Federal Judge Rejects Multi-Million Dollar Settlement in Silicon Valley Programmers' Suit Against Google and Apple
A California federal court judge, in a class-action lawsuit filed against Google and Apple, rejected the settlement of $324.5 million on Friday, ruling it wasn't enough to cover damages, according to reports.
In the lawsuit, over 60,000 high-tech workers alleged Google and Apple conspired with other technology companies to block employees from getting better job offers. The lawsuit alleges employers violated Section 1 of the Sherman Anti-Trust Act.
Northern District of California Judge Lucy Koh indicated that the programmers at Google, Apple, Intel and Adobe had built a strong case against their employers. "There is ample evidence of an overarching conspiracy," she concluded in her 32-page ruling.
The Judge concluded there is "substantial and compelling evidence" that Apple's Steve Jobs was "a, if not the, central figure in the alleged conspiracy."
Google co-founder Sergey Brin, for instance, has testified: "I think Mr. Jobs' view was that people shouldn't p*ss him off. And I think that things that p*ssed him off were -- would be hiring, you know -- whatever."
When Jobs heard Google was trying to recruit employees from Apple's Safari team, Brin testified, the Apple boss threatened him, stating: "If you hire a single one of these people, that means war."
On one occasion, Koh wrote, Google fired a recruiter for trying to hire a worker from Apple. Schmidt wrote to Jobs and apologized, informing him of the termination, and Jobs forwarded the email to Apple's human resources department, along with just a smiley face.
But attorneys for the workers argued the conspiracy wouldn't have been easy to prove to a jury. If the settlement had been approved, the workers' attorneys' would have received $81 million in fees and 1.2 million in costs, plus $80,000 per class representation in incentive pay. Judge Koh thought lawyers might be undervaluing the case.
One of the plaintiffs in the case, Michael Devine, wrote to the court rejecting the settlement damages, "The evidence of the Defendants' illegal conspiracy, and its intended impact, is very strong. In fact, the Defendants' own actions reveal their valuation of the conspiracy. Just look at Google which when Facebook rejected their illegal overture, felt completed to raise annual compensation 10% companywide to stem the flow of employees to Facebook. This settlement in contrast, will amount to less than 1% of compensation for each class member over the duration of the illegal agreements. That's one tenth of the experts' estimates of damages and is lacking any penalty. There's no justice for the Class in that, nor is there any real deterrent to future wrongdoing. We want a chance at achieving real justice."
After lawyer's fees of 25 percent, the workers would have received just under $4,000 each, which Judge Koh wrote "The Court finds the total settlement falls below the range of reasonableness."
Attorneys representing the workers were originally seeking $3 billion in damages before settling for 10 percent of the amount. If parties had agreed to $3 billion and gone to trial, it could have tripled to $9 billion under U.S. antitrust law according to reports, giving each worker $140,000.
The settlement would have been paid by Apple, Google Inc., Intel Corp. and Adobe Systems Inc.
Girard Gibbs, Divine's recent legal counsel, wrote in his opposition to motion for preliminary approval, "This case involves some of the most prominent companies in America, who are accused of conspiring to fix the wages of the employees whose talent and efforts led to the development of transformative technological innovations. The evidence against them is comprehensive and compelling, and includes the kind of "smoking gun" evidence that is rarely uncovered in antitrust litigation. he case is also highly visible, and is being followed closely by local and trade publications as well as national media like The New York Times and CNN. It will undoubtedly impact the employment practices of other companies and become a benchmark reference for future settlements."
Judge Koh will meet with attorneys on Sept. 10 to decide how to proceed.
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