Tech Staff Take Silicon Valley Giants to Court over Alleged Pacts to Limit Pay

Silicon Valley’s technology giants will enter the court room next month to face the trial on claims of conspiring to keep their employees down.

The defendants used this information to accuse some of the class representatives of falsifying their qualifications when seeking new employment, including misrepresenting dates of previous jobs in one case and inflating a previous salary by 15 per cent in another. Photo: theseoduke/Flickr

The defendants used this information to accuse some of the class representatives of falsifying their qualifications when seeking new employment, including misrepresenting dates of previous jobs in one case and inflating a previous salary by 15 per cent in another. Photo: theseoduke/Flickr

Some of the biggest players in the tech world –  Steve Jobs, Eric Schmidt, Sergey Brin, Bill Campbell –  are being sued for alleged collusion to suppress their wages, after they signed a series of “no-poach” pacts barring them from recruiting each other’s staff.

The antitrust lawsuit pits 64,613 software engineers against Google Inc., Apple Inc., Intel Corp. and Adobe Systems Inc. It accuses the companies of agreeing not to solicit one another’s employees in a scheme developed and enforced by Steve Jobs of Apple. In their drive for control, the companies undermined their employees’ opportunities to get better jobs and make more money, the court papers say.

The plaintiffs say the lost wages in the case add up to $3-billion. If a jury agreed, that sum would be tripled under antitrust law. Three smaller defendants settled last year for $20-million, but that was before the suit won the all-important class-action certification, reports GlobeandMail.

According to one email, sent by Google’s co-founder, Sergey Brin, to his staff, Apple’s then chief executive, the late Steve Jobs, phoned him personally to warn the web search company off recruiting Apple’s employees.

Mr. Jobs told him, “If you hire a single one of these people, that means war,” Mr Brin wrote in a memo to his team in February 2005. In his view, Mr Jobs was being “just kind of crazy”.

A 43-year-old programmer who helped set in motion a class-action lawsuit against the companies and became one of its five class representatives will not be present in the San Jose courtroom. He was shot and killed by the police last December.

The programmer, Brandon Marshall, died in circumstances that remain murky. He was agitated and combative, escalating a confrontation with sheriff’s deputies by assaulting one, who shot him in the chest. Marshall’s death is just one of many ways in which the case has shaped up to be a Silicon Valley drama unlike any other.

The original suit also named Pixar, Lucasfilm and Intuit, and the class contained 150,000 employees. However, those companies have agreed to settlements totaling $20 million, pending approval from a judge.

In recently released documents, the companies also attempted to bring Facebook on board, but the social media giant refused to play ball. According to U.S. District Judge Lucy Koh, Intuit chairman and partnership broker Bill Campbell “unsuccessfully sought to expand Google’s anti-solicitation agreements to Facebook.”

The suit claims that over the course of the agreement, the technology companies became worried about the talent that Facebook was poaching from others in Silicon Valley. Google co-founder Sergey Brin wrote to Google employees in 2007, saying:

“The Facebook phenomenon creates a real retention problem, I now realize, not just because of FB’s direct hiring, but the more insidious effect that everyone wants to start the next Facebook or get rich by having a popular fb app.”

In August 2008, Mr. Campbell sought to address a new challenge, as upstart Facebook raided talent from its neighbors. “Who should contact Sheryl ( Sandberg ) or Mark ( Zuckerberg ) to get a cease-fire? We have to get a truce,” Mr. Campbell wrote to Google executives in an email.

Facebook balked. “I declined at that time to limit Facebook’s recruitment or hiring of Google employees,” Ms. Sandberg, Facebook’s chief operating officer, said in a court statement provided for the suit.

The businesses do not expect the final bill to reach anything like this, but they are fully aware of the reputational cost of the row. They tried and failed to have the case thrown out of court, and to ensure there was no incriminating evidence.

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