Judge Koh Rejects Silicon Valley Anti-Poaching Settlement - In House
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Judge Koh Rejects Silicon Valley Anti-Poaching Settlement

Judge Koh, dubbed (by us) "the most powerful woman in Silicon Valley," flexed her judicial strength on Friday when she rejected a proposed settlement in the Silicon Valley anti-poaching antitrust lawsuit involving some of high-tech's biggest players, reports Bloomberg.

Finding the proposed settlement amount of $324 million "troubling" in light of plaintiffs' substantial and compelling evidence, Judge Koh refused to approve the settlement. Let's take a look at the reasons why.

Antitrust Claims

In 2011, four plaintiffs, individually and on behalf of a class, filed suit against seven high tech companies alleging that the companies suppressed their wages by agreeing not to solicit each others' employees. The plaintiffs alleged violations of Sections 4 of the Clayton Antitrust Act, and 1 of the Sherman Antitrust Act. After some maneuvering and motions, the case was removed to federal court, some of the defendants settled, and the class was narrowed to include only technical employees.

The Proposed Settlement

In April, the parties agreed to settle for $324 million, or $5,000 per person (before taking out legal fees). One of the named plaintiffs, Michael Devine, wrote a letter to Judge Koh where he stated that the settlement amount "is grossly inadequate and fails to achieve justice for the Class." He later filed an Opposition to the settlement on June 5 and on June 19, 2014, Judge Koh held a hearing to determine whether to approve the settlement.

The Rejected Settlement

Last Friday, Judge Koh rejected the proposed $324 settlement amount, namely because she "cannot conclude that the instant settlement amount falls within the range of reasonableness." When factoring attorney's fees and costs, each plaintiff would receive $3,750, which to Judge Koh, was too low, especially when plaintiffs' expert calculated damages in the amount of $3.05 billion (and there's a potential for treble damages too).

Judge Koh cited the "ample evidence of overarching conspiracy" between the defendants, as well as the better negotiating position the plaintiffs were in now (compared to their position when they negotiated with now-settled defendants who paid proportionally more than the amount in the proposed settlement). For these reasons, she rejected the settlement, and set a trial conference date for September 10, 2014.

It's likely this case will still settle, with one month before the next trial conference. In fact, with the amount of evidence Judge Koh found in plaintiffs' favor, it may be in their best interest to settle. At least now, they have a bit more guidance from the court -- they're going to have to offer a bit more.

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