Why are Google, Apple and others seeking a settlement in their employees’ law suit?

The Boardroom

by CBR Staff Writer| 28 April 2014

Companies reportedly agree to pay $324m to plaintiffs.

Google, Apple, Intel and Adobe are looking at an out-of-court settlement to resolve a class action law suit filed by their employees for allegedly conspiring together to restrict the prospects of further salary growth.

The case, scheduled to begin in May, was filed by nearly 64,000 engineers, accusing the companies of agreeing to not poach each other's workers and thus restricting their wage growth between 2005 and 2009.

How is a settlement beneficial to defendants?

According to a Reuters report, the settlement has been agreed for $324m, far lower than the $3bn being demanded in the lawsuit.

Moreover, if the case is won by the plaintiffs, the potential damages granted could be as high $9bn under US antitrust laws.

The companies involved would also be keen to keep any emails exchanged between their top executives private, so that they are not scrutinised by the jury and discussed in the public domain.

How was the case built?

It is these emails, sent between company executives, form the basis of the case.

In one of the emails, former Google CEO Eric Schmidt reportedly told former Apple's boss, the late Steve Jobs, that an HR resource in their company was fired for soliciting to hire an Apple's engineer.

Jobs forwarded that email to his HR executives with a smiley face.

In another instance, Schmidt advocated discretion to his HR director after the latter mentioned the sharing of no-cold call agreement with competitors.

Reuters quoted the court filings as saying: "Schmidt responded that he preferred it be shared 'verbally, since I don't want to create a paper trail over which we can be sued later?'"

What did they say about the settlement?

Chuck Mulloy, spokesman for Intel, was quoted by the BBC as saying that the firm denies any wrongdoing but chose to settle "to avoid the risks, burdens and uncertainties of ongoing litigation'".

Google and Apple declined to comment.

One of the plaintiff attorneys, Kelly Dermody, was quoted in reports as saying that the settlement was an excellent resolution of the case.

However the settlement still needs to be approved by the San Jose federal court in California.

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