updated 09:29 pm EDT, Mon May 12, 2014
Says $324 million offer too low, was not informed of deal meetings
The named class representative in the lawsuit brought against five top tech firms has filed a letter of complaint with the presiding judge in the case, US District Court Judge Lucy Koh, protesting the proposed $324 million settlement on charges of illegal conspiracy to stop the firms poaching each others' employees, thus potentially denying opportunity and capping wages.
The original case was brought by some Silicon Valley engineers and legal firms after the discovery of a "gentlemen's agreement" of no poaching of each other's employees made between Google (whose CEO, Eric Schmidt, was on Apple's board at the time) and Apple's Steve Jobs. The agreement, which eventually expanded to Adobe Systems, Intel, Pixar and some smaller firms, was not intended to stop employees from voluntarily changing employers among those companies, but rather to halt aggressive employee recruiting of current employees that the companies considered disruptive.
The engineers, on the other hand, saw the agreement as a conspiracy to keep wages low by limiting opportunities for talented candidates to sell their services to the highest bidder. Although there was no evidence of it ever actually happening, the plaintiffs pointed to an email from Jobs that threatened retaliation if Google continued to poach Apple engineers. Such an agreement would be illegal.
The class representative and one of the four plaintiffs in the case, Michael Devine, complained to the judge in his letter that he was not informed of meetings by the court-appointed plaintiff attorneys that produced the proposed settlement, calling the $324 million figure "grossly inadequate." The current lawsuit asks for $3 billion in damages, which under federal law could be tripled to as much as $9 billion if the court awarded the full amount and found that the agreement among the companies was willful.
"I should have been notified of this mediation so that I could substantively participate and fulfill my duties as Class Representative," he said, adding " I informed Plaintiffs' counsel in writing that I found it inadequate and that I intended, on behalf of the Class, to oppose it. Despite this, Plaintiffs' counsel proceeded with informing the Court that a settlement agreement had been reached and thus litigation was halted. Is the role of Class Representative a mere formality absent substance? Does this case belong to the Plaintiffs' counsel rather than the Class? No and no. This case belongs to the Class, and we wish to proceed with the litigation."
Devine repeatedly asked the judge to put aside the settlement so that the class could "have its day in court," comparing the award to a thief stealing an iPad, getting caught and only having to pay $40 in compensation. The analogy is flawed, as the plaintiffs have yet to prove that the arrangement materially affected employee shifts from one company to another or that it had any effect on compensation.
Devine's stronger argument was that the proposed settlement offers -- as it usually does in these cases -- larger rewards to the plaintiff and defendents' attorneys than it does to individual members of the class action. If it were accepted, the two teams of attorneys would split roughly $75 million in fees, while each member of the 64,000-strong class action would see a few thousand dollars each, at most.
He also argued that because of the enormous amount of money the various defendants make, a $324 million settlement would prove inadequate to prevent the companies from making another such agreement. It may be necessary for the plaintiffs to hire a new set of lawyers to argue against the settlement reached with the first team if the disagreement continues.
The companies involved are likely keen to settle the case, even if they believe themselves innocent of the charges, as a trial would reveal inter-industry communications and arrangements the companies involved would likely prefer be kept confidential. Judge Koh, who is also handling the second Apple-Samsung trial's post-verdict matters, has not yet accepted or rejected the attorney-crafted settlement offer.