Enormous Class-Action Suit Filed Against Apple, Google, and More
A group of about 10,000 employees has filed a massive class-action lawsuit for lost wages against numerous tech companies, including Apple (NASDAQ:AAPL) and Google (NASDAQ:GOOG). The sum they’re hoping for? $9 billion dollars. That averages out to about $90,000 per person. The kicker is that the payout may end up happening, thanks to mounting evidence that tech employers may be involved in what AppleInsider calls a “no-hire cartel.”
Specifically, the tech companies are accused of making agreements to prevent their employees from being hired by rival companies. If these deals actually happened, they may have stifled employee wages, which is where the $9 billion comes in. If these practices are found to be anticompetitive, the lawsuit may prove successful, or result in an out-of-court settlement. Currently, the companies in question, which also include Intel and Adobe, are taking part in mediation sessions in an attempt to settle the case before it goes to trial.
Whether the companies end up paying the full $9 billion remains to be seen, but according to The New York Times, the employees “suggest that the facts are so damning against the companies — and so embarrassing — that they won’t settle for anything less than a blindingly high number.”
Steve Jobs, Apple’s former CEO, who was famous for his blunt approach to business dealings, reportedly once told a Google executive, “If you hire a single one of these people that means war.” This mindset is also responsible for a note from Apple’s human resources department that read, “Please add Google to your ‘hands-off’ list. We recently agreed not to recruit from one another so if you hear of any recruiting they are doing against us, please be sure to let me know.”
In an internal email from Google’s CEO Eric Schmidt prompted by Steve Jobs questioning why Google was trying to hire an Apple employee, Schmidt spells out the situation just as clearly. “I believe we have a policy of no recruiting from Apple and this is a direct inbound request. Can you get this stopped and let me know why this is happening? I will need to send a response back to Apple quickly so please let me know as soon as you can.” In another email about the no-hire policy to a different tech company, Schmidt asked a colleague to discuss it “verbally since I don’t want to create a paper trail over which we can be sued later.”
Apparently, the evidence gets even broader in scope from there. PandoDaily says that the lawsuit has unearthed “court documents … which show shocking evidence of a much larger conspiracy, reaching far beyond Silicon Valley.” The site has a treasure trove of documents admitted into evidence that you can view here.
This all sounds very bad, but according to lawyers interviewed by The New York Times, it’s not quite an open-and-shut case. One lawyer argued that refraining from hiring a single employee of a competitor to maintain a good relationship between companies might be permissible, but a “blanket ban on hiring as part of systemic strategy would be plainly anticompetitive.” Others weren’t so sure, and “argued that as long as there was not a reciprocal stated arrangement, companies had wide latitude about their hiring practices.”
If no out-of-court settlement is reached in the meantime, the case will go to trial next month. However, since all parties in the lawsuit are participating in settlement talks, a trial seems unlikely.