SAN JOSE (CN) - A federal judge on Friday rejected a $325 million class action settlement that accused Adobe, Apple, Google and Intel of conspiring to restrict tech workers' wages, finding the offer too low: outside "the range of reasonableness."
U.S. District Judge Lucy Koh denied the plaintiffs' request for preliminary approval of the settlement.
Class representatives Mark Fichtner, Siddharth Hariharan and Daniel Stover sought preliminary approval of the settlement
in April. In May, a number of class members submitted
letters supporting and opposing the proposed amount.
Software engineers, on behalf of an estimated class of 64,000, sued
the tech giants, plus Intuit and Walt Disney subsidiaries LucasFilm and Pixar, in 2010, over illegal "no cold-call agreements" that restricted or eliminated competition for high-tech employees, which "disrupted the normal price-setting mechanism that apply in the labor setting."
The poaching ban, workers claimed
, maintained internal salary structures at the companies from 2005 to 2009, and involved "gentleman's agreements" via CEO-to-CEO emails between the late Steve Jobs and other leading Silicon Valley CEOs.
Five cases underlying the consolidated action were filed in California Superior Court and removed to Federal Court.
On Friday, Koh ruled that although "ample evidence" showed an overarching conspiracy between the defendants, the proposed settlement was "proportionally lower" - per class member - than that of a separate $20 million settlement with Lucasfilm, Pixar and Intuit, in 2013.
"Pursuant to the terms of the instant settlement, class members who have not already opted out and who do not opt out will relinquish their rights to file suit against the remaining defendants for the claims at issue in this case," the 32-page ruling states. "In exchange, remaining defendants will pay a total of $324.5 million, of which plaintiffs' counsel may seek up to 25 percent (approximately $81 million) in attorneys' fees, $1.2 million in costs, and $80,000 per class representative in incentive payments. In addition, the settlement allows remaining defendants a pro rata reduction in the total amount they must pay if more than 4 percent of class members opt out after receiving notice. Class members would receive an average of approximately $3,750 from the instant settlement if the court were to grant all requested deductions and there were no further opt-outs."
Koh repeatedly said the proposed settlement fell "below the range of reasonableness," and that the settlement at hand would need to total $380 million to match the previous amount.
"This court has lived with this case for nearly three years, and during that time, the court has reviewed a significant number of documents in adjudicating not only the substantive motions, but also the voluminous sealing requests," Koh wrote. "Having done so, the court cannot conclude that the instant settlement falls within the range of reasonableness."
Koh said ample evidence pointed to an overarching conspiracy between the defendants that led to "a class-wide depression of wages."
"As this court stated in its summary judgment order, there is ample evidence of an overarching conspiracy between the seven defendants, including '[t]he similarities in the various agreements, the small number of intertwining high-level executives who entered into and enforced the agreements, defendants' knowledge about the other agreements, the sharing and benchmarking of confidential compensation information among defendants and even between firms that did not have bilateral anti-solicitation agreements, along with defendants' expansion and attempted expansion of the anti-solicitation agreements,'" the ruling states.
"The evidence of defendants' rigid wage structures and internal equity concerns, along with statements from defendants' own executives, are likely to prove compelling in establishing the impact of the anti-solicitation agreements: a class-wide depression of wages."
Koh said she was "troubled" that the proposed
$324.5 million settlement, reached "a mere month" before" trial, was "proportionally lower" than settlements with the settled defendants.
"This concern is magnified by the fact that the case evolved in plaintiffs' favor since those settlements. At the time those settlements were reached, defendants still could have defeated class certification before this court, defendants still could have successfully sought appellate review and reversal of any class certification, defendants still could have prevailed on summary judgment, or defendants still could have succeeded in their attempt to exclude plaintiffs' principal expert," Koh wrote. "In contrast, the instant settlement was reached a mere month before trial was set to commence and after these opportunities for defendants had evaporated. While the unpredictable nature of trial would have undoubtedly posed challenges for plaintiffs, the exposure for defendants was even more substantial, both in terms of the potential of more than $9 billion in damages and in terms of other collateral consequences, including the spotlight that would have been placed on the evidence discussed in this order and other evidence and testimony that would have been brought to light. The procedural history and proximity to trial should have increased, not decreased, plaintiffs' leverage from the time the settlements with the settled defendants were reached a year ago."
Koh credited class counsel for acting as "zealous advocates" for clients against their "extraordinarily well-resourced adversaries."
"The court acknowledges that class counsel have been zealous advocates for the class and have funded this litigation themselves against extraordinarily well-resourced adversaries. Moreover, there very well may be weaknesses and challenges in plaintiffs' case that counsel cannot reveal to this court," the ruling states. "Nonetheless, the court concludes that the remaining defendants should, at a minimum, pay their fair share as compared to the settled defendants, who resolved their case with plaintiffs at a stage of the litigation where defendants had much more leverage over plaintiffs."
A case management conference is scheduled for Sept. 10.