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Silicon Valley tech titans beg for more mediation time in wage-fix lawsuit

Adobe, Apple, Google, Intel heading back to bargaining table over $325m settlement

Steve Jobs, credit Apple site, screengrab

Some of the biggest names in Silicon Valley have filed a court motion asking for more time in mediation before going to court to fight former employees who claim they were put on secret no-hire blacklists by their bosses.

The class action suit claims that from 2005 the bosses of Adobe, Apple, Google, Intel, Intuit, Lucasfilm, and Pixar all agreed not to try to poach each other's staff so that wages could be kept down. Intuit, Lucasfilm, and Pixar reached a $20m settlement agreement in May, but the others have battled on.

In May, the two sides agreed to a deal that would divide $324.5m between the employees, but last month Judge Lucy Koh ruled that the staff should get more.

"There is ample evidence of an overarching conspiracy between the seven defendants," Koh wrote in her judgment, saying the amount of evidence produced so far was "likely to prove compelling in establishing the impact of the anti-solicitation agreements: a Class-wide depression of wages"

The new filing from legal eagles representing Adobe, Apple, Google, and Intel formally requests more time before the case goes to trial. Negotiations have resumed between the two sides, it says, presided over by retired federal judge the Hon. Layn Phillips. (You may remember Phillips from such earlier mediation efforts as the $765m settlement brokered between the NFL and injured former players.)

The two sides also asked Judge Koh to rule on the matter of witness lists, should the case come to court. The employees' lawyers plan to bring 37 witnesses to the stand, but complain that the companies involved have listed 70 people that "may" be called to testify, including six economics specialists to discuss why wage fixing didn't occur.

Researching so many witnesses would be massively time consuming and expensive, the employees' group argues. The companies, meanwhile, claim it's "unrealistic" to trim the numbers further, given the complexities of the case.

Steve Jobs' plan to stuff his workers

Based on the evidence submitted so far, any moves to go to an open trial would be incredibly embarrassing for the parties involved – particularly for Apple, since Judge Koh has suggested that the company's late founder Steve Jobs was the ringleader of the alleged plot.

"There is substantial and compelling evidence that Steve Jobs (Co-Founder, Former Chairman, and Former CEO of Apple, Former CEO of Pixar) was a, if not the, central figure in the alleged conspiracy," she said in last month's judgment rejecting the $324.5m settlement.

The plaintiffs claim that in 2005 Jobs formed a "gentleman's agreement" with former Adobe CEO Bruce Chizen not to poach either others' best technology talent. Jobs then brokered similar deals with Pixar and Google, it is alleged, while Eric Schmidt arranged similar deals with Intel and Inuit.

Koh noted testimony from Google cofounder Sergey Brin that Jobs had warned him "if you hire a single one of these people that means war." Google agreed to a deal, and it is claimed that Schmidt personally ordered the for-cause dismissal of two recruiters who approached people on Apple's "do not call" list, Koh said.

Some companies did stand up to Jobs' alleged threats. Palm CEO Ed Colligan was approached by Jobs after hiring an Apple staffer, and when he refused to scrap the contract, the Apple boss threatened to retaliate by suing Palm for patent violations.

"I'm sure you realize the asymmetry in the financial resources of our respective companies," states an email from Jobs that was entered as evidence in the initial hearing. "My advice is to take a look at our patent portfolio before you make a final decision here."

Facebook was also approached, although in this case it was by Google executives who were worried that the social network was causing wage inflation. Facebook's chief operating officer Sheryl Sandberg has testified that she turned them down.

Eventually word got out, and the Department of Justice began an investigation. It concluded that the no-poaching deals had indeed taken place and made the firms involved promise never to do it again. Former staff started filing lawsuits shortly afterwards.

Reaching an agreement on how much these shenanigans are going to cost the firms isn't going to be easy. During mediation, the employees suggested figures as high as $3bn, and while their lawyers settled for less initially, some of the staff were unhappy at the paucity of the payout.

If the evidence is as egregious as it looks, however, the Silicon Valley firms might be willing to settle before the case goes to trial – although based on today's filing it appears they are getting ready for legal combat. A hearing on the matter has been scheduled for September 10 in front of Judge Koh. ®

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