Rejected Deal in Tech Wages Case Defended

     SAN FRANCISCO (CN) – It was “clear legal error” to reject a proposed $325 million settlement of wage-fixing in the high-tech industry, Google and two other tech giants told the 9th Circuit.
     The dispute stems from a 2010 class action filed on behalf of up to 64,000 software engineers for a number of tech companies and Disney-owned LucasFilm and Pixar. Earlier this year, four of the Silicon Valley companies – Apple, Google, Intel and Adobe – offered $325 million to settle the claims that their CEOs made “gentleman’s agreements” not to poach each other’s employees – eliminating competition and its companion wage-setting mechanism in the high-tech sector.
     U.S. District Judge Lucy Koh had rejected the offer last month, however, as “below the range of reasonableness,” given the strength of the workers’ case and the potential $9 billion in damages if a jury found in their favor.
     But on Thursday, Google attorney Robert Van Nest of the firm Keker & Van Nest advised Koh that the four tech giants had asked the 9th Circuit to review their settlement offer and the judge’s rejection of it.
     In their 27-page petition, the companies said that Koh’s “formulaic approach” in deciding that the offer was short by 16 percent went against precedent that values negotiation and mediation over benchmarking.
     “The District Court’s benchmark formula impermissibly substituted the court’s assessment of the value of the case for that of the parties who have been litigating the case for more than three years, and in particular plaintiffs’ counsel, who were ‘sobered’ by the ‘very real risks’ faced at trial after devoting ‘a lot of work product’ to analyzing the case and conducting jury research and other ’empirical work’ – none of which the district court had access to,” the petition states, citing transcripts from previous hearings. “The District Court dismissed the parties’ analysis of the trial risks, suggesting that, unless the settlement was larger, the court had – in its own words – ‘wasted years on this case.’ This too directly contradicts Rodriguez v. West Publishing Corp., which held that ‘parties represented by competent counsel are better positioned than courts to produce a settlement that fairly reflects each party’s expected outcome in litigation.'”
     The tech companies called on the 9th Circuit to use this case as an opportunity to set “the proper standard for preliminary approval of class settlements.”
     They also noted that by rejecting the $325 million deal – the highest ever in an employment antitrust case – Koh potentially doomed the tech employees to “the very real chance that they and the absent class members will receive nothing.”
     The petition continues: “And it forces defendants to abandon the bargain they reached with highly qualified class counsel and instead either pay at least an additional $55.5 million to settle the case or proceed to trial. This court should therefore issue the writ because, without mandamus, this fundamentally erroneous ruling will evade appellate review, irreparably harm plaintiffs, absent class members, and defendants, and make it significantly more difficult for parties to settle class actions in future cases.”
     The software engineers already reached a $9 million settlement with Pixar and LucasFilm, and they reached a deal with Intuit for $11 million. Koh signed off on both of those agreements last year.
     Both sides said last week they had resumed negotiations with the engineers in hopes of hammering out a deal more to Koh’s liking.
     Judge Koh met the filing Friday by releasing two emails she had received, praising her for rejecting the settlement offer.
     One, allegedly written by a Google employee and shareholder, said tech employees “need the real story out” and that she hoped the case would go to trial.
     “Real choices and opportunities were taken away from these employees due to lack of recruiting among the companies,” the email says. “No amount of money can fix that now.”
     A hearing on other matters originally slated for Sept. 10 has been pushed to December. The trial date is tentatively slated for April 9, 2015.

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