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MacRumors
Jan 18, 2013, 08:28 AM
http://images.macrumors.com/im/macrumorsthreadlogo.gif (http://www.macrumors.com/2013/01/18/tim-cook-ordered-to-give-deposition-in-employee-poaching-ban-antitrust-case/)


Bloomberg is reporting (http://www.bloomberg.com/news/2013-01-18/apple-ceo-cook-ordered-to-give-deposition-in-antitrust-case-1-.html) that Apple CEO Tim Cook has been ordered by U.S. District Judge Lucy Koh to give a deposition in a lawsuit claiming that Apple and five other companies entered deals not to recruit each other's employees.Koh told lawyers yesterday that Apple founder Steve Jobs was copied on e-mails at issue in the case, and that she found it "hard to believe" that Cook, as Apple's chief operating officer at the time in question, wouldn't have been consulted about such agreements.

The judge said she was disappointed that senior executives at the companies involved hadn't been deposed before yesterday's hearing over whether she should certify the case as a group lawsuit.
http://images.macrumors.com/article-new/2012/01/usdc-500x101.jpg
The case goes back (http://www.macrumors.com/2011/05/04/lawsuit-filed-against-apple-and-other-tech-companies-over-anti-poaching-agreements/) to 2005 and alleges that Apple, Adobe, Pixar, Lucasfilm, Google, Intel and Intuit had agreements not to poach employees from the companies that were privy to the agreements. Employees were free to apply at jobs at any of the companies on their own volition, however.

The agreements were investigated (http://www.macrumors.com/2010/09/17/apple-google-and-others-in-negotiations-with-regulators-over-anti-poaching-agreements/) in 2010 by the Justice Department and the claims were eventually settled (http://www.macrumors.com/2010/09/24/u-s-department-of-justice-orders-apple-and-others-to-stop-engaging-in-anti-poaching-agreements/), with the companies agreeing not to enter employee-poaching bans for five years.

The current lawsuit is a class-action civil suit by employees who say they were harmed by the anti-competitive actions of the companies within the agreement.

Article Link: Tim Cook Ordered to Give Deposition in Employee-Poaching Ban Antitrust Case (http://www.macrumors.com/2013/01/18/tim-cook-ordered-to-give-deposition-in-employee-poaching-ban-antitrust-case/)



KdParker
Jan 18, 2013, 08:34 AM
Not sure why they would even enter into such an agreement. You want the best employees, and if you have someone that you don't want to leave, then treat them right.

ybz90
Jan 18, 2013, 08:38 AM
Not sure why they would even enter into such an agreement. You want the best employees, and if you have someone that you don't want to leave, then treat them right.

It makes perfect sense. You believe you can recruit the best on your own, and likewise, if you believe in your talent, you don't want to have your guys poached. It is anti-competitive for sure though.

That said, I understand the anti-cartel mentality, but I don't think this suit has much true impact, unless there is more information that hasn't been presented in the article as written. As I read it, I don't really see how the employees were significantly harmed -- they weren't prevented from leaving or applying elsewhere, they just weren't actively recruited by other companies in this handful of often very loosely related companies.

Yujenisis
Jan 18, 2013, 08:43 AM
This should be interesting.

This is only the next logical step after California started enforcing the ban on non-compete clauses (http://en.wikipedia.org/wiki/Non-compete_clause#California) within the tech industry.

GoCubsGo
Jan 18, 2013, 08:45 AM
Not sure why they would even enter into such an agreement. You want the best employees, and if you have someone that you don't want to leave, then treat them right.

At least in the U.S., this is pretty standard. I have a similar requirement in my employment "contract" that prevents me from basically starting my own business that would compete with my company's business. The fact that I'm tied to that is absurd considering the business that I am in, but it is there. That being said, it is very easy for companies to get around this if there is no clause that states the employee from Apple (for example) can apply to Adobe (for example) if he/she wishes. All you do is pursue the employee then explain they need to apply on their own.

needfx
Jan 18, 2013, 10:42 AM
now they'll be posting Staff Picks of the week..!

velocityg4
Jan 18, 2013, 10:46 AM
It makes perfect sense. You believe you can recruit the best on your own, and likewise, if you believe in your talent, you don't want to have your guys poached. It is anti-competitive for sure though.

That said, I understand the anti-cartel mentality, but I don't think this suit has much true impact, unless there is more information that hasn't been presented in the article as written. As I read it, I don't really see how the employees were significantly harmed -- they weren't prevented from leaving or applying elsewhere, they just weren't actively recruited by other companies in this handful of often very loosely related companies.

It puts you in a disadvantage at the bargaining table for pay and benefits. If you approach them for a job they know you want to leave and don't have to provide much more incentive. While if they approach you they need to try and get you to leave so they'll be in a mindset that they must offer substantial perks to induce you to quit.

Kaibelf
Jan 18, 2013, 10:52 AM
At least in the U.S., this is pretty standard. I have a similar requirement in my employment "contract" that prevents me from basically starting my own business that would compete with my company's business. The fact that I'm tied to that is absurd considering the business that I am in, but it is there. That being said, it is very easy for companies to get around this if there is no clause that states the employee from Apple (for example) can apply to Adobe (for example) if he/she wishes. All you do is pursue the employee then explain they need to apply on their own.

I wouldn't say your noncompete is similar at all. Your company is making you agree not to take things you learn from them and immediately set up a direct competitor. This case is about companies agreeing not to actively go and try to peel away talent, but they are otherwise completely free to leave.

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It puts you in a disadvantage at the bargaining table for pay and benefits. If you approach them for a job they know you want to leave and don't have to provide much more incentive. While if they approach you they need to try and get you to leave so they'll be in a mindset that they must offer substantial perks to induce you to quit.

Nonsense. If you are worth it, you'll get the offer you want, and if you don't, you try to negotiate. Being unhappy at a company doesn't mean someone else should think you're more valuable than you are.

Diode
Jan 18, 2013, 10:57 AM
It makes perfect sense. You believe you can recruit the best on your own, and likewise, if you believe in your talent, you don't want to have your guys poached. It is anti-competitive for sure though.

That said, I understand the anti-cartel mentality, but I don't think this suit has much true impact, unless there is more information that hasn't been presented in the article as written. As I read it, I don't really see how the employees were significantly harmed -- they weren't prevented from leaving or applying elsewhere, they just weren't actively recruited by other companies in this handful of often very loosely related companies.

Depending on the level of the employee - it could harm them. For high caliber employees - you never apply - you get recruited. Do you think CEO positions ever make it to the online application list?

samcraig
Jan 18, 2013, 11:02 AM
Depending on the level of the employee - it could harm them. For high caliber employees - you never apply - you get recruited. Do you think CEO positions ever make it to the online application list?

Wait - are you saying that all the people here on MR that know how to run Apple better weren't able to apply on Monster.com?

slrandall
Jan 18, 2013, 01:00 PM
Employees were free to apply at jobs at any of the companies on their own volition, however.

I don't really see the problem. This is just a head-hunting agreement. What's wrong about that, if the employees are still free to apply anywhere they want?

gnasher729
Jan 18, 2013, 01:21 PM
I don't really see the problem. This is just a head-hunting agreement. What's wrong about that, if the employees are still free to apply anywhere they want?

If you don't see what's wrong with it, you have to learn a lot in life.

GoCubsGo
Jan 18, 2013, 01:46 PM
I wouldn't say your noncompete is similar at all. Your company is making you agree not to take things you learn from them and immediately set up a direct competitor. This case is about companies agreeing not to actively go and try to peel away talent, but they are otherwise completely free to leave.


Yeah you're probably right, you're pretty familiar with my contract. ;)

Rodimus Prime
Jan 18, 2013, 02:34 PM
Nonsense. If you are worth it, you'll get the offer you want, and if you don't, you try to negotiate. Being unhappy at a company doesn't mean someone else should think you're more valuable than you are.

While that may be true the difference is the starting offer is generally going to be lower which makes it harder to move up.
Also you do not tend to go looking for a job unless you generally want to change. It puts more power in the hands of the employer.

I want to see all these guys get slammed big time for this. They need to be made an example of so others do not even attempted to do it.

slrandall
Jan 18, 2013, 02:54 PM
If you don't see what's wrong with it, you have to learn a lot in life.

I guess. I mean, it's a little unfair to the employees to say they can't be recruited by anyone else without telling them. So how about this - I don't have any problems with the policy, but I dislike the shadiness involved. If this was a policy that Apple wanted to implement, they should have put something in their employees' contracts to the effect of "we do not allow employees to be solicited by outside companies". That way the employee gets to explicitly agree (or not) to it.

But no, I don't think the policy itself is bad.

york2600
Jan 18, 2013, 03:27 PM
I don't really see the problem. This is just a head-hunting agreement. What's wrong about that, if the employees are still free to apply anywhere they want?

You've obviously never been recruited away by a competitor. When companies know that people are poaching their employees they pay better. If you as a company know you have nothing to worry about, you're less likely to give raises and large bonuses. Recruiters come with big raises for employees. It's not uncommon in my experience to see 30-50% raises being offered in tech. If Apple knew that wasn't going to happen they don't have to pay as well. That definitely hurts employees. It kills the free market.

ybz90
Jan 18, 2013, 03:34 PM
Depending on the level of the employee - it could harm them. For high caliber employees - you never apply - you get recruited. Do you think CEO positions ever make it to the online application list?

This is a true point and important distinction, but anti-head hunting agreements exist all the time, and aren't generally actively pursued by authorities. In fact, I don't even think 'no solicitation' agreements are illegal at all. Companies frequently spin this as part of agreements to a joint venture.

This was in a way a bit of a landmark case because the DOJ was actually investigating it for anti-competitive/anti-trust issues; ultimately, they settled though because while labor (an economic inputs good, by the way) was 'restricted', it wasn't a black and white violation of the Sherman Act as they weren't preventing employees from leaving or anything, just putting some select individuals on a 'do not call' list. I think in this case, it's pretty telling that all the DOJ did was settle the case and tell the companies not to do this again for five years.

What merited a response was probably that this included such a large group of high-profile companies that aren't even closely related (you can group them into three sub-groups by market), suggesting a large and collusive agreement that really can't be considered to be a joint effort or pro-competitive in any way.

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You've obviously never been recruited away by a competitor. When companies know that people are poaching their employees they pay better. If you as a company know you have nothing to worry about, you're less likely to give raises and large bonuses. Recruiters come with big raises for employees. It's not uncommon in my experience to see 30-50% raises being offered in tech. If Apple knew that wasn't going to happen they don't have to pay as well. That definitely hurts employees. It kills the free market.

In this particular scenario, it wasn't a company-wide no solicitation agreement, just that each company had a select "Do Not Call" list. In light of this, it's likely that only execs, top management, and key designers/engineers were on the list. So while I agree with your argument, I don't necessarily feel like this was something detrimental to employees as a whole, just a select few. Given this, I don't think the company's motivations are salary-related at all, as the types to be put on the no-poach list are paid very well already, but rather an issue of retaining key talent (and concerns about corporate espionage, re: AMD v Nvidia right now).

Also, in situations like this when you get recruited, usually you don't see huge raises immediately, but rather a very large bonus followed by conditional raises that can prove to be substantial if you earn them.

IJ Reilly
Jan 18, 2013, 04:14 PM
This was in a way a bit of a landmark case because the DOJ was actually investigating it for anti-competitive/anti-trust issues; ultimately, they settled though because while labor (an economic inputs good, by the way) was 'restricted', it wasn't a black and white violation of the Sherman Act as they weren't preventing employees from leaving or anything, just putting some select individuals on a 'do not call' list. I think in this case, it's pretty telling that all the DOJ did was settle the case and tell the companies not to do this again for five years.

I don't know much about the specifics of this situation, but I do know that the DOJ settling an antitrust case by consent is the rule, not the exception. It is extremely rare that an antitrust case goes to trial. An agreement by the company to alter its practices is typically what the DOJ is seeking, not a trial, and not punishment. I mention this because the DOJ has investigated Apple for other practices in the past, which often leads to great huffing-and-puffing around here about how Apple should fight the government right down the line. This is rare, and almost always a really bad idea.

lynfordd
Jan 18, 2013, 04:30 PM
The judge should through them all out of the court room. What a stupid thing to sue about.
Than apple should just fire them all.

jstnlzr
Jan 18, 2013, 05:13 PM
now they'll be posting Staff Picks of the week..!

no kidding

HurtinMinorKey
Jan 18, 2013, 05:42 PM
If this goes to trial, the companies will probably lose. But it won't, they'll settle with the class.

Cavepainter
Jan 19, 2013, 02:25 AM
Not sure why they would even enter into such an agreement. You want the best employees, and if you have someone that you don't want to leave, then treat them right.

There's the rub, isn't it? Well, think like an executive for a moment. "Treating them right" costs lots of money when you're talking about top employees. These companies are for-profit businesses, not charities, and they don't like spending money. That's how they make lots of money. And these aren't the kind of employees that can be secured by a nice Christmas card and a $50 dollar gift card. If these companies all agree to not poach the valuable employees (as in the expensive employees) from one another, they all will save lots and lots of money. That's why.

In sports terms, what value is free agency if all the other teams agree not to recruit you?

Solomani
Jan 19, 2013, 03:21 AM
If this goes to trial, the companies will probably lose. But it won't, they'll settle with the class.

Why is the Apple CEO being singled out by the judge? Is he the only CEO being ordered to give a deposition? When the judge knows full well that 6 other big-name tech companies are implicated in this?

Lucasfilm, Pixar, Adobe, Apple, Google, Intel, and Intuit

7 companies total. Apple by itself cannot be the sole perpetrator here, since an anti-poaching agreement MUST be an agreement between companies. It must involve the collusion/collaboration of 2 or more companies. Does this judge not understand this? Or is Bloomberg just reporting this incorrectly, and only referencing the order against Apple CEO, while not mentioning that the other CEOs (Intel CEO, Google CEO, etc) are also being summoned likewise.

unlinked
Jan 19, 2013, 07:20 AM
It makes perfect sense. You believe you can recruit the best on your own, and likewise, if you believe in your talent, you don't want to have your guys poached. It is anti-competitive for sure though.

That said, I understand the anti-cartel mentality, but I don't think this suit has much true impact, unless there is more information that hasn't been presented in the article as written. As I read it, I don't really see how the employees were significantly harmed -- they weren't prevented from leaving or applying elsewhere, they just weren't actively recruited by other companies in this handful of often very loosely related companies.

The original story is a while back but I think they were also reporting job applications to the persons employer.

----------

Why is the Apple CEO being singled out by the judge? Is he the only CEO being ordered to give a deposition? When the judge knows full well that 6 other big-name tech companies are implicated in this?

Lucasfilm, Pixar, Adobe, Apple, Google, Intel, and Intuit

7 companies total. Apple by itself cannot be the sole perpetrator here, since an anti-poaching agreement MUST be an agreement between companies. It must involve the collusion/collaboration of 2 or more companies. Does this judge not understand this? Or is Bloomberg just reporting this incorrectly, and only referencing the order against Apple CEO, while not mentioning that the other CEOs (Intel CEO, Google CEO, etc) are also being summoned likewise.

Did you read the original report?

At Koh’s request, the lawyers also agreed that Google Chairman Eric Schmidt will be deposed Feb. 20. Lawyers for the employees will depose Intel Chief Executive Officer Paul Otellini later this month, lawyers said.

Killerbob
Jan 19, 2013, 09:23 AM
Oh my God you guys! What's so wrong about anti-poaching agreements?

If they weren't there you would very quickly have a monopoly - which is much much worse. If the biggest gorilla in the room could just snap up all the best employees (by poaching) and leave the "last animals out of the forest" at their competitors, you would soon have bigger problems than some individuals thinking they would have been offered big salary incentives to change firms!!!

Suits like this is EXACTLY why so many people laugh of the US laws and Americans in general.

It is up to each and every individual to know what he/she is worth, and ask for that, and remember everyone is free to change on their own premises. As an employer I am certainly not holding you back; there are plenty of very knowledgeable people out there - it is just not necessary to have other companies asking my people to leave. Otherwise we can have it like in professional sports...

IJ Reilly
Jan 19, 2013, 11:13 AM
Suits like this is EXACTLY why so many people laugh of the US laws and Americans in general.

Right. Corporate collusion is what made America great.

Clues: the laws prohibiting this practice are stronger just about everywhere else in the world, and more vigorously enforced. The fact that it remains such a item of debate here is what makes people laugh.

Killerbob
Jan 19, 2013, 11:59 AM
Right. Corporate collusion is what made America great.

Clues: the laws prohibiting this practice are stronger just about everywhere else in the world, and more vigorously enforced. The fact that it remains such a item of debate here is what makes people laugh.

What a bunch of BS - You obviously do not know what you're talking about!

I have been conducting business in Switzerland, Liechtenstein, the UK, Greenland, and in Denmark the last 15 years, and in all the companies I have worked for has it been practice (legally) to make agreements with other companies that they do not poach each others people. We even have contracts with headhunting agencies/companies that they will never approach employees in companies in-where they do placements. And, if an employee approaches the agency for a job, it is only OK, if the particular employee was not placed by that particular agency! This is all written into contracts, in addition to the competitor clauses we are so used to!

ufwa
Jan 19, 2013, 12:24 PM
What a bunch of BS - You obviously do not know what you're talking about!

I have been conducting business in Switzerland, Liechtenstein, the UK, Greenland, and in Denmark the last 15 years, and in all the companies I have worked for has it been practice (legally) to make agreements with other companies that they do not poach each others people. We even have contracts with headhunting agencies/companies that they will never approach employees in companies in-where they do placements. And, if an employee approaches the agency for a job, it is only OK, if the particular employee was not placed by that particular agency! This is all written into contracts, in addition to the competitor clauses we are so used to!

Are the employees made aware of such a deal when they are hired?

IJ Reilly
Jan 19, 2013, 02:20 PM
What a bunch of BS - You obviously do not know what you're talking about!

I have been conducting business in Switzerland, Liechtenstein, the UK, Greenland, and in Denmark the last 15 years, and in all the companies I have worked for has it been practice (legally) to make agreements with other companies that they do not poach each others people. We even have contracts with headhunting agencies/companies that they will never approach employees in companies in-where they do placements. And, if an employee approaches the agency for a job, it is only OK, if the particular employee was not placed by that particular agency! This is all written into contracts, in addition to the competitor clauses we are so used to!

In the specific case you might be right (I don't know), but in the instance of antitrust laws you are certainly not right. Antitrust laws (specifically prohibiting collusion, which is at the crux of this suit), are stronger and more consistently enforced in the EU than in the U.S.

Cartaphilus
Jan 19, 2013, 02:48 PM
Non-solicitation agreements are commonplace in the United States, and as far as I know have been deemed generally enforceable as not contrary to public policy in every state, unless the restrictions are found to be specifically unreasonable as to time, geography, or extent, or unless the agreement also prohibits hiring in the absence of solicitation. (Of course, the distinction is a bit naive considering how difficult it is to prove that someone in the soliciting company initiated a suggestion that the employee make an "unsolicited" application.)

The position of the current DOJ that these agreements are a violation of the U.S. antitrust laws is relatively new, and as far as I know, no court has yet substantively upheld Justice's broadest stance. My own opinion, FWIW, is that the outcome would be highly fact-dependent, and depend on the industry, the specialty, and the relationship of the two companies. For example, if a subsidiary were to be sold by a parent company, and the buyer insisted on an agreement that for some reasonable period of time the parent could not solicit any sub employee who had been employed at the time of the sale, I can't imagine a court finding an anti-trust violation. On the other hand, if all the major tech companies in Silicon Valley entered into a mutual non-solicitation pact relating to, say, Python developers, I'd rather be representing the DOJ than the cartel.

I think the government right now is overplaying its hand, and if it isn't judicious in picking its spots, there's a good chance that a case with lousy facts for them will end up as the controlling precedent.

cfs112
Jan 19, 2013, 03:46 PM
Oh my God you guys! What's so wrong about anti-poaching agreements?

If they weren't there you would very quickly have a monopoly - which is much much worse. If the biggest gorilla in the room could just snap up all the best employees (by poaching) and leave the "last animals out of the forest" at their competitors, you would soon have bigger problems than some individuals thinking they would have been offered big salary incentives to change firms!!!

Suits like this is EXACTLY why so many people laugh of the US laws and Americans in general.

It is up to each and every individual to know what he/she is worth, and ask for that, and remember everyone is free to change on their own premises. As an employer I am certainly not holding you back; there are plenty of very knowledgeable people out there - it is just not necessary to have other companies asking my people to leave. Otherwise we can have it like in professional sports...

well said, i agree!

Killerbob
Jan 19, 2013, 04:01 PM
Are the employees made aware of such a deal when they are hired?

I wouldn't say it is in the welcome package, but yes, all you have to do is ask HR. I'll give an example, I joined a company in 2010, having been head-hunted into Denmark from Switzerland. It wasn't 1 week before I had the list of companies that had agreed in that region, not to poach each others people. In this case it was specific to IT personnel, as well as the technical department of the manufacturing company.

In addition, I was told already when the head-hunter approached me, that he would not be able to represent me in two years after placing me in the particular company, and that only if I was laid off could he place me again. Also, I couldn't ask that he help me find another job (by he I mean the agency he represented as well).

On top of that I signed in my contract clauses that precluded me from working for any competitive company, world-wide, for a total of 12 months after ending my employment. Meaning competitors to the company, not other IT departments in other industries.

This is common in the countries I have worked in.

Also, I agree, Antitrust laws are very strong in Europe, but do NOT apply in this case. Antitrust usually focuses on three areas;

- Agreements that stop free trading and competition between business - i.e. cartels,
- Making illegal any activities leading to a dominant position in a market,
- Overseeing mergers and acquisitions of large corporations.

In this case I could even argue that the agreements between these 7 companies support Antitrust laws; preventing dominance by sheer buying all the employees in an area/field.

fourthtunz
Jan 19, 2013, 06:13 PM
I don't think the government should be able to interfere in this way.
We've gotten so used to government inference everyone thinks its ok.
If the employees were able to apply on their own, what's the harm?

Killerbob
Jan 19, 2013, 07:15 PM
if the employees were able to apply on their own, what's the harm?

exactly!

Cartaphilus
Jan 19, 2013, 08:19 PM
I don't think the government should be able to interfere in this way.
We've gotten so used to government inference everyone thinks its ok.
If the employees were able to apply on their own, what's the harm?

The government ALWAYS, as you characterize it, "interferes". In the U.S. the Department of Justice often determines in the first instance what activities constitute a violation of the antitrust laws, but the reason the government must always be involved is because individuals and companies must resort to government funded and staffed courts to resolve disputes. The government in the form of courts must decide which party should prevail and this can involve determining whether or not an agreement can be enforced or not, sometimes on the basis of whether that agreement is in keeping with the sort of society we want to have. For that reason, the government interferes when a bookie sues a gambler who has welshed on a bet by saying, in many states, that it will not allow its courts to be used to collect money from a wager that was illegal to have been made in the first place.

Here two companies have made a contract with each other that arguably affects the rights of an employee of one of the companies who had no involvement in the making of that contract, and who certainly did not consent to it. Assume that in the absence of that contract the other company would have attempted to recruit that employee by offering a 25% augmentation in salary. In effect, the contract has harmed the employee by arguably improperly removing the fair competition for his services that is the essence of capitalism.

So whether the Justice Department decides that the contract is a "combination in restraint of trade", or the employee decides that he has been harmed by illegal collusion to keep his compensation low, or whether one of the companies sues the other for breaching the contract by approaching the employee, the government is going to get involved.

The alternative, which existed in the distant past, and even today in some parts of the world, is that anyone who thinks he has been harmed by the acts of another gets his friends and relatives together and physically attacks whomever they think did them wrong. Long before governments were instituted among men to organize armies, coin money, or negotiate with other governments, people supported an authority to decide disputes among them. It is what separates us from barbarians.

Additionally, there are many reasons why an employee of Company A would not apply to Company B for a job, not the least of which is that if Company A learned about it, it might fire him to replace him with a more loyal employee it could count on not to defect to the competitor. Once you achieve a responsible role in an organization it is far more likely that you will be recruited to your next assignment than that you apply for it, and for that reason any limitation on recruiting deprives you of opportunity.

At the same time, though, there are situations where it is fair to prevent, for a reasonable period of time, one company from making offers of employment to the employees of another. Courts and governments generally are charged with making judgments about when particular circumstances justify enforcing or refusing to enforce a particular agreement.

In this particular case it appears that Apple contracted with a number of unrelated companies to avoid a hiring war where each company was raiding the employees of the other, setting off an expensive auction for employees with rare skills. It is certainly understandable that these companies would see some advantage to themselves in avoiding such a battle, but it is incontrovertible that another consequence is that the compensation of those with valuable and rare skills would not make as much as they would otherwise. The agreement, consequently, is a violation of the law of supply and demand since the demand has been artificially suppressed. In a free capitalist society we must always be vigilant to ensure that the competition that is the heart of our economy is not circumvented by collusion among competitors, and we entrust that duty to be vigilant to our government.

lordofthereef
Jan 19, 2013, 09:05 PM
Yeah you're probably right, you're pretty familiar with my contract. ;)

That's the thing. He doesn't have to be, Unless you are terrible at explaining things, which is possible. You described a non compete clause basically to a T, in simple terms. Is that in your contract? I don't know. You said it was...

Obviously there is more to your contract. Bit when you paraphrase, which you did, don't expect people not to dispute the analogy.

IJ Reilly
Jan 20, 2013, 12:20 AM
Non-solicitation agreements are commonplace in the United States, and as far as I know have been deemed generally enforceable as not contrary to public policy in every state, unless the restrictions are found to be specifically unreasonable as to time, geography, or extent, or unless the agreement also prohibits hiring in the absence of solicitation. (Of course, the distinction is a bit naive considering how difficult it is to prove that someone in the soliciting company initiated a suggestion that the employee make an "unsolicited" application.)

The position of the current DOJ that these agreements are a violation of the U.S. antitrust laws is relatively new, and as far as I know, no court has yet substantively upheld Justice's broadest stance. My own opinion, FWIW, is that the outcome would be highly fact-dependent, and depend on the industry, the specialty, and the relationship of the two companies. For example, if a subsidiary were to be sold by a parent company, and the buyer insisted on an agreement that for some reasonable period of time the parent could not solicit any sub employee who had been employed at the time of the sale, I can't imagine a court finding an anti-trust violation. On the other hand, if all the major tech companies in Silicon Valley entered into a mutual non-solicitation pact relating to, say, Python developers, I'd rather be representing the DOJ than the cartel.

I think the government right now is overplaying its hand, and if it isn't judicious in picking its spots, there's a good chance that a case with lousy facts for them will end up as the controlling precedent.

I agree the outcome would be fact-dependent, but then so are all points of law, are they not? Assuming the facts are essentially as we know them, the question here may be less complicated than is being made out. Whether it be for pig iron or employees, whenever companies agree to not complete with one another, they have formed a type of cartel. It is difficult to imagine any circumstances beyond the very limited where such an agreement would not violate the Sherman Act.

It seems when Apple began this practice several years ago that Steve Jobs was warned that it was likely to be illegal. My feeling is that Apple and the other involved companies will do whatever is required to settle this as promptly as possible by consent and without trial, as any court finding of fact will only make the civil suits that much more powerful. They will not want to repeat the mistakes made by Microsoft.

JAT
Jan 20, 2013, 11:35 AM
You know, more people would be on the side of "protecting" these employees if we weren't talking about people making $200k and up per year, if not millions. This isn't about Apple Store Geniuses. At some dollar amount, these court cases just receive a :rolleyes: from the general populace.

Just waiting for a Latrell Sprewell-like quote.....

iDuel
Jan 20, 2013, 11:42 AM
The judge should through them all out of the court room. What a stupid thing to sue about.
Than apple should just fire them all.

Well, it didn't take too long into this thread for a comment like this to pop up.

Morshu9001
Jan 20, 2013, 12:57 PM
Not sure why they would even enter into such an agreement. You want the best employees, and if you have someone that you don't want to leave, then treat them right.

Might be a way of forcing their employees to stay. I normally don't accuse corporations of unethical practices, but this does not seem ethical.

----------

You know, more people would be on the side of "protecting" these employees if we weren't talking about people making $200k and up per year, if not millions. This isn't about Apple Store Geniuses. At some dollar amount, these court cases just receive a :rolleyes: from the general populace.

Just waiting for a Latrell Sprewell-like quote.....

High demand, low supply of these employees. Most people won't support those whom they envy.

KdParker
Jan 21, 2013, 08:22 AM
There's the rub, isn't it? Well, think like an executive for a moment. "Treating them right" costs lots of money when you're talking about top employees. These companies are for-profit businesses, not charities, and they don't like spending money. That's how they make lots of money. And these aren't the kind of employees that can be secured by a nice Christmas card and a $50 dollar gift card. If these companies all agree to not poach the valuable employees (as in the expensive employees) from one another, they all will save lots and lots of money. That's why.

In sports terms, what value is free agency if all the other teams agree not to recruit you?

True, treating them right will cost money, but you aren't going to give them more than they are worth. Most likely not even close.

And the net profit loss that could come from not persuing the best fit for your company will get you fired by the Board pretty quickly.

IJ Reilly
Jan 21, 2013, 10:41 AM
Well, it didn't take too long into this thread for a comment like this to pop up.

Some of us have yet to accept the new world order, where corporations are entitled to the protections of the state but aren't legitimately subject to any laws. We are a pitiful lot, to be sure.

techwhiz
Jan 21, 2013, 12:09 PM
It's fine for a company to ban it's contract agencies from poaching if they are also placing. That is not an issue or the issue here.

What we have is a group of companies that "secretly" colluded to keep wages down by not poaching from their partners. Not detailed in the story was the fact that they also would be less likely to hire people from those other companies.

This does in fact put a cap on wages because the free market is stifled.
Pixar didn't need a secret agreement. Steve was head of both Apple *AND* Pixar at the time. Intel is/was an Apple partner.

As someone that works in the industry, I watch the IEEE Salary Survey and also participate in the survey. I keep a pretty good eye on what the market pays. What they did prevents a free market because companies won't seek out the brightest and the best at the highest pay. Waiting for you to look means you get less money than if they come look for you.

Anti-Trust laws in America are to prevent companies from making secret agreements that are counter to what is best in the public interest.

IJ Reilly
Jan 21, 2013, 01:34 PM
What we have is a group of companies that "secretly" colluded to keep wages down by not poaching from their partners.

From their competitors in the market for labor, and this is where the rubber hits the road with the Sherman Act. That's a cartel whether the collusion is done secretly (as in this case) or entirely out in the open (see: OPEC).

The purpose of antitrust law is to protect and enhance free and open competition, which are the core values that make capitalism a productive economic system. The potential for companies to collude and form cartels has been well understood going back to Adam Smith as an inefficiency and imperfection in capitalism, so it isn't like we haven't known this for a long time. The U.S. antitrust laws are now over 120 years old, but from the discussion you'd think they were just invented.

Cartaphilus
Jan 22, 2013, 12:50 PM
...It is difficult to imagine any circumstances beyond the very limited where such an agreement would not violate the Sherman Act....

Another situation in which I think a non-solicitation/non-hire agreement would likely be found permissible, even between competitors, would be in the case where, for example, Apple had been in negotiations to acquire, say, a voice-recognition software company as a means of enhancing their Siri product. If after due diligence the parties fail to reach an agreement on the acquisition, I can easily see permitting and enforcing an agreement prohibiting Apple, for some reasonable time, from hiring any technical employee of the target company of whom Apple acquired knowledge or had substantial contact during the diligence phase.

I think that generally the courts would be sympathetic to most situations where the same principle applies. For example, a software sales contract coupled with a substantial implementation project may contain a clause forbidding the customer, for some reasonable period of time, from hiring away any implementers assigned by the provider to work on the customer's project. Similarly, each corporation sponsoring the development of industry technical standards should be able to agree to refrain for some reasonable time from hiring another sponsor's employee who serves as a member of the committee.

There are many instances where companies might otherwise refuse to permit their employees to cooperate in activities which are seen as beneficial to society at large because they fear that their participating employees will be poached. To avoid discouraging the desired cooperation some exceptions should be carved out of the broad antitrust prohibition with accompanying appropriate limitations, safe harbors, and guidance.

We should also acknowledge that larger tech companies tend to comprise an often surprisingly small world, engaging regularly in what was once called "co-opetition". Accordingly, despite antitrust law and contracts, employers and employees often find it in their best respective long-term interests to accommodate one another's needs by, for example, permitting a prohibited hiring, but only once the employee has completed a current assignment where his role would be difficult to replace. Often a few discreet phone calls through back channels can result in things working out to the satisfaction of all. This cordial resolution is much more likely if all the parties know exactly where they stand legally.

It is quite true that in applying any policy the facts of the specific situation are important, but a comprehensive understanding of the relevant realties can inform the development of policies that balance the competing interests and provide for different outcomes depending on specific conditions. More situational policies can often lessen the need for enforcement actions and litigation, and allow the parties to negotiate their agreements with confidence that their legitimate goals will not be frustrated.