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Silicon Valley Non-Poaching Pact Could Cost Tech Giants Billions

By William Peacock, Esq. on April 10, 2014 | Last updated on March 21, 2019

Steve Jobs may have been a genius, but he was an idiot about discussing anti-competitive behaviors over email. His emails were one of the deciding factors in the Apple e-book lawsuit (Apple lost) and now, his words are haunting his friends in the tech industry in a different anticompetitive case: the non-poaching pact class action that first made headlines late last year.

In October, the all-knowing, all-seeing Judge Lucy Koh allowed the lawsuit to proceed, and now, six months later, the parties are entering into intense settlement negotiations, with figures like $9 billion being floated around (and scoffed at by the tech companies). Laugh now, pay later, because the eDiscovery evidence seems damning.

Apple, Google, Intel, and Adobe, Sitting in a Tree

"If you hire a single one of these people that means war," Jobs told Sergey Brin (Apple Insider has a screenshot of the email).

"Please add Google to your 'hands-off' list. We recently agreed not to recruit from one another so if you hear of any recruiting they are doing against us, please be sure to let me know," an Apple human resources memo noted.

According to The New York Times, executives from Google, Intel, and other companies all mentioned the agreement in emails. The Pando Daily blog has even more coverage, including an interesting piece about Google's response to upstart Facebook (which refused to join the pact).

Settlement Soon?

Thanks to the smoking gun emails, the parties are "deep in settlement talks," per the Times. How ridiculous is the floated $9 billion figure?

There are 100,000 employees in the class, which comes out to $90,000 in lost wages each. Considering that this agreement went on for years, and that many engineers are making six-figure salaries, and that companies are increasingly desperate for top-notch talent, it's not unfathomable to believe that an engineer could've been deprived of that much, had a few of the major firms fought over his or her services.

Proving that, of course, is the hard part, and should a trial happen, it'd almost certainly be a battle of experts, but a ten-figure damages award is certainly feasible.

Obvious Lesson

As my editor noted, these are supposed to be some of the most tech-savvy people in the world, yet they don't know to keep sensitive information out of email? It's the first rule of eDiscovery folks: they will find it. At least one of the executives was quoted by the times as saying that he'd prefer to discuss hiring in person (gosh, good idea!), probably because he knew that when all of the major tech companies agree to not poach each other's talent's, it's a textbook case of anti-competitive practices.

And for the workers, it means suppressed wages. For their sake, let's hope it also means a $9 billion settlement.

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