US District Judge Lucy Koh has ordered Apple CEO Tim Cook to give a deposition about Apple's role in a series of deals between top tech companies to not recruit each other's employees. At a hearing this week, Koh said Cook, Google chairman Eric Schmidt, and Intel CEO Paul Otellini must be deposed to provide testimony about the deals, which the companies had agreed to dissolve after a US Department of Justice probe into the practices in 2010. The testimony is related to a civil lawsuit filed by five former employees of the companies, who claim that they and others lost out on better salaries due to the policies.
Beginning around 2005, executives from Apple, Adobe, Google, Intel, Intuit, and Pixar had begun to make agreements to not "cold call" each other's employees and hire them away. Though the agreements were made separately over the course of about three years, the Department of Justice contended that the net effect of the agreements constituted an anti-competitive cabal that "restrained competition for affected employees without any procompetitive justification and distorted the competitive process."
In other words, highly skilled employees couldn't leverage other job opportunities for better pay, because the other companies that might hire that employee had agreements that prevented them from making job offers in the first place.
The DoJ filed an antitrust lawsuit in federal court against the six tech firms. All six firms eventually agreed to a five-year settlement which barred making any "no solicitation agreements."
But that wasn't the end of the matter. Five former employees of the six companies filed their own civil antitrust lawsuit, alleging they and other employees suffered real economic harm from the collusion. At the first hearing in the civil suit on Thursday, Judge Koh noted that internal e-mails among executives showed they believed the "no cold call" agreements would have net economic benefits since they would not have to offer individual raises to counter potential employment offers from other firms.
In Apple's case, former CEO Steve Jobs had been copied on the e-mails in question, but not (then) COO Tim Cook. Apple's lawyers argued that Cook had no knowledge of the agreements to not hire competitor's employees, but Koh wasn't buying it.
"I find it hard to believe a COO would have no say over salary and compensation for all employees," Koh said.
Koh must also decide whether or not to grant the case class-action status, which the plaintiffs claim affected not just engineers, but also corporate chefs and even administrative assistants. The damages could amount to hundreds of millions of dollars, plaintiff attorneys said.
Adobe counsel Robert Mittelstaedt said the data didn't support those claims, however. "You can't assume that if someone got a raise from a cold call" that it would "ripple to everybody else," Mittelstaedt argued in court. "Why would a company give a raise to someone in a negotiation if it knew it had to turn around and give a raise to everyone else?"
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