Although concluding that Comcast Corp. v. Behrend, No. 11-864, 2013 U.S. LEXIS 2544 (U.S. Mar. 27, 2013), did not require plaintiffs to prove individual class member damages on a class-wide basis, Judge Lucy Koh of the U.S. District Court for the Northern District of California nevertheless held in In Re High-Tech Employee Antitrust Litigation, No.: 11-CV-02509, 2013 U.S. Dist. LEXIS 4978, at *69, 87-90 (N.D. Cal. Apr. 4, 2013), that plaintiffs failed to show that antitrust impact could be shown with common evidence. It therefore denied class certification.

In Re High-Tech Employee Antitrust Litigation is a highly publicized workplace antitrust case allegedly centered around present and former CEOs of some of the largest Silicon Valley employers such as Steve Jobs of Apple and Eric Schmidt of Google. We previously blogged about this case here.

In this consolidated putative class action plaintiffs allege that seven high-tech Silicon Valley employers entered into agreements not to solicit each other’s employees. They contend that these agreements violated §1 of the Sherman Act and suppressed the wages of the putative class members below competitive levels. In this decision, Judge Koh denied plaintiffs’ motion for class certification, but told the plaintiffs that they could try again with the benefit of additional evidence obtained in discovery after the class certification hearing. There is both good and bad for employers in Judge Koh’s opinion.

The Class Certification Decision

Plaintiffs sought certification of a nationwide class of all salaried persons who were employees of any of the defendants from March 2005 through December 2009. Alternatively, they moved to certify a nationwide class of salaried technical, creative, and research and development employees who worked for any of the defendants during the same time period. Id. at 14-16. Defendants conceded that the question of whether they entered into the alleged agreements was a common issue. Id. at 27-28. But they argued that whether class members were harmed by the agreements (“antitrust impact”) and the amount of damages each class member allegedly suffered could not be demonstrated with common evidence. Id. at 21.

For purposes of the class certification motion, defendants did not contest that plaintiffs had satisfied all elements of Rule 23 (a) – numerosity, commonality, typicality and adequacy of representation.  Id.  The sole battleground was Rule 23(b)(3) – whether questions of law or fact predominated over individual issues.

Plaintiffs contended that the prohibition on soliciting employees impaired information flow about compensation and job offers, resulted in fewer opportunities to move between firms and increase salaries, and deprived the employees of information that could have been used to negotiate higher wages and benefits. Plaintiffs also argued that the anti-solicitation agreements impacted not only those employees who would’ve been recruited but rather all employees corporation-wide due to principles of internal equity. Under this theory when outside opportunities put pressure for higher wages at one place in the wage structure, firms tend to maintain the overall firm wage structure thereby rewarding all employees for the improved outside opportunities of some workers. Id. 38-42.

The Court conducted a detailed analysis of the expert reports submitted by both sides in support of their respective positions. Ultimately, it was not persuaded that the plaintiffs had shown that the effects of the anti-solicitation agreements would have spread to all or almost all employees and denied plaintiffs’ motion. However, since defendants did not produce significant amounts of discovery or make key witnesses available for depositions until after the class certification hearing, the Court gave the plaintiffs leave to amend. Id. at 86-87.

Other Key Rulings

The Court adopted a narrow view of the Supreme Court’s recent decision in Comcast. It held that the plaintiffs satisfied their burden under Rule 23(b)(3) even though the plaintiffs’ damage methodology could not provide a method of estimating damages on an individual basis. Comcast was satisfied merely because the method of calculating damages was consistent with the plaintiffs’ theory of liability. Id. at 87-90.

The Court concluded that the plaintiffs’ burden of proof at the class certification stage was only to advance a plausible methodology to demonstrate that antitrust injury can be proven on a class-wide basis. Id. at 32-33. But the Court acknowledged that even under that standard it was required to conduct a rigorous analysis. Where, as here the parties presented a “battle of the experts,” the Court reasoned that it must do more than determine whether the evidence is admissible but also must judge the persuasiveness of the evidence. The Court must also resolve in any factual disputes necessary to determine whether Rule 23’s requirements have been satisfied. Id. at 35-36.

Implications

The decision in In Re High-Tech Employee Antitrust Litigation provides a mixed bag for employers in defending class certification motions. The Court conducted a rigorous analysis of the evidence and ultimately concluded that the plaintiffs had not shown that proof of antitrust impact could be demonstrated on a class-wide basis. On the other hand, the Court took a narrow reading of Comcast and characterized plaintiffs’ burden as only having to show a plausible method of proving antitrust impact on a class-wide basis.