair to hear a class action lawsuit as the salaries vary from employee to employee. They also mentioned the evidence as presented by the plaintiffs isn’t very persuasive. Koh still disagreed with their arguments explaining, “Defendants cannot rebut the voluminous documentary evidence from Defendants’ internal files and the expert reports that rely on this documentary evidence.”
Michael Mauboussin: Here’s what active managers can do
A half redacted court document offered examples of the companies and one particular example showed Google Inc (NASDAQ:GOOG)’s reaction to Facebook Inc (NASDAQ:FB)’s cold calls to their engineers. CNET elaborated, “Google’s approach involved asking its competition to stop as an option, in addition to considering giving employees an incentive to stay or launching an “aggressive campaign” to go after Facebook’s employees in response. When then Google Recruiting Director Arnnon Geshuri found out that Facebook was cold-calling Google Inc (NASDAQ:GOOG) engineers in March 2008, Geshuri’s first response was to call Facebook Inc (NASDAQ:FB) COO Sheryl Sandberg and ask her to stop and establish “a mutual ‘Do Not Call’ agreement,” according to the court document.”
Google’s involvement with the scheme
Google’s competition with Facebook Inc (NASDAQ:FB) failed to stop and Bill Campbell (Google Advisor) wanted to contact either Sandberg or Mark Zuckerberg to come with a truce. Facebook, which remained uninvolved with the matter, continued to poach employees. This led Google to increase salaries and add bonuses. Apple Inc. (NASDAQ:AAPL) followed Google Inc (NASDAQ:GOOG)’s route and ended up paying more to their employees.
Apple Inc. (NASDAQ:AAPL) will meet with their codefendants in court later on this year.