Will Apple’s Anti-Poaching Lawsuit Settlement Offer Be Rejected?

Source: Thinkstock

Source: Thinkstock

To paraphrase a famous line from The Godfather: Part III – just when Apple (NASDAQ:AAPL) thought it was out, it gets pulled back in. Last month, it appeared that Apple, Google (NASDAQ:GOOG) (NASDAQ:GOOGL), Adobe (NASDAQ:ADBE), and Intel (NASDAQ:INTC) had finally settled a long-running class action lawsuit when the tech companies offered to pay a combined total of $324.5 million to 64,000 former employees, reports Reuters. The payout was intended to provide compensation to thousands of Silicon Valley workers who were harmed by a widespread anti-poaching conspiracy that limited their job options and salary potential. However, recent comments from U.S. District Judge Lucy Koh suggest that the case may not be over yet.

According to Reuters, Judge Koh has expressed doubts about the relatively small amount that is being paid to the workers in the case. “I just have concerns about whether this is really fair to the class,” said Koh. The current settlement offer would give workers individual payouts between $2,000 and $8,000 after lawyers’ fees are subtracted. According to court documents seen by Reuters, the plaintiffs had originally planned to seek about $3 billion in damages, which could have been tripled to $9 billion under antitrust law.

Koh’s comments suggest that she is leaning toward the point of view expressed by Michael Devine, one of the named plaintiffs in the case. Devine objected to the amount of the settlement in a letter submitted to the court. In the letter provided by The New York Times, Devine used a pointed analogy to criticize the settlement offered by the tech companies. “[I]f a shoplifter is caught on video stealing a $400 iPad from the Apple Store, would a fair and just resolution be for the shoplifter to pay Apple $40, keep the iPad, and walk away with no record or admission of wrongdoing?” wrote Devine. “Of course not, nor is such a resolution appropriate in our case.

However, a lawyer for another plaintiff noted that proceeding with the case had its own risks, such as the possibility of being overturned on appeal. “Those are very, very real risks for plaintiffs,” said attorney Kelly Dermody, according to Reuters.

Although Koh appears to be questioning the fairness of the current settlement offer from Apple and the other tech companies, she has previously approved similarly sized settlement amounts for other companies involved in the anti-poaching conspiracy. According to Reuters, Intuit (NASDAQ:INTU) and Disney’s (NYSE:DIS) Lucasfilm and Pixar units were also alleged to be part of the conspiracy, but opted to settle out of court with payouts of $11 million and $9 million, respectively. Both companies’ settlements were approved by Judge Koh.

Google attorney Robert Van Nest noted via Reuters that the current settlement offer is actually higher per employee than the amount paid by Disney and Intuit. On the other hand, the $324.5 million settlement offer “will amount to less than 1 percent of compensation for each class member over the duration of the illegal agreements,” noted Devine in his letter to Judge Koh. However, it remains to be seen if Devine can persuade Koh to give the thousands of workers affected by this case “a chance at achieving real justice.”

While Apple would undoubtedly prefer to settle this case for a lower amount in order to save money, the iPhone maker also has other reasons for wanting to bring the case to a quick conclusion. Many of the allegations of illegal no-hire agreements between the tech companies were based on email exchanges between former Apple CEO Steve Jobs and executives at other companies.  According to court documents, Google co-founder Sergey Brin described one occasion when Jobs threatened Google with “war” if the company hired some former Apple employees. Apple is understandably protective of its co-founder’s image and further publicity of these emails could prove embarrassing for the company.

Follow Nathanael on Twitter (@ArnoldEtan_WSCS)

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