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Microsoft Ducks Suit Over No-Poach Deals

SAN FRANCISCO (CN) - Microsoft on Monday successfully evaded the same antitrust class action claims that cost other major tech firms hundreds of millions of dollars earlier this fall.

In September, U.S. District Judge Lucy Koh approved a $415-million settlement and $42 million in attorneys' fees for employees that sued Apple, Google, Intel and Adobe for conspiring not to "poach" each other's high tech workers.

On Monday, Koh issued a new ruling in a separate class action against Microsoft, finding employees waited too long to file their antitrust lawsuit.

Koh first dismissed lead plaintiff Deserae Ryan's class action against Microsoft last April with leave to amend, warning that a failure to cure statute of limitations problems in the suit would result in a dismissal with prejudice.

The newly amended complaint claimed the plaintiffs could sue Microsoft for deals it struck prior to 2010 because the company fraudulently concealed its misdeeds and continued to conspire with other firms to suppress competition beyond 2010.

However, Koh found the plaintiffs failed to identify "a single antisolicitation agreement allegedly entered into by Microsoft after 2009" and therefore failed to state a claim on acts that occurred after the four-year statute of limitations period took effect on Oct. 16, 2010.

The employees claimed that three related lawsuits against other technology firms and a Department of Justice investigation into Microsoft froze the limitations period.

Koh cited a 1978 Ninth Circuit ruling, Dungan v. Morgan Drive-Away Inc., which found the limitations period began tolling when the government filed a complaint against a company, not when it started an investigation.

"Because the DOJ never filed a complaint against Microsoft, plaintiffs are not entitled to any tolling based on the DOJ's investigation of Microsoft," Koh wrote in her 39-page ruling.

Koh also found the three government lawsuits against other tech firms - Adobe, Google, Apple, Intel, Intuit, Lucasfilm, Pixar and eBay - made no mention of any actions or agreements with Microsoft. Therefore, those complaints did not toll the limitations period for Microsoft employees to file their suit.

Regarding allegations of fraudulent concealment, Koh said allegations that supervisors and human resources managers failed to disclose their deals with other tech firms when discussing compensation with employees lacked specificity.

"The first amended complaint does not specify the identity of the parties who allegedly made false representations to plaintiffs beyond the broad descriptors of 'human resources and senior management,'" Koh said in her ruling.

She also found the plaintiffs failed to cite any cases to support their claim that Microsoft's submission of heavily redacted agreements to the DOJ was an act of fraudulent concealment.

More than a dozen emails sent by Microsoft employees about a "hands-off list" for recruitment did not support claims that the company tried to conceal its deals with other tech firms, Koh said.

"Plaintiffs have not identified any email in which a Microsoft employee marked an email as confidential, stated that the recipient should not forward or discuss the contents of the email, or took efforts to discuss the alleged agreements in code," Koh wrote.

The judge also rejected arguments that Microsoft's statements claiming to obey antitrust laws and adhere to competitive hiring and compensation practices in public filings amounted to misleading statements that constitute fraud.

Koh said the plaintiffs failed to cite any cases that held statements like that made in routine public filings could alone suffice to show fraudulent concealment.

She dismissed the class action with prejudice, finding an amended complaint could not cure the timeliness issues.

"Giving plaintiffs an additional opportunity to amend their complaint to address the statutes of limitations would cause undue delay, would unduly prejudice Microsoft by requiring Microsoft to file repeated motions to dismiss on timeliness grounds, and would be futile," Koh wrote in her conclusion. "Therefore, the court's dismissal of plaintiffs' first amended complaint is with prejudice."

Neither class attorney Jeferey Hogue of Hogue Belong in San Diego nor Microsoft attorney Robert Macguire of Davis Wright Tremaine in Seattle responded to phone calls seeking comment Tuesday morning.

A Microsoft spokesperson did not immediately respond to an email seeking comment on Tuesday.

This past April, Koh refused to dismiss a similar class action against Oracle claiming the company suppressed wages by striking nonpoaching agreements with other tech firms. Another lawsuit regarding antirecruitment deals between animation studios, including Dreamworks, was ordered to arbitration the same month.

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