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Tech Workers Defend Expert in Wages Dispute

(CN) - Technology workers have amplified their bid for certification of a class action alleging that executives at Apple, Google and other companies suppressed wages via "gentleman's agreements."

They want to certify an all-employee or technical-employee class of about 100,000 or 50,000 members, respectively.

The would-be class says expert testimony is warranted, and that the companies tried "to mislead the court to believe that differences among class members prevent certification."

In the complaint, which was removed from Alameda County Superior Court to U.S. District Court in San Jose, five named employees said the tech giants enacted a poaching ban to maintain stable internal salary structures.

They listed Adobe, Apple, Google, Intel, Intuit, Lucasfilm and Pixar as defendants.

These companies allegedly 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.

The plaintiff's October certification motion included a report by economist and statistician Dr. Edward Leamer, who found that the agreements had a widespread, adverse effect on pay.

Workers say that the Justice Department corroborated Leamer's analysis in concluding that the agreements "disrupted the normal price-setting mechanisms" and thereby suppressed compensation.

In separate motions in November, the companies asked Koh to strike Leamer's testimony and deny certification.

The plaintiffs replied Monday that the attack on Leamer relies "on factually incorrect and unscientific assumptions" put forth by Dr. Kevin Murphy.

They say the companies "have conceded the predominance of every common legal and factual issue in this case, including defendants' violation of the law, except as to impact and possibly damages."

Leamer's opinion "is capable of showing that defendants' agreements suppressed the compensation of 'all or nearly all' members of the class," according to the 48-page reply authored by Lieff Cabraser attorney Kelly Dermody and co-counsel Joseph Saveri.

"Defendants assert that their violations of the antitrust laws could not have materially impacted their employees' pay because compensation is determined solely by external forces of supply and demand and defendants, collectively or individually, do not have 'power' - the ability to affect prices - in any relevant labor market. But this misses plaintiffs' main economic points," Cabraser and Saveri added. "According to Dr. Leamer: (1) the information suppressing effects of the agreements fundamentally interfered with the 'price discovery' process at each defendant firm thereby blocking the employees and firms from ever getting to the market price; and (2) principles of 'internal equity' within firms often override or supersede simple external forces of supply and demand such that a company like [copy redacted] regardless of the 'market price' for any particular job or job category."

The companies advanced an "outdated and misleading view of economics," its workers claim.

Dr. Murphy's market equilibrium approach also represents an "extreme view" that "has long been debunked by labor economists as an accurate description of how labor markets actually work," Dermody and Saveri wrote.

Murphy allegedly relied on "interviews with defendants' employees that have never been adequately disclosed."

The workers want Murphy's report excluded. Five consecutive pages of their reply are fully redacted, with more text blacked out throughout the document.

"Defendants only assert that plaintiffs cannot show class-wide harm through common evidence," Dermody and Saveri wrote. "However, defendants argue the incorrect legal standard. Defendants contend that 'common evidence' and 'class-wide harm' mean 'individualized evidence of individualized harm.' Variability or flexibility in setting wages is beside the point. Prices do not need to be identical in order to be impacted by a common conspiracy; courts routinely certify class actions where, as here, any individual negotiations - of which there is little evidence - were commonly impacted by defendants' misconduct."

U.S. District Judge Lucy Koh is scheduled to hear the case on Jan. 17.

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