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May 25, 2014

Major silicon valley firms seek wages war settlement

A number closer to one tenth of the original claim will go before a judge next month

By Vinod

Four major Silicon Valley companies – Apple, Google, Adobe Systems, and Intel – have come to a formal agreement to pay $324.5m to settle a class-action lawsuit brought by roughly 64,000 employees who accused them of limiting competition by secretly following a ‘no-poach’ policy.

The settlement still needs to be approved by a US federal judge at a hearing on 19 June. It is currently facing objection from one plaintiff, representing all the workers, who said that the settlement will let the companies off too easily.

The lawsuit filed in 2011, sought potential $9bn in damages, and was triggered by a US Department of Justice investigation. It uncovered evidence of an ‘informal nexus’ among companies, with Google and Apple pointed out as ‘chief culprits.’

Various communications between companies were made public, including mails exchanged between the late Apple co-founder Steve Jobs and the then Google chief executive Eric Schmidt, with the former admonishing the latter to ‘stop raiding his company.’

Three other companies – Intuit Inc., Pixar Animation and Lucasfilm – were also named in the lawsuit, but they already came to a separate agreement, and paid out $20m, which was recently approved by US district judge.

Of this, $11m was paid by Intuit, with Pixar and Lucasfilm – both now owned by Walt Disney Co. – covering the rest.

This recent settlement gives workers an of a few thousand dollars each, in contrast to average payments of $50,000 to $150,000, being sougth in the original claims of between $3bn and $9bn.

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Lawyers for the plaintiffs are also expected to command a share of up to 25% of the settlement amount in legal fees, which will leave up to $4,000 for each worker. It is not yet clear how the bill will be split.

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