Judge Certifies Class in Silicon Valley 'No-Poach' Case
SAN FRANCISCO — In one of Silicon Valley's most closely watched cases, a federal judge on Thursday certified a class of more than 60,000 skilled workers who accuse Adobe Systems Inc., Apple Inc., Google Inc. and Intel Corp. of illegally suppressing their pay through a conspiracy not to compete for each other's employees.
"This court could not identify a case at the class certification stage with the level of documentary evidence plaintiffs have presented," wrote U.S. District Judge Lucy Koh of the Northern District of California.
Her 86-page order is a victory for plaintiffs and their attorneys at Lieff Cabraser Heimann & Bernstein and the Joseph Saveri Law Firm, who have alleged an "overarching conspiracy" between 2005 and 2009 limiting competition for employees among the Valley's largest companies.
"It's a significant milestone in our prosecution," Joseph Saveri said Friday, adding, "I think it's fair to say that everything we have said in our complaint we've been able to validate."
Robert Van Nest, who argued the motion for the defendants, declined to comment.
Lieff Cabraser's Kelly Dermody and Saveri brought the suit a year after the U.S. Department of Justice's Antitrust Division filed a complaint in 2010 against the same four defendants as well as Intuit Inc., Lucasfilm and Pixar. The seven corporations settled the government suit without admitting wrongdoing but agreed to end coordination of their recruitment and hiring policies.
Last month, Intuit, Lucasfilm and Pixar agreed to pay a combined $20 million to settle the civil antitrust claims. According to the plaintiffs' court filings, the four remaining corporate defendants employed about 92 percent of the class, with Intel workers representing the largest portion of the class.
Plaintiffs' recent victory also marks a reversal of fortune for plaintiffs.
In April, Koh rejected their first push for certification, pointing to a lack of evidence that the so-called no poach pacts hurt salaries across a broad swath of employees, but she gave plaintiffs a chance to amend their motion using a trove of deposition testimony and internal company communications.
Plaintiffs trimmed their class from about 100,000 employees to approximately 60,000, focusing on the most highly skilled workers—the so-called technical class, consisting of employees from computer programmers and engineers to digital and graphic artists.
At an August hearing on certification, Koh said that the evidence in the case was stronger. Still, she seemed at least partially persuaded by arguments made by Google attorney Van Nest of Keker & Van Nest, who emphasized a wide variation in pay across the companies—a fact, he argued, that showed signs of healthy competition for workers rather than the rigid pay structure plaintiffs had alleged.
Ultimately, Koh found the new evidence convincing, citing in her order declarations and depositions of executives and emails exchanged among the heads of those companies. The order makes several references to the role played by deceased Apple founder Steve Jobs, who emerges from her order as an aggressive enforcer, if not ringleader, of the conspiracy to suppress employee wages.
Testimony that she cites depicts Jobs as "very adamant about protecting his employee force" from other defendants. In fact, according to a declaration by Edward Colligan, former president and CEO of Palm Inc., Jobs threatened Colligan that if he did not agree to the pact, "Palm could face lawsuits alleging infringement of Apple's many patents." Colligan refused, and Palm was not part of the alleged conspiracy.
Referencing that declaration and similar allegations, Koh wrote, "Plaintiffs' evidence suggests not only that the antisolicitation agreements eliminated a key tool of recruitment, cold calling, but also that the impact of this elimination affected the entire technical class."
Koh's order also emphasizes the class' satisfaction of new requirements imposed by recent U.S. Supreme Court cases, including Walmart v. Dukes, Comcast v. Behrend and Amgen v. Connecticut Retirement Plans.
Kelly Dermody, a partner leading the case for Lieff Cabraser, called Koh's review of those precedents "comprehensive and careful."
"She needed to see evidence that we weren't just making inferences" about common harms across the class, said Dermody.
Cohen Milstein partner Joseph Sellers, who represented plaintiffs in Dukes, said he thought Koh's order was "a fair interpretation of the legacy of the Walmart and Comcast decisions. I think she's wisely making reference to the Supreme Court's authority. And that this case found that those requirements were satisfied."
Referencing Dukes and Comcast in light of Koh's order granting certification, Sellers added, "They clearly do not spell the end of class actions, as some have predicted."
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