Apple, Google, Intel, and Adobe have appealed a federal court's dismissal of a settlement in a landmark anti-poaching case. In their appeal, the companies accuse Judge Lucy Koh of making a "clear legal error" in rejecting the settlement.
The class action case was brought against several Silicon Valley giants in 2011, accusing them of entering into illegal agreements not to recruit—or poach—employees from one another. I say accused, but the reality is that the companies involved had all settled charges with the DOJ over those agreements in 2010.
While the DOJ settlement ended the anti-poaching agreements, a class of Silicon Valley workers sued the tech giants in 2011 arguing that the agreement had artificially held down wages when it was in effect.
The suit was quickly given class status, and discovery in the case revealed lots of emails between the late Steve Jobs, former Google CEO Eric Schmidt, and others not only talking about the agreement, but talking about not talking about it lest they leave a paper trail that will come back to haunt them. Which it did.
Estimates reached into the billions on what it might cost the companies involved if they took the case to trial and lost, and so it was somewhat of a surprise when a settlement for US$325 million was announced in April of 2014.
Judge Lucy Koh—the same Judge Koh who has overseen two patent infringement cases between Apple and Samsung—questioned the value of that settlement in June, and then outright rejected it in August. Judge Koh said that the evidence was stacked against Apple, Google, and the other defendants, and that the settlement didn't end up "within the range of reasonableness."
In other words, she believed that the defendants were all caught red handed and should have to pay for their misdeeds to be fair to the class affected by the hiring agreements. She cited a settlement with Intuit and Disney (who was named because of Pixar), where individuals in the class received more compensation per person than the settlement with Apple, Google, Intel, and Adobe would yield.
Judge Koh argued that the settlement would have to top $380 million to even match that settlement. That's where the attorneys for the defendants pounced.
In court documents covered by Reuters, they wrote that Judge Koh, "committed clear legal error [and] impermissibly substituted the court's assessment of the value of the case for that of the parties who have been litigating the case for more than three years."
They added that Judge Koh was being "rigid and formulaic."
In the meanwhile, both sides in the case have resumed mediation while the appeal works its way through the courts. There will be another hearing in front of Judge Koh (not related to the appeal) on September 10th.
It's an interesting case in that it's hard to see why the plaintiffs see any risk of losing at trial. The items that have been revealed by discovery and the 2010 agreement with the DOJ truly paint an open-and-shut case against the companies involved.
In fact, it's a testament to the abilities of the defendant's attorneys that they were able to wrangle such a small settlement in the first place. Then again, I'm no attorney, and it will be fascinating to see what an appellate court does with Judge Koh's ruling.
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