Silicon Valley’s Most Embarassing HR Antitrust Case Begets a Class-Action

You would think that Silicon Valley giants would compensate their employees well, support their professional growth, and know that a time will come when they leave for greener pastures.

C-level execs at Apple, Google, Adobe, Pixar, Intel, Intuit, and Lucasfilm apparently thought, acted, and communicated differently, however, according to newly revealed legal documents in an employee class-action lawsuit (see below).

SV start-ups and high-tech companies would be stunted if non-compete clauses were enforceable in California. The state’s highest court says they aren’t.

That doesn’t appear to have stopped some tech giants from trying to get around an inability to restrict their workers from going to work at competitors, according to the lawsuit.

The lawsuit contends that companies entered into “Gentlemen’s Agreements” not to hire and not to poach one another’s employees. Doing so, the lawsuit maintains, helped the companies “to eliminate competition, for talent, suppress employee compensation and lower wages.”

The revelations stem from documents originally obtained by the U.S. Department of Justice in an antitrust case over “no-hire” and “no-poaching” charges that it settled with six (6) of the companies named above (Lucasfilm was not a party to the DOJ litigation).

Some fascinating tidbits learned by the DOJ, and then by the plaintiffs’ lawyers who filed a FOIA lawsuit to get their hands on the agency’s antitrust unit findings, include:

  • On May 28,2005, Mr. Chizen, Adobe’s CEO, emailed Mr. Jobs, then CEO of Apple, forwarding an internal Adobe email from Theresa Townsley, Adobe’s Senior Vice President for Human Resources, to others at Adobe, regarding “Recruitment of Apple Employees.” In that email, Ms. Townsley wrote: “Bruce and Steve Jobs have an agreement that we are not to solicit ANY Apple employees, and vice versa…Please ensure all your worldwide recruiters know that we are not to solicit any Apple employee. I know that Jerry is soliciting one now, so he’ll need to back off.” (231APPLE002145.)
  • Ms. McAdams of Pixar wrote that she “”got off the phone with Danielle Lambert [Apple’s Vice President of Human Resources], and we agreed that effective now, we’ll follow a Gentleman’s agreement with Apple that is similar to our Lucasfilm agreement (PIX00003419.)

Not everyone in the Valley shared a no-poach, no-hire mindset. When he was CEO of Palm, Inc., Ed Colligan wrote Jobs to rebuff what he called “likely illigal” conduct:

  • On August 24,2007, Ed Colligan, then CEO of Palm, Inc., wrote to Mr. Jobs, refusing Mr. Jobs’s request to enter into an illegal agreement with Apple. Mr. Colligan wrote: “Your proposal that we agree that neither company will hire the other’s employees, regardless of the individual’s desires, is not only wrong, it is likely illegal.” (231APPLE002153.)

You can read the revealing material below, and follow the high-tech employee antitrust class-action case docket.

Document Submitted Under Seal In Re: High-Tech Employee Antitrust Litigation

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