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Tech Giants Conspired on Wages, Plaintiffs Assert

(CN) - Former tech employees want to certify a class in their case alleging that Apple, Google and Intel conspired to fix and suppress wages via "gentleman's agreements" between the late Steve Jobs and other leading Silicon Valley CEOs.

The lawsuit, removed from Alameda County Superior Court to San Jose, claims seven companies 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.

Defendants listed are Adobe, Apple, Google, Intel, Intuit, Lucasfilm and Pixar.

Five former employees say that the firms agreed to the poaching ban in order to maintain stable internal salary structures.

The conspiracy violated the Sherman and Clayton Antitrust Acts and was revealed by the U.S. Department of Justice in 2010.

"After receiving documents produced by defendants and interviewing witnesses, the DOJ concluded that defendants reached 'facially anticompetitive' agreements that 'eliminated a significant form of competition ... to the detriment of the affected employees who were likely deprived of competitively important information and access to better job opportunities' ... The DOJ concluded that defendants entered into agreements that were naked restraints of trade that were per se unlawful under the antitrust laws," the motion states.

Because the federal government was unable to compensate victims of the conspiracy, the plaintiffs filed the action privately and on behalf of a proposed class.

"Defendants' joint course of conduct included a web of bilateral agreements not to compete for each other's employees. The agreements all prohibited the companies' solicitation of any of their employees, regardless of geography, job description, or time period," the motion, filed Monday, states.

"The defendants memorialized these agreements in CEO-to-CEO emails and other documents, including 'do not call' lists putting each firm's employees off-limits to other defendants. These 'gentleman's agreements,' as defendants called them, centered around three of the most important figures in Silicon Valley: Apple CEO Steve Jobs, Google CEO Eric Schmidt, and Intuit Chairman Bill Campbell, all of whom served together on Apple's board of directors throughout the conspiracy."

The motion includes a report by economist and statistician Dr. Edward Leamer, who found that the agreements had a widespread, adverse effect on pay.

Leamer's analysis was corroborated by the Justice Department, which concluded that the agreements "disrupted the normal price-setting mechanisms" and thereby suppressed compensation, the motion adds.

Jobs acquired Lucasfilm's graphics division in 1986 and renamed it Pixar. Connections between the remaining companies are blacked out in the 33-page motion.

U.S. District Judge Lucy Koh is scheduled to hear the lawsuit on Jan. 17, 2013.

The plaintiffs seek to certify either an all-employee or technical employee class of about 100,000 or 50,000 members, respectively.

They are represented by Kelly Dermody with Lieff Cabraser Heimman & Bernstein LLP and Joseph Saveri of San Francisco.

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