U.S. District Judge Lucy Koh, Northern District of California (Jason Doiy / The Recorder)
SAN FRANCISCO — Scoring their second win in one week, plaintiffs attorneys in the Silicon Valley “no poach” class action have overcome their last obstacle to bringing the case to trial next month.
U.S. District Judge Lucy Koh of the Northern District of California denied a defense motion to sideline a critical plaintiffs expert. Koh ruled Friday that UCLA economics and statistics professor Edward Leamer can testify that skilled employees of technology companies, including Google and Apple, lost out on $3.06 billion in compensation due to a web of antirecruitment agreements.
At a March 27 hearing in San Jose, defense counsel attempted to poke holes in Leamer’s analysis. But while some of the defendants’ points may weaken Leamer’s arguments, Koh ruled, that doesn’t render his testimony inadmissible.
“It will then be up to the jury to assess the credibility of the experts,” she wrote.
Koh also rejected a related motion for summary judgment. Defense counsel had argued that without Leamer’s testimony, plaintiffs could not prove they were harmed.
Plaintiffs accuse Google Inc., Apple Inc., Intel Corp. and Adobe Systems Inc. of colluding to drive down employee wages by entering pacts not to recruit each other’s workers.
Koh’s latest ruling comes on the heels of a March 28 decision that also denied summary judgment for the defense. In that ruling, she allowed plaintiffs to pursue claims that the alleged “no poach” agreements were not isolated business agreements but part of an industrywide conspiracy. In shooting down the two motions, Koh has eliminated the last possibilities for summary judgment before trial.
“We have passed a significant milestone,” colead plaintiffs attorney Joseph Saveri said in an email. “We are busy preparing the case for the trial beginning May 27.”
Intuit Inc., Lucasfilm Ltd. and Pixar Animation Studios Inc. have already settled for a combined $20 million. At last month’s hearing, plaintiffs lawyer Kelly Dermody, a partner at Lieff Cabraser Heimann & Bernstein, told Koh that settlement talks with the remaining four defendants were ongoing.
Leamer asserts that recruiting job candidates through cold calling provides employees with more information about outside opportunities and leverage to negotiate for higher salaries. He came up with his $3.06 billion damages calculation through a regression analysis using the companies’ internal compensation data.
But counsel for the defense argued Leamer’s findings were flawed. In particular, defense lawyers attacked the analysis for falling short of statistical significance, failing to distinguish between damages suffered as a result of legal noncompete agreements and the alleged illegal agreements, lumping together plaintiffs impacted by one or more agreements, and failing to prove that every class member would have been injured.
“The rules of evidence do not allow the jury to ‘live with’ Dr. Leamer’s statistical ‘uncertainty’ resulting in billions in alleged damages because he has nothing ‘better’ to offer,” defense counsel wrote in a joint Daubert motion challenging Leamer’s testimony.
O’Melveny & Myers represents Apple; Jones Day is counsel to Adobe; Munger, Tolles & Olson is defending Intel; and Keker & Van Nest and Mayer Brown jointly represent Google.
Koh, who relied on Leamer’s analysis when she certified a class, again concluded the professor’s research is statistically robust, supported by economic literature and capable of calculating classwide damages.
Koh did side with defense lawyers on one matter: Leamer will not be allowed to make an argument he released late in the game to rebut defense criticism that his data is not statistically significant.
“Simply put,” Koh wrote, “Dr. Leamer’s theory is untimely disclosed because he could have and should have included this theory in his opening merits report to allow defendants the opportunity to respond.”
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