Apple Inc. (NASDAQ:AAPL), Google Inc. (NASDAQ:GOOG) and several other technology firms have long been on the lookout for great talent in science and engineering. There have been stories of some employees moving from one tech company to another. however, has there been some poaching going on? Or have some of these tech companies – like Apple Inc. (AAPL) and Google Inc. (GOOG) – colluded to not poach each other’s workers?
According to a ruling sent out early Friday morning in California, there could be – but a class-action suit can’t go froward … at least not yet. Judge Lucy Koh – yep, the one who presided over the Apple v. Samsung patent infringement case last summer that produced a $1 billion damage award to Apple – ruled that class-action status for a number of former tech employees cannot go forward without demonstrated harm against them due to anti-poaching agreements reached between several tech companies.
Not only are Apple Inc. (NASDAQ:AAPL) and Google Inc. (NASDAQ:GOOG) implicated in the anti-poaching deals, but supposedly are Adobe Systems Inc. (NASDAQ:ADBE), Intel Corporation (NASDAQ:INTC), Intuit Inc. (NASDAQ:INTU), Lucasfilm and Pixar. There has been mounting evidence, Koh said in her decision, that support the notion that the seven companies in questions had reached secret collusive agreements not to hire away each other’s employees, but unless and until some actual harm could be demonstrated by the group of former employees, Koh could not grant class-action status to the case. At this point, this means that each of the employees would have to enter their individual cases for judgment against the individual companies for which they worked.
Because the tech industry is articular sensitive about trade secrets and patented property, it seems sensible that the companies would discourage this type of hiring – and certainly would discourage rival companies like Apple Inc. (NASDAQ:AAPL) and Google Inc. (NASDAQ:GOOG) from hiring employees away in the hopes of learning insider secrets and patents. So what is the big deal here?
The former employees of these companies are suing on an antitrust basis, saying these agreements between the companies violate the Sherman Act and the California state Cartwright Act which are both prohibit anti-competitive business practices. Not allowing for competition among companies for employees’ labor is a sticking point so far, but Judge Koh said unless the entire class can demonstrate harm, any claims would have to be handled on a case-by-case basis.
What are your thoughts about any of these hiring agreements between companies like Appel Inc. (NASDAQ:AAPL) and Google Inc. (NASDAQ:GOOG)? Do you think these agreement discourage competition, or are they necessary in the tech industry to protect some trade information? We’d love your thoughts in the comments section below.
DISCLOSURE: I own no positions in any stock mentioned.