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Tech executives felt a ‘no poaching’ rule would be a benefit, e-mails show

Apple’s iPad devices are displayed at its store in Tokyo Jan. 18, 2013.

KIM KYUNG-HOON/REUTERS

Internal e-mails show that executives at tech companies such as Apple Inc. and Google Inc. believed that an agreement to refrain from poaching each other's workers would bring real financial benefits, a U.S. judge said on Thursday.

Five former employees of various tech companies have filed a civil lawsuit against Apple, Google, Intel Corp. and others, alleging an illegal conspiracy to eliminate competition for each other's employees.

At a hearing in San Jose, Calif. federal court on Thursday, U.S. District Judge Lucy Koh also ordered Apple chief executive Tim Cook to be questioned by plaintiff attorneys for four hours.

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Judge Koh must decide whether the lawsuit can proceed as a class action, which would give the plaintiffs more leverage to extract a large settlement. Judge Koh said that at the time the no-poaching agreements were forged, top executives felt a collective approach toward hiring was more efficient than dealing with employees individually.

"That, I think, is the biggest problem for the defendants," said Judge Koh, who did not identify the executives. However, Judge Koh also closely questioned a key economic analysis commissioned by the plaintiffs, which the judge said had "holes."

Judge Koh did not rule on the class action issue during the hearing on Thursday.

In 2010, Google, Apple, Adobe Systems Inc., Intel Corp., Intuit Inc. and Walt Disney Co.'s Pixar unit agreed to a settlement of a U.S. Justice Department probe that bars them from agreeing to refrain from poaching each other's employees.

The Justice Department and California state antitrust regulators then sued eBay Inc. late last year over an alleged no-poaching deal with Intuit. EBay said the government is wrong, and has not been named as a defendant in the civil lawsuit.

Plaintiff attorneys have estimated that civil damages potentially could run into hundreds of millions of dollars.

In court on Thursday, Adobe attorney Robert Mittelstaedt said the plaintiffs had no evidence that employees were actually impacted by the no-cold call deals.

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"It's not in the data," Mr. Mittelstaedt said.

In 2007, Apple's Steve Jobs asked former Google chief executive Eric Schmidt to stop trying to recruit an Apple engineer, a transgression that threatened one junior Google employee's job, according to a court filing last year. At the time, Mr. Schmidt was an Apple board member.

Judge Koh on Thursday criticized attorneys for the tech companies for being too slow to schedule depositions of top executives. Apple attorney George Riley attempted to spare Mr. Cook from a deposition, saying that when Mr. Cook was chief operating officer of the company before succeeding Mr. Jobs in 2011, Mr. Cook had no role in any of the no-hire agreements.

"I find it hard to believe a COO would have no say over salary and compensation for all employees," Judge Koh responded.

Additionally, Google attorneys agreed that Mr. Schmidt, now Google's executive chairman, could be questioned by plaintiffs' lawyers on Feb. 20. Executives from several other companies were also scheduled for depositions, including Intel chief executive Paul Otellini.

Reuters

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