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Valley powerhouses reach new settlement deal in poaching suit

Apple and Google are among the companies accused of conspiring not to hire away each other's employees.

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Defendants in an employee anti-poaching lawsuit have reached a new settlement. Shara Tibken/CNET

Four Silicon Valley companies, including Apple and Google, have reached a new settlement to resolve an antitrust lawsuit filed by 65,000 tech workers that accused the companies of conspiring not to hire away each other's employees.

A proposed settlement between plaintiffs and Apple, Google, Intel and Adobe Systems was revealed in a court filing Tuesday and confirmed by a spokesman for one of the defendants, but the details could not ascertained. Intel spokesman Chuck Mulloy confirmed that a settlement had been reached but said the terms were confidential until it has been filed with the court.

Google declined to comment, while Apple and Adobe did not respond to a request for comment.

The lawsuit, filed in 2011 by former employees of the named companies, accused the companies of carrying out an "interconnected web" of agreements to keep wages low by not hiring each other's workers between 2005 and 2009. The lawsuit has garnered much attention for the intimate look it has provided into the inner workings and apparent cooperation among some of the Valley's biggest companies.

The case, which also involved Lucasfilm, Pixar, and Intuit, started in 2011 when a former Lucasfilm software engineer filed a lawsuit alleging that the seven companies conspired to keep wages low by refraining from poaching one another's employees. Several similar complaints followed and they were all consolidated into a class-action lawsuit that covered nearly 65,000 employees who worked for the companies between 2005 and 2010.

Lucasfilm, Pixar, and Intuit settled in 2013 for a combined $20 million, covering 8 percent of the employees named in the suit. The four remaining companies avoided a potentially costly and drawn-out trial last May by agreeing to pay $324.5 million to the plaintiffs in a settlement offer.

After one of the affected employees objected to the settlement, US District Court Judge Lucy Koh rejected the deal last August, saying the settlement amount should have been higher, particularly given the "compelling evidence" the plaintiffs had against the companies. She wrote that she was "concerned that class members recover less on a proportional basis" from the settlement with the four remaining defendants than from the settlement with the other three initial defendants a year prior

If the remaining defendants reached a settlement at the same or higher rate as the settled defendants, the amount should total at least $380 million, she said.

Some of the evidence in the case focused on emails sent between executives at the named companies that allegedly detail the conspiracy.

An unredacted court filing in January 2012 recounted an e-mail exchange between late Apple co-founder and CEO Steve Jobs and then-Google CEO and Apple board member Eric Schmidt, in which Jobs politely asks Schmidt to stop trying to hire one of Apple's engineers.

"I would be very pleased if your recruiting department would stop doing this," Jobs wrote to Schmidt on March 7, 2007.

According to the exchange detailed in the filing, Schmidt then sent the request on, saying: "I believe we have a policy of no recruiting from Apple and this is a direct inbound request. Can you get this stopped and let me know why this is happening? I will need to send a response back to Apple quickly so please let me know as soon as you can."

The exchange led to the immediate firing of the recruiter who had attempted to hire the engineer in question, with Google's staffing director writing back: "Please extend my apologies as appropriate to Steve Jobs" and noting that it was "an isolated incident."

The suit focuses specifically on the companies targeted by a 2009 antitrust investigation by the US Department of Justice. That investigation and the civil lawsuit that followed were settled back in September 2011, with the aforementioned companies agreeing to discontinue the non-solicitation agreements. Nonetheless, the suit says the companies are still profiting in the aftermath of the practice.

News of the new settlement was first reported by Reuters.