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New Silicon Valley Anti-Poaching Settlement: Is $415M Enough?

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By Mark Wilson, Esq. on January 20, 2015 12:21 PM

Back in 2011, we learned that several Silicon Valley companies agreed not to poach each other's employees, resulting in suppressed wages. The class ended up in federal court and looked close to a settlement by April of last year.

Judge Lucy Koh, however, rejected the proposed $324 million settlement, which would have resulted in $5,000 per employee in the class. Koh said the settlement wasn't reasonable, given that each employee would walk away with $3,750 after attorneys' fees and that an expert for the plaintiffs calculated damages in the billions.

Almost a year later, we have another proposed settlement.

An Appellate Longshot

The new agreement would settle claims brought by 64,000 employees against Google, Apple, Adobe, and Intel, Inside Counsel reports. The new agreement is for $415 million, which will average out to about $5,000 per employee after attorneys' fees. Just like the previous settlement, none of the companies admit to any wrongdoing in the new settlement.

After Koh rejected the first settlement, the defendants appealed the denial to the Ninth Circuit, claiming Koh "committed clear legal error by creating an unprecedented and rigid test for preliminary settlement approval in class actions."

Onlookers said that the appeal was a longshot; it wasn't even properly called an "appeal," because there was no final order from the district court to appeal from. Instead, the defendants asked the Ninth Circuit for a writ of mandamus ordering Koh to approve the settlement.

It's More Likely Than You Think

In addition to these four tech companies, several Bay Area computer animation companies are the targets of a similar suit filed in September. A former DreamWorks artist claims that Disney, DreamWorks, Pixar, Sony, and LucasFilm conspired to suppress competition and drive down wages.

Orly Lobel, a professor of employment law at the University of San Diego, told The New York Times that Koh would probably approve the new settlement, even though she said it "still is low, given the egregious violations over a sustained period of time." Emails from the CEOs of the companies in question, including the late Apple CEO Steve Jobs, all reflected that it was their explicit intention to enact policies that would prevent employees from moving between companies.

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