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Was Steve Jobs a Conspiracy Mastermind?

Even two years after his death, the enigmatic Steve Jobs is still grabbing headlines. This time, the former Apple CEO’s appetite for success and domination has landed Apple in hot water. A class action lawsuit filed on behalf of 64,000 computer engineers alleges that Jobs orchestrated a massive Silicon Valley conspiracy to restrict employee mobility and stifle wages in violation of Section 1 of the Sherman Antitrust Act. In Re: High-Tech Employee Antitrust Litigation Case, No.: 11-CV-02509-LHK (N.D. Cal. 2013).

Among the defendants are Adobe, Apple, Google, Intel, Intuit, Lucasfilm, and Pixar. Specifically, the plaintiffs claim that the defendants eliminated competition for skilled labor through an “interconnected web of express bilateral agreements…to abstain from actively soliciting each other’s employees. Id. at 4. In essence, a series of “Do Not Call” lists and vigorous enforcement by CEO’s themselves prevented recruiters from one company from contacting employees from competing companies. Id.

Section 1 of the Sherman Act mandates that “Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal.” 15 U.S.C. § 1. To prevail, the plaintiff must show (1) an agreement or conspiracy; (2) the agreement was an unreasonable restraint of trade; and (3) the restraint affected interstate commerce.” Am. Ad Mgmt., Inc. v. GTE Corp., 92 F.3d 781, 784 (9th Cir. 1996).

Among the more condemning evidence offered is the communication between Jobs and the former CEO of Palm, Edward Colligan. Allegedly, Jobs wanted to enter into an anti-competitive agreement with Palm and Colligan responded negatively, asserting that such action was “not only wrong, it is likely illegal.” Id. at 29. In response, Jobs threatened a patent lawsuit. “My advice is to take a look at our patent portfolio before you make a final decision [on an anti-solicitation agreement] here.” Id. at 30.

The plaintiffs have even produced evidence demonstrating that the parties involved understood the questionable nature of the agreements. When asked about formalizing and sharing a “Do Not Call” list with Google’s competitors, former Apple CEO Eric Schmidt responded that he preferred that it be shared “verbally[,] since I don’t want to create a paper trail over which we can be sued later?” Id. at 27.

Due to the scope and complexity of the agreements, it appears that the plaintiff’s will have some trouble proving their exact damages. Nevertheless, the court’s tone tends to skew against the tech giants. “Due to Defendants’ formalized pay structures and compensation design, Plaintiffs’ evidence indicates that Defendants’ concerns with internal equity could lead to classwide changes in compensation levels as a result of the anti-solicitation agreements.” Id. at 45.

The 9th Circuit has denied an appeal and the case is set for trial in May. Follow us on Twitter @JacobAronauer for updates.

 

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