District Court Judge Certifies Class in Silicon Valley No-poaching Case | Practical Law

District Court Judge Certifies Class in Silicon Valley No-poaching Case | Practical Law

Judge Lucy H. Koh of the US District Court for the Northern District of California certified a class of plaintiffs alleging that various Silicon Valley employers entered into anticompetitive non-solicitation agreements in violation of Section 1 of the Sherman Act and Section 4 of the Clayton Act.

District Court Judge Certifies Class in Silicon Valley No-poaching Case

Practical Law Legal Update 9-547-1726 (Approx. 4 pages)

District Court Judge Certifies Class in Silicon Valley No-poaching Case

by Practical Law Antitrust
Published on 29 Oct 2013 • USA (National/Federal)
Judge Lucy H. Koh of the US District Court for the Northern District of California certified a class of plaintiffs alleging that various Silicon Valley employers entered into anticompetitive non-solicitation agreements in violation of Section 1 of the Sherman Act and Section 4 of the Clayton Act.
On October 24, 2013, Judge Lucy H. Koh of the US District Court for the Northern District of California certified a class of plaintiffs in In re High-Tech Employee Antitrust Litigation alleging that various Silicon Valley employers used non-solicit agreements to conspire to suppress wages to artificially low levels in violation of Section 1 of the Sherman Act and Section 4 of the Clayton Act.
The defendant companies, including Adobe, Apple, Google, Intel, Intuit, Lucasfilm and Pixar, allegedly conspired from 2005 to 2009 to refrain from actively soliciting each other's employees.
Earlier this year, Judge Koh granted in part and denied in part plaintiffs' Motion for Class Certification, but gave plaintiffs leave to amend. Judge Koh declined to certify the original proposed class because:
  • The class consisted of every salaried employee who worked for defendants from 2005 to 2009, which was more than 100,000 employees.
  • The plaintiffs did not adequately demonstrate that common issues would predominate over individual issues under Rule 23(b) of the Federal Rules of Civil Procedure.
To find whether common questions predominate over individual questions, the court essentially must determine whether the elements of the antitrust claim can be proven by common evidence and methodology. However, plaintiffs are not required to prove the elements of their substantive claims at the class certification stage.
In their Supplemental Motion for Class Certification, the plaintiffs successfully showed that common issues predominate over individual issues by:
  • Limiting the class to only salaried technical, creative, and research and development employees.
  • Presenting substantial documentary evidence, expert reports and statistical evidence common to the class to show that the alleged conspiracy:
    • is an overriding common antitrust violation for each class member;
    • resulted in common antitrust injury; and
    • resulted in class-wide measurable damages.

Antitrust Violation

The court noted that plaintiffs provided the court with substantial evidence supporting a conspiracy, including depositions and e-mail conversations regarding non-solicit agreements culled by the DOJ in its own investigation of the defendants' hiring practices. The court reasoned that the conspiracy evidence presents common legal and factual issues and will therefore predominate over individual issues.

Antitrust Injury

The documents provided to the court as proof of antitrust injury included evidence that the conspiracy similarly injured all class members, including that:
  • The conspiracy forbade cold calling, a common industry practice that may have produced job and career advancement opportunities and given employees information to use as salary leverage.
  • The defendants maintained individual compensation structures with an emphasis on internal equity (paying employees at the same level the same or similar salary), but shared compensation information to individually and uniformly suppress compensation levels to the detriment of all relevant employees.
Through a variety of formulaic models and accompanying analysis, the plaintiffs' expert explained that there was evidence to show that:
  • Absent anti-solicitation agreements, defendants would have paid at least some class members more than they did.
  • The compensation suppression likely had a class-wide effect.
Therefore, the court held that the evidence supporting antitrust injury also demonstrated that common questions and evidence will predominate over individual questions across the entire proposed class.

Antitrust Damages

The court held that an economic model submitted by one of plaintiffs' experts was capable of calculating class-wide damages.
Trial is scheduled to begin in May, 2014.

Court Documents