Tech Firms Hit With Antitrust Lawsuit

Following a U.S. Justice Department investigation and a civil lawsuit, a group of software engineers employed by Adobe Systems Inc., Apple Inc., Google Inc., Intel Corp., Intuit Inc., Lucasfilm and Pixar filed a class-action lawsuit challenging those companies’ use of agreements not to “cold call” each others’ employees for recruitment purposes.

The agreements were bilateral and involved the active participation of a company under the control of Steve Jobs and/or a company whose board shared at least one member of Apple’s board of directors. The agreements allegedly were negotiated, executed, monitored and policed by senior executives for each company, who also actively concealed each agreement.

The Justice Department concluded that the companies had reached “facially anticompetitive agreements” that eliminated a form of competition and were “naked restraints of trade that were per se unlawful under the antitrust laws.”

Ruling on a motion to dismiss, the U.S. District Court for the Northern District of California held that the plaintiffs had alleged the requisite who, what, where and when of the conspiracy sufficient to withstand a motion to dismiss.

The court observed that “the bilateral agreements were not limited by geography, job function, product group or time period, and were not related to a collaboration between the defendants.

The court also held that the employees alleged an antitrust injury, explaining “that, where, as here, an employee is the direct and intended object of an employer’s anticompetitive conduct, that employee has standing to sue for antitrust injury.” In re High-Tech Emp. Antitrust Litig. (N.D. Cal., No. 5:11-cv-02509, April 18, 2012).

IMPACT: Agreements made between companies that restrict competition between their employees may violate antitrust laws.

James E. Hall, Mark T. Kobata and Marty Denis are partners in the law firm of Barlow, Kobata & Denis, with offices in Los Angeles and Chicago. Comment below or email editors@workforce.com.

The information contained in this article is intended to provide useful information on the topic covered, but should not be construed as legal advice or a legal opinion. Also remember that state laws may differ from the federal law.

Workforce Management, June 2012, p. 20 — Subscribe Now!