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Apple, Google lose bid to avoid trial on tech worker lawsuit

A neon Google logo is seen as employees work at the new Google office in Toronto, November 13, 2012. REUTERS/Mark Blinch
A neon Google logo is seen as employees work at the new Google office in Toronto, November 13, 2012. REUTERS/Mark Blinch

By Dan Levine

SAN FRANCISCO (Reuters) - A U.S. judge on Friday rejected a request from Apple, Google and two other tech companies to avoid a trial in a class action lawsuit alleging a scheme to drive down wages.

Tech workers sued the companies alleging they conspired to avoid competing for each other's employees in order to avert a salary war. Trial is scheduled to begin in May.

Apple, Google, Intel and Adobe asked for a judgment in their favor without a trial, arguing that any no-hire agreements between the companies were reached independently, and were not part of an overarching conspiracy. U.S. District Judge Lucy Koh in San Jose, Calif., however, rejected that argument.

"That the agreements were entered into and enforced by a small group of intertwining high level executives bolsters the inference that the agreements were not independent," wrote Koh.

A representative for Adobe could not immediately be reached for comment. An Intel spokesman said the company is studying the ruling, and representatives for Google and Apple declined to comment.

The case began in 2011 when five software engineers sued Apple, Google, Adobe Systems Inc, Intel Corp and others, alleging a conspiracy to suppress pay by agreeing not to recruit or hire each other's employees.

These defendants were accused of violating the Sherman Act and Clayton Act antitrust laws by conspiring to eliminate competition for labor, depriving workers of job mobility and hundreds of millions of dollars in compensation.

The case has been closely watched in Silicon Valley, with much of it built on emails among top executives, including the late Apple Chief Executive Officer Steve Jobs and former Google Chief Executive Officer Eric Schmidt.

In the order on Friday, Koh wrote that the companies shared confidential compensation information with each other, despite the fact they considered each other competitors. For instance, Intel chief executive Paul Otellini circulated information about competitors' bonus plans that he "lifted from Google."

"A reasonable jury could infer that this confidential information could be shared safely by competitors only because the anti-solicitation agreements squelched true competition," Koh wrote.

Other companies refused to enter into non-solicitation agreements at all. Bill Campbell, who served on Apple's board and also advised Google, discussed attempting to broker a "cease fire" between Google and Facebook, Koh wrote.

Facebook chief operating officer Sheryl Sandberg ultimately refused Google's entreaties to join a no-hire agreement, according to court documents.

"These expansions and attempted expansions of the anti- solicitation agreements suggest that the agreements were not isolated, independent bilateral agreements, but rather were part of a broader conspiracy," Koh wrote.

Walt Disney Co's Pixar and Lucasfilm units and Intuit Inc have already agreed to a settlement, with Disney paying about $9 million and Intuit paying $11 million.

At a hearing this week, attorneys for Google and the plaintiffs said they were "making progress" in settlement talks.

The case in U.S. District Court, Northern District of California is In re: High-Tech Employee Antitrust Litigation, U.S. District Court, Northern District of California, No. 11-02509.

(Reporting by Dan Levine; Editing by David Gregorio and Andrew Hay)

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