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Tech Giants Balk at Class Suit on Wages

(CN) - Apple, Google and others urged a federal judge against certifying a class that claims that the late Steve Jobs and other leading Silicon Valley CEOs suppressed wages via "gentleman's agreements."

Seven companies face claims that they agreed not to recruit one another's employees in CEO-to-CEO emails, and "conspired to suppress, and actually did suppress, employee compensation to artificially low levels" from 2005 to 2009.

Five former employees filed the all-employee suit in October. They say the firms enacted the poaching ban to maintain stable internal salary structures.

The suit against Adobe, Apple, Google, Intel, Intuit, Lucasfilm and Pixar was filed in Alameda County Superior Court and removed to the federal court in San Jose.

On Monday, the companies said U.S. District Judge Lucy Koh should reject certification for a proposed class of 60,000 to 100,000 employees who were employed "in widely varying jobs and received vastly different compensation set by each defendant's unique practices."

"The common injury sometimes found in price-fixing cases is absent here," their 32-page brief states. "This case does not involve agreements to reduce hiring or fix wages. Rather, plaintiffs alleged that certain pairs of defendants, as part of an 'overarching conspiracy,' agreed not to make unsolicited cold calls to each other's employees."

The companies also say that certification would violate the due process clause and the Rules Enabling Act.

"Whether and to what extent any employee suffered injury as a result of the alleged 'do-not-cold-call' agreements cannot possibly be determined 'in one stroke' by common proof," according to the brief authored by O'Melbeny & Myers attorney Michael Tubach. "Nor can the indefensible statistical methods of plaintiffs' expert substitute for the individualized inquiries required to determine whether anyone was harmed, directly or indirectly, because certain cold calls were not made."

In a separate motion, the companies said Koh should strike the testimony of class expert, Dr. Edward Leamer.

Leamer's "unreliable" analysis alleges that "all or nearly all" class members were undercompensated as a result of bilateral agreements among the companies, according to the motion.

It "is rife with fundamental errors and contrary to the evidence," according to this filing authored by Bingham McCutchen attorney Frank Hinman.

"Leamer's opinions about the effects of an alleged suppression of competition on class members' compensation are supported by no factual knowledge of competition in the labor markets he purports to address, the extent of any information suppression, or the actual effect on any class members, let alone 'all or nearly all' of them," the 30-page motion states.

"If one runs Leamer's model disaggregated for each defendant, it concludes that some defendants overcompensated their employees as a result of the alleged agreements - a result flatly contrary to plaintiffs' theory that the agreements suppressed the compensation of all defendants' employees," Hinman added.

The companies claim that the plaintiffs "have presented no viable means to determine antitrust impact or damages classwide."

"Lumping all employees' claims together would violate the Rules Enabling Act," they added.

The suit would "violate defendants' due process right to assert 'every available' defense against each class member," according to the brief.

"Lacking concrete evidence of any harm, plaintiffs advance a novel theory of indirect impact on the class that has not support in law or economics," the companies added.

"In short, plaintiffs' motion ignores the individualized factual issues that must be resolved to determine who was injured and the extent of injury caused by the alleged agreements. Plaintiffs' profoundly flawed statistical analysis assumes, rather than demonstrates, predominance of common issues."

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