California Nabs $3.75M From EBay in Settlement

(CN) - EBay on Thursday agreed to settle both the U.S. government and California's claims that it hurt competition by agreeing with Intuit not to recruit each other's employees.

While the Justice Department's settlement "prevents eBay from doing this again," Assistant Attorney General Bill Baer said in a statement that California's deal "provides restitution for the harm to individuals and the state's economy."

California Attorney General Kamala Harris valued the deal at $3.75 million.

Both the state and federal government had filed their lawsuits on the same day in 2012, challenging an alleged "handshake" agreement between senior executives at eBay and Intuit Inc. not to poach each other's employees.

Two years earlier, seven other high-tech firms - Adobe, Apple, Google, Intel, Intuit, Lucasfilm and Pixar - were the butt of similar anticompetitive complaints.

"The behavior was blatant and egregious," Baer said. "And the agreements were fully documented in company electronic communications. In one email, eBay's senior vice president of HR wrote [former eBay CEO] Meg Whitman complaining that while eBay was adhering to its agreement not to hire Intuit employees, 'it is hard to do this when Intuit recruits our folks.' Turns out that Intuit had sent a recruiting flyer to an eBay employee. Whitman forwarded the email to [Intuit founder and executive committee chair] Scott Cook asking him to 'remind your folks not to send this stuff to eBay people.' Cook quickly responded with '...Meg my apologies. I'll find out how this slip up occurred again...'"

The companies' alleged agreement harmed employees by lowering the salaries and benefits they might otherwise have obtained, and by depriving them of better job opportunities, both lawsuits claimed.

"California's technology sector is at its best when competition and creativity are allowed to thrive," Harris said in a statement. "No-poach agreements unfairly punish talented workers and stunt our state's economic growth."

The settlement between eBay and the Department of Justice calls for five-year injunctive relief preventing eBay from entering into anticompetitive agreements with other companies to restrain employee recruitment and hiring.

The Department of Justice already has court-ordered injunctions related to similar antitrust misconduct against Adobe, Apple, Google, Pixar, Intuit and Lucasfilm.

"Our enforcement actions should make it abundantly clear that the antitrust law apply to every industry, including companies that innovate and companies in the high-tech industry," Baer said. "These companies and the executives who run them are not above the law. And our lawsuits against eBay and others prove that point."

California filed its $3.75 million settlement with eBay in San Jose. That figure covers civil penalties and $2.375 million in restitution for employees or prospective employees affected by the alleged agreement.

Three distinct pools of employees will receive the restitution payments. The first pool of approximately 40 individuals were employed by Intuit and considered but not offered a position at eBay. They will receive between $5,000 and $10,000 each.

Approximately 950 employees of Inuit who applied for but were not offered a position at eBay will receive between $1,000 and $5,000 each.

Other current and former employees who fall within the terms of the settlement, but not within the first or second pools, will receive a maximum payment of $150.

"This settlement compensates employees, demands improved future hiring practices, and refunds the state for economic harm," Harris said.

Harris reached a settlement with Intuit over its alleged actions in July 2013.

A hearing for preliminary approval of the settlement is scheduled to take place on Aug. 29 before U.S. District Judge Edward Davila.

With a class action by software engineers over the same allegations heading to trial, Adobe, Apple, Google and Intel agreed last week to pay disgruntled tech workers as much as $324 million. Intuit, Lucasfilm and Pixar agreed in 2013 to pay $20 million to settle the claims.

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