Earlier this year tech giants Apple, Google, Intel and Adobe were hit with a class action lawsuit. Recently, they have agreed to a settlement, to the tune of $415 million, to be paid jointly by all four companies. This puts the cost of the settlement about a hundred million more than Intel’s recent diversity initiative.
The antitrust suit was initiated by 64,000 programmers and engineers, who were employed by the four companies, alleging that they had secret agreements to enact anti-competitive practices. From a period of 2005 to 2009, the companies allegedly agreed not to poach each other’s employees. The plaintiffs claim that this cost them mobility and higher paying jobs.
Previously, the four tech companies tried to settle for the amount of $324 million, while still denying any wrongdoing. Lawyers representing the plaintiffs seemed to be in agreement. However one of the employees who was part of the class action suit, Michael Devine, argued that the amount was too low. He cited the fact that it fell far short of the estimated $3 billion in lost compensation that the plaintiffs deserved.
After hearing this argument, and in an unusual move, the judge overseeing the case rejected the settlement for being too low. This new settlement of $415 million has been accepted by the plaintiff’s lawyers, but we will have to wait and see if the judge again rejects the settlement as inadequate, or lets it stand.
Apple, Google, Intel and Adobe, are collectively worth hundreds of billions of dollars, so a few hundreds of millions is a fairly small amount, and it may be worth paying this cost to settle quickly. All four companies have tried to cultivate an image as progressive and worker friendly. A long drawn out court case, where they are shown to conspire against the best interest of their employees would damage this reputation.
Another serious concern is that going to court could result in losing a far greater sum of money if the jury rules against them. A jury could potentially award the plaintiffs billions of dollars. It might be in their best interest to settle for hundreds of millions rather than risk losing billions.
Do you think the settlement offered by Apple, Google, Intel and Adobe is fair to the plaintiffs? Do you think the judge will reject it again for being too low? How do you think this case affects the reputation of the four companies? Leave your comments below.