Apple, Google, Intel and Adobe to Pay $324 Million to Settle Conspiracy Lawsuit

Four big Silicon Valley tech companies reached a settlement on Thursday in a lawsuit that alleged they conspired not to poach employees from one another.

The trial had been scheduled to begin at the end of next month on behalf of 64,000 workers. Photo: Maria Guimarãe/ Flickr

The trial had been scheduled to begin at the end of next month on behalf of 64,000 workers. Photo: Maria Guimarãe/ Flickr

Apple Inc., Google Inc., Intel Corp., and Adobe Systems Inc. agreed to pay $324 million to settle an employee lawsuit over claims they conspired to suppress salaries by not recruiting one another’s workers, a person familiar with the matter said.

Terms of the settlement will not be made public until the deal is presented to the court, according to Dermody. She said she anticipates that will happen by May 27, when a trial in the case was scheduled to begin.

The settlement comes after the four companies were sued by their 64,000 tech workers in 2011, alleging they conspired to refrain from soliciting one another’s employees in order to avert a salary war. Originally, they planned to ask for $3 billion in damages at trial, which could be tripled to $9 billion under antitrust law.

The lawsuit was originally filed against seven companies, however now Disney-owned Lucasfilm and Pixar agreed last year to pay $9 million to settle their portion of the case, while Intuit agreed to pay $11 million.

The case was based largely on e-mails in which Apple’s co-founder Jobs, former Google CEO Eric Schmidt and some of their Silicon Valley rivals hatched plans to avoid poaching each other’s prized engineers.

In one email exchange after a Google recruiter solicited an Apple employee, Schmidt told Jobs that the recruiter would be fired, court documents show. Jobs then forwarded Schmidt’s note to a top Apple human resources executive with a smiley face.

Another exchange shows Google’s human resources director asking Schmidt about sharing its no-cold call agreements with competitors. Schmidt, now the company’s executive chairman, advised discretion.

Jobs allegedly told Google co-founder Sergey Brin, during a conversation described by Brin: “If you hire a single one of these people that means war.”

Interestingly, Facebook’s Sheryl Sandberg rejected Google’s invitation into the non-compete ring, and Jobs allegedly went so far as to threaten Palm executives with patent lawsuits should they not stop approaching Apple employees. Palm’s C.E.O. told Jobs that the plan was “likely illegal” and declined to play ball.

Spokespeople for Apple, Google and Intel declined to comment. Adobe, in a statement, said it “strongly denies” that it did anything wrong in its recruiting policies. “Nevertheless, we have elected to settle this matter in order to avoid the uncertainties, cost and distraction of litigation,” the company added.

An attorney for the plaintiffs, Kelly Dermody of Lieff Cabraser Heimann & Bernstein, said in a statement the deal was “an excellent resolution”. Corporate defendants in antitrust cases often agree among themselves what portion each will contribute towards a settlement, said Daniel Crane, a professor at the University of Michigan Law School.

For the four companies involved, the settlement represents just a fraction of the money that they could have had to pay-out if the court proceedings went ahead and they lost. The portion of the $324 million that each of the companies will have to pay will be a drop in the ocean when compared to the profits each company records on a yearly basis, says Independent.

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