Tech Companies Agree to Settle Silicon Valley 'No-Poach' Case

Tech Companies Agree to Settle Silicon Valley 'No-Poach' Case Jason Doiy / The Recorder Kelly Dermody, Lieff Cabraser Heimann & Bernstein partner

SAN FRANCISCO — One month shy of trial, Google Inc., Apple Inc., Intel Corp. and Adobe Systems Inc. have reached a settlement with workers who accused the tech giants of conspiring to drive down wages by not hiring each other’s employees.

Counsel for both sides reported the resolution Thursday in a joint letter to U.S. District Judge Lucy Koh, but did not reveal the settlement’s price tag.

Lieff Cabraser Heimann & Bernstein partner Kelly Dermody and Joseph Saveri of the Joseph Saveri Law Firm signed the letter on behalf of plaintiffs, and Google attorney Robert Van Nest of Keker & Van Nest signed on behalf of defendants.

“We felt like we achieved an excellent result,” Dermody said in an interview. “And because of that, it seemed time to resolve the case.”

Keker & Van Nest deferred questions to a Google spokesman, who declined comment.

In an emailed statement, Adobe denied its recruiting policies diminished competition. “Nevertheless, we have elected to settle this matter in order to avoid the uncertainties, cost and distraction of litigation,” the statement reads. “We don’t expect the settlement to have a material impact on Adobe’s financials.”

The settlement puts an end to three years of litigation that tarnished some of Silicon Valley’s most prominent CEOs and pit a team of aggressive Bay Area plaintiffs lawyers against a deep bench of defense firms.

In addition to Keker & Van Nest, Google turned to Mayer Brown. O’Melveny & Myers represents Apple; Jones Day is counsel to Adobe; and Munger Tolles & Olson is defending Intel.

Dermody’s team alleged the conspiracy to suppress employee movement cost workers more than $3 billion in lost wages and rose to the highest levels at companies like Apple and Google. Top tech executives, including Google cofounder Sergey Brin and former Intel CEO Paul Otellini, candidly discussed their no-hire agreements in dozens of emails referenced in the court record.

There were snarky missives sent to executives who violated the agreements, and apologetic replies. One email chain described the firing of a Google recruiter who made the mistake of contacting an Apple employee—a response that prompted a smiley face emoticon from late Apple cofounder and CEO Steve Jobs. In another email exchange, Google executives decided to scrap plans to open an engineering office in Paris because Jobs didn’t give the OK to hire former Apple employees.

The case, which followed on the heels of a U.S. Department of Justice investigation, was filed in May 2011 by a Lucasfilm Ltd. software engineer. It accused seven tech companies of establishing so-called no-poach agreements. In October, Koh certified a class of more than 60,000 skilled employees.

Lucasfilm, Pixar Animation Studios Inc. and Intuit Inc. settled last year for a combined $20 million. The terms of the latest deal are expected to be disclosed to the court by May 27.

Dermody declined to comment on what factors led to the settlement, but said the decision fell within the window of time where trial is just close enough to motivate a resolution. Both sides were scheduled to release their witness lists Thursday in anticipation of next month’s trial.

“I think we all look forward to a trial,” Saveri said. “But we were able to achieve a fair result for the class.”

The two sides worked with mediator Layn Phillips, a former federal judge and current Irell & Manella partner in Newport Beach. Last month, Dermody told Koh discussions with the defense were ongoing and active, and if anyone could help them reach a settlement, it would be Phillips.

“Certainly the mediator is tremendously talented,” Dermody said Thursday, “and sometimes you need to have someone like that in the mix.”

It still seems surreal, she added, to close the door on such a prominent case.

“When you work on a case for as long and as hard as we have on this one, it’s like a family member on some level,” she said. “You’re very attached to it. So the idea of having closure or saying goodbye is bittersweet for that reason.”

Contact the reporter at mkendall@alm.com.

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