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Tech Labor Conspiracy Case Settled With Three

(CN) - Intuit, Lucasfilm and Pixar can pay $20 million to settle claims that they hurt competition by agreeing not to recruit each other's employees, a federal judge ruled.

Walt Disney subsidiaries LucasFilm and Pixar will pay $9 million, and Intuit will pay $11 million under the settlement agreement.

Four other high-profile companies - Adobe, Apple, Google and Intel - did not reach a settlement and still face related claims in the suit.

The employment and recruitment practices of the seven companies were investigated by the U.S. Department of Justice in 2009 and 2010. The DOJ filed a suit against the companies in 2010, alleging that the companies had agreed to restrict the mobility of their skilled employees.

Without admitting any wrongdoing, the companies settled with the government and agreed not to enforce any agreement that refrained the companies from soliciting, cold calling or competing for employees from the other companies.

Multiple civil complaints were then filed, however, and a federal judge eventually consolidated the cases in the Northern District of California.

The former employees allege that the seven companies engaged in an "overarching conspiracy" to eliminate competition among the companies for skilled labor. The conspiracy called for the companies to abstain from placing "cold calls" and from actively soliciting or recruiting each other's employees.

Cold calling - in which one company communicates directly with another company's employee who has not applied for a job - is a key competitive tool used to recruit employees with advanced skills, and increases the total compensation and mobility for those employees, according to the complaint.

The seven companies allegedly agreed not to do any such cold calling with the intent to keep the salaries low for high-tech employees, the employees said.

In April 2013, U.S. District Judge Lucy Koh declined to certify a class of approximately 60,000 former employees in the case. She found that the employees had failed to demonstrate that common issues predominated over individual issues. The employees have since filed a supplemental motion for class certification, which is now pending.

Koh did provide conditional class certification, however, for the purposes of the proposed settlement with Intuit, Lucasfilm and Pixar. The class consists of employees working in the technical, creative, or research and development fields who were employed on a salaried basis by the seven companies from varying dates up until December 2009.

Koh also found that the $20 million settlement by the three companies to be fair and reasonable.

The amount "is substantial, particularly in light of the fact that the settling defendants collectively account for less than 8 percent of class members, and together account for approximately 5 percent of total class compensation," the judge wrote.

Under the settlement, the other nonsettling companies - Apple, Adobe, Google and Intel - will remain "jointly and severally liable for all damages caused by the conspiracy, including damages from the settling defendants' conduct."

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