On the eve of what could have been very embarrassing litigation for Apple, Google, Intel, and Adobe, the four tech giants agreed to settle a federal lawsuit in California alleging that they conspired to keep wages lows for certain employees. The settlement is worth approximately $325 million. That would seem like a pretty massive settlement for these companies unless you consider the fact that Google and Apple alone have a combined market cap of nearly $1 trillion.
The Plaintiffs in the lawsuit alleged the four tech companies agreed to not poach each others’ employees, which in effect formed an anti-competitive cabal that kept engineers’ wages down. A class-action antitrust lawsuit was filed to compensate the engineers that worked for the tech giants from approximately 2005 through 2006. There were more than 60,000 workers in the class. Class members claimed that the no poaching agreement resulted in $3 billion of lost wages. That’s a far cry from the $324 million settlement agreement. Although some of the companies admitted the no-poaching agreement, they disputed the fact that it was done to keep price wages down. Right. So, these multi-billion companies claim ignorance of basic economic principles? I know some of these tech guys pride themselves on not having college degrees, but maybe they should take a few online college courses? Economics 101 would be a start.
Some of the alleged actions of the executives laid out in the Reuters article are just comical:
- After a Google recruiter solicited an Apple employee, then-Google CEO Eric Schmidt told Apple co-founder Steve Jobs that the recruiter would be fired. Jobs then forwarded the email to an Apple HR executive with a smiley face.
- A Google human resources director sent an email asking Schmidt about sharing its no-cold call agreements with competitors. Schmidt replied that the agreement should be spread “verbally, since I don’t want to create a paper trail over which we can be sued later?
If you are going to go the route of avoiding a paper trail, wouldn’t you pick up the phone to tell someone that? Maybe its just me.
Lucasfilm, Intuit, and Pixar were also defendants in the original lawsuit, but those companies settled before the class was formed. Those companies got off relatively cheap, paying approximately $20 million to settle the claims against them.
We often say that in class action lawsuits there’s really no winner other than the lawyers. However, I think it’s safe to say that the tech companies won here. $325 million is nothing to sneeze at, but it really works out to about $5,500 per employee (before deducting fees and costs). While that’s certainly better than the $10 gift cards that are the spoils of many class action settlements, it’s not a lot of money in comparison to what these employees may have lost.