LG, Samsung Face No-Poaching Class Action

     SAN JOSE, Calif. (CN) — The Silicon Valley may be the world’s center for technological advancement, but another lawsuit over no-poaching agreements indicates that employees feel the industry may be behind the times where they’re concerned.
     An LG sales manager known in the class action as “A. Frost” sued his employer and its competitor Samsung in Federal Court this past week, accusing the two companies of agreeing not to not hire each others’ workers with an eye toward fixing employee wages at an artificially low level.
     “Defendants entered into, implemented, and policed the agreement with the knowledge of the overall conspiracy, and did so with the intent and effect of suppressing mobility and information sharing between and among employees of the companies, and thereby fixing the compensation of the employees of participating companies at artificially low levels,” Frost says in the complaint.
     LG and Samsung are both headquartered in Seoul, South Korea, and have extensive offices in Northern California, where they compete with other Silicon Valley industry heavyweights like Apple and Google in various technology markets including smartphones, computers, tablets and appliances like televisions, dishwashers and refrigerators.
     Because of the similarity of the two companies, they become the most likely employment alternative for a worker working at either company, Frost said — meaning the conspiracy not only injured Frost but all of the companies’ employees.
     “Competition and mobility would allow the workforces each to demand — and collectively receive — higher wages, benefits and other compensation, either in exchange for switching employers or for staying with the current employer,” Frost said in the complaint.
     Frost says he learned of the conspiracy in October 2013, when he was contacted by a recruiting officer about a job opening at Samsung. Soon after making Frost aware of the opening, the recruiting officer recanted, citing the no-poaching agreement.
     The wage-fixing scheme began in 2005 and was known through the upper echelons of the corporate structure in both companies, which sought to keep the agreement secret from the United States workforce, Frost says.
     While Frost is the only plaintiff presently, the complaint estimates tens of thousands of employees were affected by the scheme.
     Silicon Valley companies have shown a propensity to engage in no-poaching, wage-fixing agreements.
     The U.S. Department of Justice first took antitrust action against industry titans in 2010, when it filed a complaint accusing Apple, Google, Adobe, Intel, Intuit and Pixar of violating the Sherman Act by agreeing not to “cold-call” each other’s employees.
     The department and the accused companies quickly settled, agreeing in principle to stipulations that forbade the no-cold-call agreements and wider prohibitions against meddling in the industry’s labor market. No compensation was tied to the settlement, but workers brought a civil case against the aforementioned companies and the ensuing settlement eventually amounted to approximately $435 million to be distributed to the affected employees.
     The lawsuit focused on the network of connections surrounding former Apple CEO Steve Jobs, who is widely perceived as being the driving force behind the wage-suppression scheme.
     Jobs was also the CEO of Pixar when it entered into a similar wage-suppression scheme involving a slew of major movie studios aimed at keeping its workforce salaries stagnant, according to a 2014 lawsuit filed in Federal Court.
     In that case, Robert Nitsch, who was a senior character effects artist for DreamWorks and a clothes and hair technical director at Sony Pictures Imageworks, says animation and special effects studios — including Walt Disney and its subsidiaries Pixar and Lucasfilm, Sony Pictures, Digital Domain 3.0 and ImageMovers — conspired to stifle wages and restrict career opportunities for animators, digital artists, software engineers and other technical workers.
     Blue Sky Studios recently agreed to a settlement in the case. Sony has also gotten preliminary approval for a settlement with the class, which Nitsch says includes about 10,000 people.
     Nitsch says the scheme dates back to when the late Jobs bought Lucasfilm’s computer graphics division from George Lucas in 1986 and created Pixar.
     A Samsung representative said the company will not comment on the case. LG did not return a request for comment as of press time.
     Frost is suing for violations of the Sherman Act and the California companion Cartwright Act and unfair competition. He seeks treble damages, restitution and disgorgement.
     He is represented by Joseph Saveri of San Francisco.
     

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