SAN
JOSE, California (AP) — In Silicon Valley's white-hot competition for tech
talent, programmers can face a daily barrage of calls from recruiters seeking
to woo them to rival companies with offers of better pay and perks.
But
workers for some of the biggest names in the business claim their phones fell
silent because of a conspiracy among their employers. And they claim the
world's biggest tech icon was at the center.
A
lawsuit filed in federal court in San Jose claims senior executives at Google
Inc., Intel Corp., Adobe Systems Inc., Intuit Inc., Lucasfilm Ltd., Pixar and
Apple Inc. violated antitrust laws by entering into secret anti-poaching
agreements not to hire each other's best workers. In doing so, the suit
contends the companies were able to keep wages artificially low by preventing
bidding wars for the best employees.
The
plaintiffs also claim that company emails show Steve Jobs himself sought and
orchestrated at least some of the so-called "gentlemen's agreements"
while Apple's CEO.
"I
believe we have a policy of no recruiting from Apple," then-Google chief
executive Eric Schmidt wrote in a 2007 email cited by the plaintiffs. The email
was originally furnished to the U.S. Justice Department, which investigated
similar allegations in 2010. The same email included a forwarded message from
Jobs complaining that Google's recruiting department was trying to lure away an
Apple engineer.
"Can
you get this stopped and let me know why this is happening?" Schmidt
wrote. Google's director of staffing replied that the recruiter "will be
terminated within the hour."
The
companies' attorneys said the facts even as presented by the plaintiffs show no
evidence of a conspiracy.
Rather,
they said in court filings that some companies had separate one-to-one pacts
among themselves as they worked together on various business ventures.
"The
obvious explanation for the existence of these agreements were the
collaborations," said Apple defense attorney George Riley, as the two
sides squared off Thursday in U.S. District Court in San Jose. Riley told Judge
Lucy Koh that such arrangements were common.
The
case hinges on a practice described in court documents as
"cold-calling." Under the practice, recruiters from one company will
call an employee at another company who has the skills the company needs. The
practice can lead to bidding wars as workers play the companies off one another
to get the highest pay.
Cold-calling,
the suit contends, helps workers get a sense of what they're worth in a free
market for employment in which all the companies are competing against one
another for top employees. When the cold-calling stops, workers lose the
knowledge and the leverage they could otherwise use to demand higher pay.
The
Justice Department's 2010 investigation included all the same companies except
Lucasfilm, and the plaintiffs in some ways mimic the language from the
department's original case. The companies settled without admitting any
wrongdoing but agreed not to enter into future agreements preventing them from
cold-calling each other's employees to recruit them.
Because
the Justice Department's case was settled quietly without any public dispute,
court records contain little detail about any specific alleged agreements among
companies.
Some
of those details did come to light, however, in a recent filing by the
plaintiffs, which quotes emails they obtained from the companies that had
previously been given to the Justice Department.
In
a 2005 email describing a purported agreement between former Adobe CEO Bruce
Chizen and his then-counterpart at Apple, an Adobe human resources executive
wrote: "Bruce and Steve Jobs have an agreement that we are not to solicit
ANY Apple employees, and vice versa," according to court documents.
Ex-Palm
Inc. CEO Ed Colligan wrote to Jobs in 2007: "Your proposal that we agree
that neither company will hire the other's employees, regardless of the
individual's desires, is not only wrong, it is likely illegal," the
plaintiffs' filing said.
In
internal company communications, Intel CEO and Google board member Paul
Otellini described a gentlemen's agreement between the two companies: "Let
me clarify. We have nothing signed. We have a handshake 'no recruit'"
between himself and then-Google CEO Schmidt. "I would not like this
broadly known."
Defense
attorneys contend the emails are being distorted by the plaintiffs and show
nothing beyond legitimate one-to-one agreements. Apple declined to comment.
"Intel
disagrees with the allegations contained in the private litigation related to
recruiting practices and plans to conduct a vigorous defense," said Sumner
Lemon, an Intel spokesman.
Adobe
said the company does not comment on pending litigation.
The
other companies named in the lawsuit did not immediately respond to requests
seeking comment.
Whichever
side prevails, the case underscores the high wages talented tech workers can
command in Silicon Valley, where the tech industry added thousands of jobs last
year. According to federal labor statistics, mid-level tech workers in the
region such as computer security specialists, web developers and network
architects earn more money than anywhere else in the country, with average
annual salaries topping $110,000.
Many
of those workers could get thousands more if the case goes their way, lead
plaintiff's attorney Joseph Saveri said. Given the potentially tens of
thousands of workers affected if the plaintiffs succeed in turning the suit
into a class-action case, Saveri said the combined damages for the companies
could reach into the hundreds of millions of dollars if decided at trial.
Such
penalties would sink many companies. But Apple recently reported cash reserves
of more than $97 billion. Google also has billions in cash on hand.
One
anti-trust attorney not involved in the case doubts the companies have much to
worry about anyway.
Antitrust
cases that revolve around hiring practices are difficult to win, said David
Balto, a Washington, D.C.-based antitrust lawyer who investigated Microsoft as
a staff attorney for the Federal Trade Commission in the 1990s. Among the legal
challenges they face is defining who exactly makes up the class of workers
harmed by the alleged violations, since people with different jobs have
different employment options, he said.
"I
don't think anybody at these companies is losing a nanosecond of sleep because
of this lawsuit," Balto said.
Copyright 2012 The Associated Press.