Judge Questions Settlement in Silicon Valley No-Poaching Case

A federal judge Thursday strongly questioned a $324 million settlement in a class-action lawsuit against Apple Inc., Google Inc., Adobe Systems Inc. and Intel Corp. alleging illegal hiring practices, leaving it unclear whether she will sign off on the deal later this year.

“I have concerns,” U.S. District Court Judge Lucy Koh said during a back-and-forth with lawyers that lasted nearly two hours. “I would like to think about it further, but I do have concerns about whether this is a good settlement for the plaintiffs.”

The settlement, which gives approximately 64,000 workers involved an average of a few thousand dollars each, was a big victory for the companies, allowing them to avoid an embarrassing trial while sustaining a relatively minor financial hit. Apple, for example, has nearly 500 times as much in its cash reserves as the total settlement amount.

The proposed settlement has been called unjust by one of the four named plaintiffs in the 2011 lawsuit. Michael Devine, a former Adobe engineer, wrote a letter to Koh last April bitterly attacking the deal, which he noted was barely one-tenth of the $3 billion in compensation the 64,000 workers could have made had the collusion not occurred.

Outside court Thursday, he reiterated his opposition.

“A lot of people care about this case, so I’m not surprised by all the reaction to my letter,” Devine said. “I can’t predict the likelihood of what may or may not happen now, but I have confidence in the judge.”

The deal could mark the final chapter in a high-profile Silicon Valley legal skirmish that began after the five original plaintiffs, one of whom has died, accused a group of tech companies of secretly colluding between 2005 and 2009 to keep their hands off one another’s work forces. Along the way, embarrassing revelations surfaced in court documents, including emails implicating high-profile executives like Apple co-founder Steve Jobs, who warned Google co-founder Sergey Brin against recruiting Apple workers.

In their lawsuit, the plaintiffs describe an intricate thicket of backroom deals among executives like Jobs and former Google CEO Eric Schmidt. Not only was this illegal, they argued, but the collusion stifled hiring in the industry while acting as a damper on pay and benefits for tech workers in a red-hot jobs market.

Some of the companies named in the original lawsuit, such as eBay and Intuit, settled separately. All the companies settled an antitrust case on the same issue filed by the U.S. Justice Department in 2010, agreeing not to restrict recruiting or hiring from their rivals.

This article appeared in print in the June 23rd, 2014 edition of Hamodia.