Antitrust Probe Into Tech Wages Called Hearsay

(CN) - Apple and fellow tech giants asked a federal judge to exclude Justice Department evidence in a contentious wage dispute, calling the consent decree inadmissible "hearsay."

The United States had actually been the first to shine a light on the employment and recruitment practices at Adobe, Apple, Google, Intel and Intuit, as well as Walt Disney subsidiaries LucasFilm and Pixar.

In its 2010 complaint, the Justice Department alleged that the companies had agreed to restrict the mobility of their skilled employees.

Without admitting any wrongdoing, the companies settled with the government and agreed not to enforce any agreement that refrained the companies from soliciting, cold calling or competing for employees from the other companies.

This deal failed, however, to ward off multiple civil complaints, which a federal judge eventually consolidated in the Northern District of California.

Software engineers in the class action claim that a poaching ban maintained stable internal salary structures at Adobe, Apple, Google, Intel, Intuit, Lucasfilm and Disney Pixar from 2005 to 2009.

Among those alleged to have reached "gentleman's agreements" via CEO-to-CEO emails are the late Steve Jobs and other leading Silicon Valley CEOs.

Only half of the defendants remain after LucasFilm and Pixar settled the civil claims for $9 million, and Intuit for $11 million, in late 2013.

On Thursday, the co-class lead counsel asked U.S. District Judge Lucy Koh give the settlement with Intuit, Lucasfilm and Pixar final approval.

"The settlements were reached at a particularly advanced stage of this litigation - occurring after the completion of discovery, after a full round of class certification briefing, after the court denied in part and granted in part plaintiffs' initial class certification motion, and after the second class certification round was underway," the 20-page motion states. "By this time, the parties were well aware of the strengths and weaknesses of their claims and the risks of ongoing litigation, which allowed for informed decisions and fair settlements."

In a separate motion, the workers demanded that the allegations concerning the conspiracy and anti-solicitation agreements face a per se analysis, which would exclude any reference to the "procompetitive justifications" that the companies have for their conduct.

"Throughout this case, defendants have steadfastly avoided explaining how anything other than the per se rule could apply to an agreement by horizontal competitors not to compete, despite findings to that effect by the court and the Department of Justice," the 20-page motion states. "Plaintiffs therefore cannot know with certainty which theory defendants will pursue on this issue."

If Koh declines the request, the trial should instead employ a "quick look" rule of reason analysis, according to the motion.

"Here, plaintiffs have alleged that defendants' conspiracy and the individual bilateral agreements that comprise it are naked restraints with readily apparent anticompetitive effects and no plausible procompetitive justifications," the motion states. "If the court is disinclined to apply a per se analysis, the court can readily determine whether such justification is plausible under a 'quick look' analysis. As defendants have failed to produce any evidence of a procompetitive justification for the overarching conspiracy or of an effort to tailor their bilateral agreements in any way to their efforts at collaboration, under a 'quick look' analysis the restraint should be condemned."

The defendants meanwhile jointly moved in limine to exclude evidence of, and references to, the Justice Department's antitrust investigation, complaint, civil investigative demands, consent decree and competitive impact statement.

"It is well settled that a consent judgment between a federal agency and a corporation that is not the result of an actual adjudication of the issues is inadmissible in a subsequent private lawsuit," the 21-page motion states.

Citing the Clayton Act, the companies said a consent decree entered in a government antitrust proceeding before testimony was taken cannot be used as prima facie evidence of a violation.

"Courts have consistently interpreted this provision to exclude any evidence of, or reference to, a consent decree at all stages of private antitrust litigation," the defendants said.

The added: "Both the competitive impact statement and the DOJ complaint are also inadmissible because they are hearsay."

Courts "routinely exclude references to antitrust consent decrees because such evidence 'can have no real purpose except to prejudice the defendant before a jury,'" the motion also states.

Last week, Koh slammed the plaintiffs for touting a new theory by Dr. Edward Leamer, months after an opening report.

According to the 48-page ruling, Leamer argued for the first time in December 2013 that so-called "null hypothesis testing" should be used to assess the reliability of his regression model.

"Plaintiffs will not be allowed to 'sandbag' defendants with new analysis that should have been included at the very least in Dr. Leamer's opening merits report," Koh wrote.

Koh nevertheless rejected the defendants' motion to exclude Leamer's testimony, ruling a court previously concluded that his model "was a reasonable methodology capable of showing that the anti-solicitation agreements caused 'generalized harm to the class.'"

Subscribe to Closing Arguments

Sign up for new weekly newsletter Closing Arguments to get the latest about ongoing trials, major litigation and hot cases and rulings in courthouses around the U.S. and the world.

Email *

Submit