Why it matters: Although the parties have ostensibly reached a $324 million deal, one of the named plaintiffs in the antipoaching class action of tech engineers against Adobe Systems, Apple, Google, and Intel has filed an objection to the settlement. Michael Devine wrote a letter to the presiding judge calling the agreement “grossly inadequate.” Stating that it “fails to achieve justice” for the class, Devine requested that the court reject the settlement so that the class could “have our day in court and have a real shot at justice.” Similar letters from other class members were also filed with the court. Whether the court takes the objections seriously remains to be seen – a hearing on preliminary approval of the settlement will be held in the coming weeks. In related news, the court did grant final approval of a $20 million settlement between the class and defendants Intuit, Lucasfilm, and Pixar.
The In re High-Tech Employee Antitrust Litigation in California federal court actually began with a Department of Justice (DOJ) investigation into several big-name technology companies in the state. Although the companies did not admit fault, they reached a deal with the DOJ in which they promised to stop the use of employee antipoaching agreements.
Civil suits followed in 2011. Groups of current and former employees of Adobe Systems, Apple, Google, Intel, Intuit, Lucasfilm, and Pixar alleged that the companies violated the Sherman Act by conspiring to keep salaries level (and 10 to 15 percent below natural market conditions) and to keep their hands off each other’s employees. The suits were consolidated and three of the defendants – Intuit, Lucasfilm, and Pixar – offered a total of $20 million to escape the litigation.
In May, U.S. District Court Judge Lucy H. Koh granted final approval to the $20 million deal in which Intuit paid $11 million and Pixar and Lucasfilm chipped in $9 million. Calling the financial award “substantial” in light of the fact that the settling defendants collectively account for less than 8 percent of the class members, the court said the deal was “fair, adequate, and reasonable.”
A total of 11,055 class members filed claim forms while only 147 opted out and just 5 objected to the settlement (which the court found did not cast any doubt on the value of the settlement). Each claimant will receive a fractional share based upon his or her total base salary received during the conspiracy period, which Judge Koh characterized as “a simple, efficient way to allocate the settlement funds to claimants based on the extent of their injuries, which are proportional to their differing salaries.”
Judge Koh already faces several objections to the more recent settlement between the class and defendants Adobe Systems, Apple, Google, and Intel. After the first three defendants reached deals, the remaining four continued to litigate the suit until just before trial when the parties reached a $324 million agreement.
But according to one of the class representatives, the terms just don’t cut it. “The evidence of the defendants’ illegal conspiracy, and its intended impact, is very strong,” Michael Devine wrote to Judge Koh. “This settlement, in contrast, will amount to less than 1 percent of compensation for each class member over the duration of the illegal agreements. That’s one tenth of the experts’ estimates of damages and is lacking any penalty. There’s no justice for the class in that, nor is there any real deterrence to future wrongdoing. We want a chance at achieving real justice.”
Devine, who worked at Adobe from 2006 to 2008, also informed the court that he was not notified of the most recent round of mediation that resulted in the deal until the day after the agreement was reached. “Is the role of Class Representative a mere formality absent substance?” he asked. “Does this case belong to the plaintiffs’ counsel rather than the class? No and no. This case belongs to the class and we wish to proceed with the litigation.”
Requesting that the court reject the settlement “so that we may have our day in court and have a real shot at justice,” Devine said the deal as it stands “amounts to big profits for plaintiffs’ counsel, insulation from real liability for the defendants, and locks in a significant net loss for the class.”
Other class members chimed in with similar comments, including a former Intel employee who said he lost out on “a huge amount of wages over the past decade because of these backroom deals,” and characterized the settlement as “blatant injustice.” “I strongly appeal to you to please dismiss this paltry settlement,” he wrote. Devine is now seeking new counsel and has launched a website in support of his cause. In his letter to the court, he compared the settlement to an act of theft, using one of the defendant’s own products.
“As an analogy, if a shoplifter is caught on video stealing a $400 iPad from the Apple Store, would a fair and just resolution be for the shoplifter to pay Apple $40, keep the iPad, and walk away with no record or admission of wrongdoing?” he wrote. “Of course not, nor is such a resolution appropriate in our case.”
To read Devine’s letter to the court, click here.
To read other letters objecting to the settlement, click here.
To read the court’s order approving the settlement between the class and Intuit, Lucasfilm, and Pixar, click here.