A federal judge in California on Friday dismissed a $324.5m (£193m) settlement deal in a case regarding alleged collusion between the tech giants Apple, Google, Intel and Adobe.
Plaintiffs in the class action suit say it affects 64,000 tech workers, who believe they are owed damages because of collusion between the companies to cap wages and limit job growth by agreeing not to poach each other’s employees. The companies acknowledged that they agreed not to hire each other’s staff in some cases, but disputed that they conspired to drive down wages.
District judge Lucy Koh said that there was “ample evidence of an overarching conspiracy” between the companies and that the proposed settlement amount did not reach standards for “reasonableness”.
Koh estimated that such a settlement would allocate an average of $3,750 to each affected worker, after the plaintiffs’ attorneys had claimed their $81m share of the payout.
The plaintiffs filed the lawsuit in 2011 and planned to ask for $3bn in damages, arguing that the companies’ arrangement made it harder for employees to get better jobs and negotiate raises. The suit alleged that the companies made such deals from 2005 to 2009, in violation of antitrust laws.
Attorneys representing the plaintiffs and companies agreed the deal in April but, the San Francisco employment lawyer Stephen Hirschfeld told the San Jose Mercury News, it is becoming less unusual for judges to reject mutually endorsed settlements.
“This does give the plaintiffs’ lawyers more leverage,” Hirschfeld said. “When something like this happens, it is going to put additional pressure on the defendants to come up with more money.”
During the three-year case, private correspondence between Silicon Valley icons became public, including emails between the Apple co-founder Steve Jobs and former Google chief executive Eric Schmidt which showed the two men agreeing not to poach each other’s employees.
Koh said Jobs, who died in 2011, was “a, if not the, central figure in the alleged conspiracy”.
“Every time a new piece of evidence comes out, people get more shocked than they did the last time,” Sam Altman, president of Y Combinator, a technology accelerator that has funded hundreds of startups, told the New York Times. “You don’t need a law degree to know that what the companies were doing was deeply wrong.”
In 2010, the companies settled with the Department of Justice over similar charges. According to a DoJ investigation, the companies worked together to suppress employee wages and reach deals about not hiring each other’s employees. In the settlement, the companies agreed to stop participating in such practices.
