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Legal Technology: Apple, Google, Intel and Others Accused Of Conspiring To Cap Employee Pay
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May 05, 2011

Apple, Google, Intel and Others Accused Of Conspiring To Cap Employee Pay

By Tracey E. Schelmetic, TMCnet Contributor


They might be some of the most “admired” companies in the country, but that doesn't mean they are exempt from headaches. A lawsuit filed in California today has accused a number of tech companies – among them Apple, Google, Adobe Systems (News - Alert), Intel, and others – of violating antitrust laws by conspiring to fix employee pay, as well as conspiring to draw up “no solicitation” deals with one another to prevent employee poaching.


The class-action lawsuit (PDF) was filed in California Superior Court in Alameda County and alleges that because senior executives from Adobe, Apple, Google (News - Alert), Intel, Intuit, Lucasfilm and Pixar “entered into an interconnected web of express agreements to eliminate competition among them for skilled labor,” affected employees from those companies are entitled to compensation, reported CNet.

“My colleagues at Lucasfilm and I applied our skills, knowledge, and creativity to make the company an industry leader,” said Siddharth Hariharan, a former Lucasfilm employee who filed the class action suit and is listed as the plaintiff. “It's disappointing that, while we were working hard to make terrific products that resulted in enormous profits for Lucasfilm, senior executives of the company cut deals with other premiere high tech companies to eliminate competition and cap pay for skilled employees,” said Hariharan in a statement.

In the complaint, Hariharan seeks restitution for lost compensation as well as damages for those who are a part of the suit. Those include individuals who were salaried employees at the plaintiff companies any time from January 1, 2005 to January 1, 2010.

The suit focuses specifically on the companies targeted by a 2009 antitrust investigation by the U.S. Department of Justice. That investigation, and the civil lawsuit that followed, were settled back in September of last year, with the aforementioned companies agreeing to discontinue the use of "do not cold call" lists. Nonetheless, the suit says the companies are still profiting in the aftermath of the practice, reports CNet

“The DOJ has confirmed that it will not seek to compensate employees who were injured by defendants' agreements,” the suit says. “Without this class action, plaintiff and members of the class will not receive compensation for their injuries, and defendants will continue to retain the benefits of their unlawful collusion.”

Joseph R. Saveri, an attorney with Lieff Cabraser, the firm representing Hariharan, said the reduced competition from the companies working together cut potential employee compensation by 10 percent to 15 percent. “These companies owe their tremendous successes to the sacrifices and hard work of their employees and must take responsibility for their misconduct,” said Saveri in a statement.

As the lawsuit outlines, the practice began with Pixar and Lucasfilm in 2005, before expanding to include Apple and Adobe. The connection there being Apple CEO Steve Jobs (News - Alert), who allegedly made the deal while he was still the CEO of Pixar. Following that, Apple is said to have entered into a deal with Google "no later than 2006" that put both companies on each other's “do not cold call” lists, effectively encouraging each side to not actively attempt to hire away staff. A year later similar deals are said to be made between Apple (News - Alert) and Pixar, Google and Intel, and Google and Intuit.

As for the size of the class, the suit says that there are potentially “tens of thousands” affected.

Intel (News - Alert) disagrees with the allegations in the lawsuit about recruiting practices.

“We are still evaluating the case but plan to conduct a vigorous defense,” said Intel spokesman Chuck Mulloy in statement to CNET. “Intel does not believe its actions violated the law nor does the company agree with the allegations. The company settled the DOJ matter because it believes it would not harm the company or its ability to do business.”

A Lucasfilm representative called the claims “meritless,” and declined to comment further.

Adobe, Apple, Google, and Pixar did not immediately return requests for comment to CNet. A representative for Intuit said the company does not comment on pending litigation.


Tracey Schelmetic is a contributing editor for TMCnet. To read more of Tracey's articles, please visit her columnist page.

Edited by Jamie Epstein


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