Tim Cook Ordered to Give Deposition in Employee-Poaching Ban Antitrust Case

[MacRumors]

Bloomberg is reporting 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.

The case goes back 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 in 2010 by the Justice Department and the claims were eventually settled, 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

[KdParker]

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]

Originally Posted by KdParker

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]

This should be interesting.

This is only the next logical step after California started enforcing the ban on non-compete clauses within the tech industry.

[jessica.]

Originally Posted by KdParker

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]

now they'll be posting Staff Picks of the week..!

[velocityg4]

Originally Posted by ybz90

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]

Originally Posted by jessica.

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.

----------

Originally Posted by velocityg4

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]

Originally Posted by ybz90

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]

Originally Posted by Diode

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]

Originally Posted by MacRumors

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]

Originally Posted by slrandall

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.

[jessica.]

Originally Posted by Kaibelf

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]

Originally Posted by Kaibelf

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]

Originally Posted by gnasher729

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]

Originally Posted by slrandall

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]

Originally Posted by Diode

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.

----------

Originally Posted by york2600

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]

Originally Posted by ybz90

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]

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]

Originally Posted by needfx

now they'll be posting Staff Picks of the week..!

no kidding

[HurtinMinorKey]

If this goes to trial, the companies will probably lose. But it won't, they'll settle with the class.

[Cavepainter]

Originally Posted by KdParker

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]

Originally Posted by HurtinMinorKey

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]

Originally Posted by ybz90

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.

----------

Originally Posted by Solomani

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]

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...