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eBay must face Justice Department suit over recruiting: ruling

The results of a Google image search on Ebay are shown on a monitor in this photo illustration in Encinitas, California, April 16, 2013. REU
The results of a Google image search on Ebay are shown on a monitor in this photo illustration in Encinitas, California, April 16, 2013. REU

By Dan Levine

SAN FRANCISCO (Reuters) - A U.S. judge on Friday refused eBay's attempt to dismiss a U.S. Department of Justice civil lawsuit over its alleged agreement with Intuit to refrain from recruiting each other's employees.

In a tandem order, U.S. District Judge Edward Davila in San Jose, California, granted eBay's motion to dismiss a parallel lawsuit brought by the state of California.

Representatives for eBay and the California attorney general's office could not immediately be reached for comment.

The suit, and similar legal issues involving other technology companies, highlight the intense competition for talent in Silicon Valley.

A "handshake" agreement between eBay and Intuit came into place in 2006 and involved executives including then-eBay chief executive Meg Whitman and Intuit founder Scott Cook, according to court documents. At the time, Cook was serving on eBay's board and complained about eBay poaching Intuit employees.

Federal and state antitrust regulators sued eBay last year. Intuit was not named as a defendant because it was already part of a wide-ranging 2010 lawsuit that federal officials brought against six technology companies, including Apple and Google. The companies agreed to a settlement agreement with the government that federal officials call sufficient to prevent similar conduct in the future.

In its motion to dismiss, eBay argued that the government's lawsuit must fail because it solely reflects conversations between eBay and Cook. Since Cook was an overlapping director of both companies, eBay argued that the government could not allege a conspiracy between two separate entities.

However, Davila ruled that the government has "plausibly" alleged an actionable agreement between both companies. In a separate order, Davila ruled the state of California did not have legal standing to pursue claims against eBay.

The cases in U.S. District Court, Northern District of California are United States of America vs. eBay, 12-5869, and the People of the State of California vs. eBay, 12-5874.

(Reporting by Dan Levine; Editing by Gary Hill and Andrew Hay)

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