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Apple, Google won't face poaching class action suit, yet

A woman walks past an Apple logo at the company's flagship retail store near signs for the central subway project in San Francisco, Californ
A woman walks past an Apple logo at the company's flagship retail store near signs for the central subway project in San Francisco, Californ

By Jonathan Stempel

(Reuters) - A U.S. judge ruled that a lawsuit alleging a broad conspiracy among Silicon Valley companies not to poach each other's employees cannot proceed as a class action for now, but left the door open for workers to eventually sue as a group.

In a decision released on Friday, U.S. District Judge Lucy Koh in San Jose, California said the five software engineers suing Apple Inc, Google Inc and five other companies have yet to show enough in common among the proposed class members to allow them to sue together.

But in deciding to give the plaintiffs another chance, the federal judge said she was "keenly aware" new evidence had recently become available that could support class certification.

She also said the nature of the "alleged overarching conspiracy" and desire to litigate it all at once weighed "heavily" in favor of certifying a class, which the plaintiffs' lawyers have said could include tens of thousands of people.

The case has been closely watched in Silicon Valley, and much of it has been built on emails among top executives, including the late Apple Chief Executive Steve Jobs and former Google Chief Executive Eric Schmidt.

If the plaintiffs win class certification, then they would have more leverage to extract large financial settlements than if they were to sue individually.

Other defendants in the case include Adobe Systems Inc, Intel Corp, Intuit Inc, and Walt Disney Co's Lucasfilm Ltd and Pixar units.

PLAINTIFFS TO PRESS ON

The defendants were accused of violating the Sherman Act and Clayton Act antitrust laws by conspiring to eliminate competition for labor, depriving workers of job mobility and hundreds of millions of dollars of compensation.

These allegations are similar to those raised in a U.S. Department of Justice probe that ended in a 2010 settlement, which forbade several of the defendants from entering an anti-poaching conspiracy, such as through the use of "Do Not Cold Call" lists.

Koh said she wants more evidence that a proposed class does not include large numbers of people who suffered no harm.

She also expressed concern over whether evidence would show that the defendants had "such rigid compensation structures" that would have affected nearly everyone in a class.

But in a signal that certification could be forthcoming, Koh appointed Lieff Cabraser Heimann & Bernstein and the Joseph Saveri Law Firm as co-lead counsel for the plaintiffs.

"The court has invited us to provide further answers to certain specific questions, which we are prepared to do," Saveri said in an email. "We are in the process of determining a schedule for doing that as quickly as possible."

Apple spokeswoman Amy Bessette declined to comment. Google spokesman Matt Kallman would not discuss the decision, but said "we have always actively and aggressively recruited top talent."

Intel spokesman Chuck Mulloy said the chipmaker opposes certification, and believes the evidence will show its employees "were fairly compensated in a highly competitive market."

Adobe spokeswoman Christie Hui declined to comment. The other companies did not immediately respond to requests for comment.

EMAIL TRAILS

Among the revelations in the litigation was a 2007 email trail involving Jobs and Schmidt, then an Apple director, over Google's apparent effort to recruit an Apple engineer.

After Jobs emailed Schmidt that he "would be very pleased if your recruiting department would stop doing this," Schmidt forwarded the email to others he urged to "get this stopped."

Koh also cited a January 2007 email from Ed Catmull, then Pixar's president and now president of Walt Disney and Pixar Animation Studios, to the head of Disney Studios that suggested a desire to avoid bidding up the price of talent.

"We have avoided wars up in Norther[n] California because all of the companies up here - Pixar,, Dreamworks, and couple of smaller places - have conscientiously avoided raiding each other," he wrote.

All of the defendants are based in California: Adobe in San Jose; Apple in Cupertino; Google and Intuit in Mountain View; Intel in Santa Clara; Lucasfilm in San Francisco; and Pixar in Emeryville. Walt Disney is based in Burbank.

The case is In re: High-Tech Employee Antitrust Litigation, U.S. District Court, Northern District of California, No. 11-02509.

(Reporting by Jonathan Stempel in New York; Editing by Bernadette Baum and Leslie Gevirtz)

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