Silicon Valley Watcher - Former FT journalist Tom Foremski reporting from the intersection of technology and media

There's No Free Lunch: Judge Halts $325m Settlement By Silicon Valley Giants With 64,000 Tech Workers As Too Small

Posted by Tom Foremski - August 11, 2014

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Facebook HQ - Mark Zuckerberg refused to take part in illegal scheme against tech workers.

Some of Silicon Valley's largest and most profitable companies are facing a serious setback in their attempt to finally settle a hugely embarrassing class action lawsuit alleging a conspiring to cap salary levels and limit job prospects for more than 64,000 tech workers.

Late Friday in San Jose, US District Judge Lucy Koh said the $324.5m settlement was too low given that the case against the plaintiffs had strengthened and that it was less than a $20m settlement paid by Lucasfilm, Intuit, and Pixar who were also part of the collusion. It would need to increase by at least $55m to $380m. The original suit asked for $3 billion in damages rising to $9bn under antitrust penalty laws.

Dan Levine at Reuters reported:

The judge provided details in evidence of anecdotes involving Jobs and other Valley executives to show why she thought the workers deserved more. Representatives for Apple and Google Inc declined to comment. Intel spokesman Chuck Mulloy said the company is disappointed Koh rejected an agreement "that was negotiated at arm's length over many months," but appreciates that Koh provided additional information on her views.

The ruling affects Apple, Google, Intel, and Adobe. Apple is ranked #1 in Silicon Valley based on revenues and profit; Google is second most profitable; Intel is fourth largest; and Adobe is number 25 with $4 billion in revenues and $272m in 2013 profits. (Source: SV150 Rankings.)

Facebook refused to join in the conspiracy and that resulted in Google having to increase engineers' salaries by 10% to stop them leaving.

Foremski's Take: This is a shameful multi-year collusion from companies who are Silicon Valley's largest, and richest and who constantly declare their devotion to their engineers by providing them with free lunches and everything else they need. It's a halitosis of hypocrisy — it stinks. Clearly, there's no free lunch — the employers made out like bandits on savings from lower salaries, hiring costs, and staff turnover. 

A free lunch and a ride to work is cheap compared to the billions of dollars they saved by working against interests of their own people — more than 64,000 workers. It's understandable that they would prefer to quickly settle the case and put a lid on the public access to hugely embarrassing emails between top executives.

More damaging than the salary caps is the harm to employees' lifetime prospects by stopping them from moving to potentially career defining opportunities at other companies. 

A rusting legacy...

The Steve Jobs legacy is becoming quickly tarnished with an unflattering patina of flaking rust rather than a noble verdis gris. The judge identified Steve jobs as the "central figure in the alleged conspiracy."  His role was despicable but so was the enthusiastic agreement of the CEOs of major Silicon Valley tech companies, such as Google's CEO Eric Schmidt and the CEOs of Intel, Intuit, Adobe, and Lucasfilm. 

Steve Jobs was a bully and these CEOs paid him their lunch money. 

Facebook CEO Mark Zuckerberg deserves to be lauded for his refusal to take part in Jobs' scheme. 

The plaintiffs should pay the extra $55m and settle the case as quickly as possible and hope people will forget this disgraceful episode in Silicon Valley's timeline. 

Please see: 

Does Silicon Valley R-e-s-p-e-c-t Its Engineers? Top Firms Shun Engineering Legends -SVW

Anti-poaching suit involving Apple, Google, Intel and Adobe hits snag | ZDNet

Biz Break: Judge rejects settlement in Silicon Valley no-poaching case - San Jose Mercury News

 

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